Part 5/11:
The Role of Discouraged Workers and Hidden Unemployment
Where do the displaced workers go? Surprisingly, the data show a surge in "discouraged workers"—individuals who have stopped actively seeking employment because they believe no suitable jobs are available. The number of discouraged workers increased by approximately 250,000 to 637,000 in recent surveys.
This suggests that many workers who might have been displaced by AI are not captured in official unemployment figures because they exit the labor force altogether. Their movement into discouraged worker status points toward downward mobility and a shrinking labor force participation rate, which has dropped from about 62.6% a few years ago to below 62% in 2025.