5.5 million people in the U.S. are labeled “not in labor force, want job”

Near the top of Table A1 of the December Jobs report is a count of people who are “not in the labor force,” but currently want a job. These are folks who aren’t working currently and haven’t actively looked for a job in the past four weeks — sometimes longer — but who would like to work. In December, that number stood at 5.5 million, a 3% decrease from a year ago.

Reasons why someone might want a job but not be actively looking for one: They’re taking care of their kids or elderly parents, they’ve decided to go back to school, or they’re just tired of the job search.

“Because they’re discouraged. They just don’t think it’s worth looking,” said Guy Berger, director of Economic Research at the Burning Glass Institute

He said generally, there are fewer people in this situation when the labor market is doing well. 

“Probably what’s happening is that when it goes down … these people actually start actively looking and then hopefully they find a job,” he said.

You could look at this little drop as a sign of solidity in the labor market, said Harry Holzer, a professor of public policy at Georgetown University.

“It indicates fewer people, not by a huge amount, but slightly fewer people, are in that limbo situation,” he said.

Holzer is also a former chief economist at the U.S. Department of Labor. He said while some people might choose to get back into the job market, others might choose to stop looking for work and lean full time into being, maybe, a caregiver or a student. 

“Whichever of those paths are chosen, it kind of reflects a greater stability, I think, of where we are. Less uncertainty,” he said.

However, Ron Hetrick, a senior economist at Lightcast, thinks this number should be way lower than it is right now. 

“I’m actually a little perplexed as to why this number isn’t really shrinking,” he said.

Hetrick pointed out this number is higher than it was right before the pandemic, and that with the combination of job growth and baby boomers retiring since then, there should be fewer people left on the sidelines wanting to work.

“I think it suggests maybe we’re a little bit weaker than we we think we are,” he said.

This measure ticking down over the past year, is something to watch, said Guy Berger at the Burning Glass Institute.

“Essentially, yeah, it has been improving, but on the scale of squiggles,” he said.

So not a straight line down, but, “certainly, if it’s a sustained down trend that … sticks into next year, I think in general, I would tend to view that as a good sign,” Berger said.

In other words, it’s a sign that the labor market, which had been cool-ish, is getting warmer.