The Long-Term Unemployment Crisis Is as Bad as Ever

As of May, 3.4 million Americans had been out of work for more than six months. That's far too many -- two and a half times the prerecession level -- but the number is falling fast, down more than 20 percent in the past year alone.

But as I wrote on FiveThirtyEight today, the ranks of the long-term unemployed are shrinking for all the wrong reasons.

Only about 11 percent of the long-term jobless find jobs each month, little better than in the depths of the recession. Moreover, even those who do find jobs are often able to find only part-time orshort-term work.

If they aren’t finding jobs, what’s happening to the long-term unemployed? They’re dropping out of the labor force altogether. As the chart below shows, the share of the long-term jobless who are giving up their job searches has been rising steadily, even as the job-finding rate has remained largely flat. (Not shown on the chart are the more than 50 percent who remain unemployed.)

None of this should come as a surprise to regular readers. Back in March, I wrote about how the long-term unemployed were being left behind by the economic recovery.

Many long-term unemployed are simply giving up. More than one-third will be out of the labor force a year later, meaning they’re neither working nor looking for work. Most of them say they no longer even want a job, suggesting they’re unlikely to return to the job market in the future.

The Princeton economists conclude that even a strong economy won’t be enough to rescue the long-term jobless. They find that the long-term unemployed don’t fare appreciably better in states that have comparatively strong job markets. And even before the recession, few people who’d been out of work longer than six months found stable employment.

It's tempting to blame the unemployed for their struggles, to believe they aren't trying hard enough to find jobs, or that they're choosing to subsist on jobless benefits. But the data don't support that. In April, I analyzed 15 years of Current Population Survey data and found that what differentiates the long-term unemployed is, essentially, bad luck: They lost their jobs in a weak economy.

As for unemployment benefits, cutting off so-called emergency payments hasn't spurred the unemployed back to work, as I wrote last month.

The case against extending unemployment benefits essentially boils down to two arguments. First, the economy has improved, so the unemployed should no longer need extra time to find a new job. Second, extended benefits could lead job seekers either to not search as hard or to become choosier about the kind of job they will accept, ultimately delaying their return to the workforce.

But the evidence doesn’t support either of those arguments. The economy has indeed improved, but not for the long-term unemployed, whose odds of finding a job are barely higher today than when the recession ended nearly five years ago. And the end of extended benefits hasn’t spurred the unemployed back to work; if anything, it has pushed them out of the labor force altogether.

The fight over unemployment benefits has largely faded from the headlines, and the job market as a whole appears to be improving. But for the long-term unemployed, the crisis continues -- even if no one is paying attention.

As always, check out more of our coverage of unemployment and other issues at FiveThirtyEight Economics.

James D. Friend

Senior Economist Advisor

7y

Ben - The #1 cause for Job loss in the US for the past 4 decades has had nothing to do with employee performance, but Corporate Executives Greed and cronies in Politics and economist feeding American pure garbage . Case in point .. couple days ago, just as many IT executives were ready to meet Donald Trump - they discovered that they had a sudden strike of Compassion for the American STEM Workers, promising that they will be hiring 100,000s US workers ( I believe it, when I see it ) .. what they have ignored is that millions of jobs have been cut and off-shored and replaced with less paid H1B or L1 visas temporary workers (with up to 7 years stay in the US) - Most extend their visa. India alone has more than 25 Millions STEMS workers working on US based projects , hired directly there by American Cos, or mostly indirectly thru the like of WIPRO, TCS, HCL, INFOSYS .etc ..etc. etc. ...those are millions of American who lost their means of supporting their families .. while many of those executives have become billionaires and careless about the US .. If there are so enamored by India , why don't they move with their family to live in India .. and for this matter their company HQ .. Americans are not only subsidizing the wealth building of these CEOs and their cronies in politics, but also supporting the tax welfare benefits of all these Cos. Who needs India Business Machine to be headquartered in Armonk, NY or Microsoft in Seattle, WA ..etc .etc .if Ultimately the only purpose to remain in the US is to suck the blood of the American system .. IBM could have never been born or flourished as multi-billion $ company or have made Millions for Ginnie Rometty or Sam Palmasino or anyone of their Cronies in Politics. While 1000s of American STEM workers, including 1000s with PhDs in sciences subject found themselves thrown out and replaced by Indians .. Meanwhile day in and day out our so called Nobel price winning economist have bombarded us that this is good for America and that if only we could more education could be provided to those Americans .. all will be fine .. Meanwhile among the millions of Indian working for American projects , 3/4 of them don't have even a 5th grade English or Math education .. WIPRO, TCS, HCL, INFOSYS have 100,000s of workers who barely hold a HS degree, but they all have been passed to American COs as highly educated with a Masters and Doctored degrees . When is the American worker going to walk up from this nightmare ? Trump may or may not be the answer . It started with Manufacturing jobs in early 80s, now every job in the US no matter how safe it might have been has been threatened at the core ..

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Kevin Norlin

Author - America Star Books

9y

When governments and business falls into debt there is massive job losses. I see trouble in future with rising costs and inflation that has caused property and goods to be overpriced and then will lose value and that is when the economy falls into collapse. Just something I can see happening if the trend should continue to rise the value will fall and the economy will collapse.

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Brenda A K.

Accomplished Senior HR Professional / Implementations of HRIS & ATS systems / Talent Acquistion, Onboarding & Mgmnt / Team Development / Passionate about system integrity, team success through training & sense of urgency

9y

Good information...problem is, those unemployed are being discriminated against and could be the best candidate out there! And those who get frustrated about the continued turn down because of their status, begin to start to show it during an interview....hurting their chances more. Those who continue to choose to stay unemployed, also hurt the chances of those who truly want to be a contributing part of the employed world. Very recently I offered someone a position, who throughout the process was very excited for the call to the offer. On the day he was to start, he called his first day contact and said he had a migraine - he would be in later. When later came, he told the contact he could not except the position for the fact he would loose his rent, food stamps and other free government money, which was better than going to work....so he was resigning and would not start. Mind you, throughout the process, he contacted me several times a day to see how his background check was going and to convey how happy he was to be offered a position and get back to work....that is until he found out he couldn't keep the free money and work. Those people may not be the norm, but for many, it is easier and better money to sit home and do better than getting up and being productive. If getting assistance was cut to make it real difficult to get and/or stay on to survive, maybe more would except those positions offered. This all makes me very sad....I love to work and I love to help those get back to work and do whatever I can to be part of that process.

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Terry Sprow

Owner, Sprow Composites Consulting Co.

9y

I think Kevin Carneys comments are "right on"!

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