No recovery for long-term unemployed

 

A new study releasd Thursday finds that only about 11 percent of the long-term unemployed returned to full-time steady work a year later.

The study found that people out of work for at least six months are having an increasingly hard time reconnecting with the labor force.

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It concludes that even if the unemployment rate returns to normal levels long-term unemployment will remain a problem in the economy and that "the long-term unemployed are an unlucky subset of the short-term unemployed."

To that end, the paper finds that more efforts will be needed to help those who have been out of work for long periods.

The Brookings Institute study was written by Princeton economists Alan Krueger, Judd Cramer and David Cho. Krueger recently returned to Princeton after spending some time as the chairman of President Obama’s Council of Economic Advisors.

About 3.8 million people or 37 percent of all of those who are out of work have been out of work for at least six months. The overall jobless rate was 6.7 percent in February. 

"Despite declining over the last four years, the share of the unemployed who have been out of work for more than six months still exceeds its previous peak reached in 1981-82, and is well above its average in the last recovery," the authors wrote.

Federal Reserve Chairwoman Janet Yellen said Wednesday that underemployment and long-term joblessness are two problems plaguing the economy and weighing on a more robust recovery.

A larger proportion of the long-term unemployed is over age 50 and is unmarried, compared with the short-term unemployed.

While whites makes up 51 percent of the long-term unemployed, blacks accounted for 22 percent, compared with just 10 percent of the employed population

Between 2009 and 2013, the authors found that a sharp decline in job openings coupled with a decrease in labor force withdrawal rates accounts for the sharp rise in the number of long-term unemployed workers and the overall rise in the unemployment rate.

The long-term unemployed are spread throughout all corners of the economy and states, even those with the lowest levels of unemployment, like North Dakota.

A majority of the long-term unemployed previously worked in sales and service jobs (36 percent) and blue-collar jobs (28 percent), the paper finds.

In addition, the authors find that when long-term unemployed workers do return to work, there is a tendency to return to jobs in the same set of industries and occupations they left. 

Between 2008 and 2012, a majority of those who had been out of work for at least 27 weeks said they either hadn't found work (30 percent) or had stopped looking altogether (34 percent), the study found. 

The remaining 36 percent said they had been employed in various capacities, including taking part-time jobs, in the previous three to four months.

Congress is still wrangling over legislation that would provide unemployment insurance to the long-term unemployed who have exhausted their state's benefits, usually about 26 weeks' worth. 

Upward of 2 million people have been affected by the lapse. The Senate may take up a bipartisan bill next week but the measure's fate is uncertain with Speaker John Boehner saying on Wednesday that state unemployment directors have deemed the bill unworkable in such a short time frame.