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More Americans quitting job hunt as economy wallows

| Friday, Oct. 5, 2012, 12:01 a.m.
John Mathe pauses for a photo in Oakdale on Thursday, October 4, 2012. The 65-year-old has been looking for a job the past year and is now trying to go back to school to improve his prospects. Philip G. Pavely | Tribune-Review

After a two-year search around Pittsburgh, Salouah Makhloufi gave up her quest for a job as an interpreter.

“I couldn't find anything in my field,” said Makhloufi, 34, of West Mifflin. “So after maybe 100 applications and just four interviews, I was very disappointed and decided to go back to school.”

An Algerian native fluent in French, she is studying at Community College of Allegheny County to become a nurse.

When disheartened job seekers stop looking for employment, they no longer count as part of America's labor force. That group, measured by an arcane government statistic called the “labor force participation rate,” reached its lowest level in three decades — 63.5 percent — at the end of August. At 63.7 percent in January, the measure of working-age people with jobs or actively looking for jobs was the lowest since the early 1980s, when America was in its last deep recession.

“The rate tells you that where we are in the business cycle is a depressed state and the economy remains extremely weak,” said Mark Price, a labor economist for the Keystone Research Center in Harrisburg. “When there are fewer people participating, that's not good for the economy. It means fewer people are employed and consuming fewer goods and services.”

The latest measure of the job situation is due on Friday when the Bureau of Labor Statistics releases September data. Most economists expect the bureau to report that the nation's economy added about 113,000 jobs in September and the unemployment rate remained at 8.1 percent.

“The (low) labor force participation rate is an indication, just like 8 percent unemployment is an indication, of a poor labor market,” said Peter Morici, an economist and business professor at the University of Maryland in College Park.

“Older people will tend to live off their assets for awhile, and younger people will simply go back to school or live with their parents and wait for a better day to find a job,” Morici said. “Neither is good for the economy.”

Job creation remains a top concern among voters, as Wednesday's debate between President Obama and Republican Mitt Romney reinforced. Though Obama said his policies of stimulus spending and government intervention in failing industries helped generate 5 million jobs since the economy bottomed out in 2009, Romney said the recovery's pace remains too slow because Obama's policies saddled the country with more debt and scared small businesses from hiring people.

John Mathé, 65, an unemployed real estate professional, rarely spends money to gas up his car these days. If he's going five miles or fewer, he'll walk.

Mathé, of Oakdale, returned to school to finish his bachelor's degree in business when he could not find a job managing condo and co-op associations, his field of expertise.

“Employers tell me I'm overqualified,” said Mathé, unemployed for 21 months despite 40 years in real estate. “But they still want a bachelor's degree.”

Economists say people tend to leave the labor force during recessions because job prospects appear slim. When employers start to ramp up recruiting, “It has the effect of drawing people out to look for work,” said Price.

Yet it's also true that many people look for work because it's a recession and they need to supplement household income, said Harold Miller, president of Future Strategies, an economic consulting firm Downtown. He cautions against reading too much into the labor force participation rate.

“It doesn't tell you that much because you don't really know who is leaving the labor force,” Miller said. “Are they older? Are they students? You don't really know.”

For the nation to return to “full employment,” which economists agree is a 6 percent jobless rate, the economy would have to generate about 375,000 jobs a month for the next three years, Morici said.

Meantime, about 46.2 million Americans are living below the poverty line of $11,702 in annual income, or $23,021 for a family of four, census data show. A record 46.7 million people received food stamps in June, according to the latest available data from the Department of Agriculture.

Staff writer Mike Wereschagin contributed to this report. Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or tolson@tribweb.com.

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