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Four possible reasons for being unemployed

Leaving or losing a job and entering or reentering the labor force

The US Bureau of Labor Statistics (BLS) reports the monthly number of people unemployed and their status at the time they become unemployed. There are four categories, each represented by a colored area in the FRED graph above:

  • workers who voluntarily left their jobs (the blue area)
  • workers who involuntarily lost their jobs (the red area)
  • former workers who, after a period of time, decided to re-enter the labor force and look for work (the green area)
  • new members of the labor force who are actively looking for work (the purple area)

The FRED graph shows that, between January 1967 and September 2023, job losers made up the largest proportion of the unemployed. That proportion is heavily influenced by business cycles, and it spiked to almost 90% during the onset of the COVID-19-induced recession. The proportion of job leavers is small, and it also changes with the phases of the business cycle. The proportion of new labor market entrants is roughly similar to that of job leavers, although generally much more stable. Lastly, re-entrants to the labor force who are unemployed are more numerous than new entrants, albeit a more-accurate comparison between those two groups should take into consideration the 1994 redesign of the current population survey.

How the graph was created: Search FRED for and select “Job Leavers as a Percent of Total Unemployed.” Next, click on the “Edit Graph” button and use the “Add Line” tab to search for and add “Job Losers as a Percent of Total Unemployed.” Repeat the previous step to add “Reentrants to Labor Force as a Percent of Total Unemployed” and “New Entrants as a Percent of Total Unemployed.” Next, click on the “Format” tab, change the graph type to “Area,” and the stacking to “Normal.”

Suggested by Diego Mendez-Carbajo.

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