* Poll shows many willing to rejoin workforce if conditions
* Falling jobless rate has not led to optimism among
* Labor markets to be major focus of Fed annual retreat
By Howard Schneider
WASHINGTON, Aug 20 Mike Yack has left the
workforce twice in the last eight years and calls himself
retired, yet at age 62 the former General Motors employee does
not consider his working life over.
"I'd be open to anything - learning a new trade or
something. I don't expect top wages. But I am not going to work
for ten dollars an hour," said Yack, who accepted a buyout from
GM in 2006 and was then laid off earlier this year by a GM
Yack, who says he can get by on Social Security and his GM
pension, is among millions of Americans who could re-enter the
U.S. labor force if the economy improves. They don't show up in
the U.S. jobless rate, currently at 6.2 percent.
For U.S. Federal Reserve Chair Janet Yellen, the willingness
of people like Yack to return to the workforce contributes to
the "slack" she sees in the labor force that could keep wages
growth and inflation under control even as the economy picks up.
Yellen and other Fed policymakers will be studying the labor
market overhang carefully as they gather for their annual
retreat in Jackson Hole, Wyoming this week.
Heading into that event, an exclusive Reuters/Ipsos poll -
which was conducted between June 6 and Aug. 8 - shows there are
many retired, and other jobless people who have stopped looking
for employment, declaring they are ready to re-enter the labor
force if the right opportunity came along.
The poll of 7,727 individuals aged 18 and older who said
they were unemployed, retired, or declined to provide their
employment status, found that 34 percent said they had stopped
looking for work because the job market was so bad. Despite the
falling unemployment rate, 40 percent said they were no more
optimistic about their job search today than when they initially
Among those who said they had halted a job search, many were
ready to resume the hunt if they received the right signals from
the market - those signals included more job postings that
match their qualifications, evidence of a stronger economic
recovery, and word that friends or relatives had landed jobs.
For people who identified themselves as retired, 40 percent
said they would have preferred to keep working and 30 percent
said they would go back to work if the right job came along.
Of the poll respondents, 44 percent had not worked in the
past five years, though nearly two thirds of those people were
close to or had reached retirement age when they stopped
Large numbers of discouraged workers are key to why the U.S.
labor participation rate lingers at 62.9 percent, down from 66.4
percent in January 2007, just before the recession and the
financial crisis was about to roll over the economy.
And this is in addition to the 7.5 million Americans who are
currently working part-time but want to work full-time, often
referred to as involuntary part-time workers. Most want a
full-time job but can't find it or their employers have cut back
on their hours for business reasons. The number is still about 3
million more than before the financial crisis.
For Yack, the equation is quite simple. If wages start
moving up at the auto parts suppliers and other companies near
his home in Howell, Michigan, he says he would be ready to
return to the workforce.
"I am physically able. The opportunity is not there," he
In the U.S., the Fed's mandate is to maintain full
employment consistent with stable prices, giving it a direct
interest in knowing not only how many people are working, but in
how many might want to work but have been discouraged from
But the extent of the changes under way in the U.S. job
market are not fully known, nor is the ability of the Fed or
other government officials to address them. Some trends seem
inexorable: perhaps half the recent decline in labor force
participation, for example, can be explained by the aging of the
U.S. workforce, a number of studies have concluded.
Six years into the recovery, U.S. policymakers confront a
few problems. Wages are hardly keeping up with inflation,
productivity is in the doldrums, and the churn between jobs - an
indicator of economic dynamism - has slowed.
In addition, the labor force participation rate for people
aged 25-54 - considered the prime working years - has dropped
from 84 percent at the turn of the century to just 81.4 percent
now, a fact economists have found difficult to explain. And the
number of people unemployed for six months or more has been
dropping, but still stands at 3.2 million - nearly triple the
number in the months before the last recession hit.
Those and other factors have convinced Yellen the U.S. still
has room to grow before inflation becomes a concern, and has
made her reluctant to raise interest rates before employment and
wage growth recover.
What she, academic researchers, Obama administration
officials, and others are trying to understand is whether those
trends have become a permanent part of the U.S. labor landscape.
They have plenty of recent research, much of it containing
worrying findings, to comb through.
Studies by economists like Robert Litan at Brookings
Institution and John Haltiwanger at the University of Maryland
have documented the growing importance of larger and older firms
in the U.S. economy -- and noted how those tend to be less
dynamic job creators than new companies.
Other research, noted with concern at the Fed and elsewhere,
has found a decline in demand for higher skilled and better
educated workers. That means college graduates may be competing
for positions further down the "job ladder," pushing the less
skilled to the margins.
"A year or so ago many labor economists would have said this
was just a really bad recession and we have seen a huge cyclical
impact and it takes a while to reverse," said Paul Swaim, senior
labor economist at the Organization for Economic Cooperation and
Development. "It looks like the longer-run trends are more and
more the story ... It is not just declining employment
participation. It is a whole sort of ebbing of vitality."
The Fed's response to the problem is necessarily blunt:
keeping interest rates lower than might otherwise be warranted
in hopes of encouraging growth, investment, job creation and
Some of the forces at work in the U.S., however, may be of a
more subtle sort that require changes in government policy and
not simply stronger economic growth.
The fact that labor force participation among women has
declined in the U.S. while it continues rising in much of
Europe, for example, may be related to European policies that
provide better family leave and care for aging parents.
There is evidence as well that the jobs which are being
created are those that pay less, perhaps adding to the level of
income inequality in the U.S. and undermining the spending power
of households. A higher federally mandated minimum wage could
help to address this, though critics say that could hurt jobs
growth and risk a much higher inflation rate.
Conversations with the unemployed, meanwhile, show that
there are many reasons why they may stay out of the workforce.
For some, like Bill Young of suburban Atlanta, a simple bump
in the overall economy might help. The 41-year-old landscaper
said his last full time job was a decade ago, before the housing
boom turned to a bust. The sector has yet to recover.
"It is almost impossible to get a full-time job," said
Young, who gets by on "a lot of little part-time jobs."
April Phelps, 40, of Sycamore, Illinois., has been making do
on her disability payment since she left the Army. She got a
master's degree in psychology in 2011, but has yet to land a job
and is only intermittently searching because of the frustration.
Donald Oremus, 63, left his job two years ago to care for
his ailing wife. After that long out of the workforce he feels
his skills as an architectural draftsman are out of date in a
profession driven by fast advances in software.
The Veterans Benefits Administration recently agreed to
provide home nursing care for his wife. Both served in the Navy
during the Vietnam War.
He's now weighing whether to invest the necessary time and
money to learn the latest tools and return to work. "I would
love to get back," Oremus said by phone from his home in Boise,
Idaho. "Suddenly I have fallen far behind."
(Reporting By Howard Schneider)