The Department of Labor reports that the unemployment rate continues to decline – in July 2014, the economy added 288,000 jobs, bringing the jobless rate down to 6.2 percent.
But even as the jobs picture is improving, the plight of the “long-term unemployed” remains a persistent problem.
Some FAQs about long-term unemployment:
What does it mean to be “long-term unemployed”?
The U.S. Bureau of Labor Statistics (BLS) defines workers as “long-term unemployed” if they’ve been jobless for 27 weeks or more.
How many workers fit into that category?
BLS reported that about 3.2 million Americans were long-term unemployed in July 2014, including roughly 2.1 million Americans who’ve been out of work for a year or more. Long-term unemployed workers account for about 33 percent of the unemployed in July.
What’s the demographic makeup of the long-term unemployed?
For the most part, these analyses find that society’s more vulnerable workers are also more likely to be long-term unemployed.
- The Urban Institute, for example, found that among long-term unemployed workers in 2012, 18.1 percent were high-school dropouts, 13.3 percent were single parents, and 34.1 percent were living below the poverty line.
- BLS found that among male workers, 41 percent of black men have experienced a spell of long-term unemployment, versus 19 percent of white men and 26 percent of Hispanics. This analysis also found that 41 percent of men without a high diploma have been long-term unemployed, versus just 11 percent for men with a four-year degree or more.
- Pew, however, reports that even though highly-educated workers are less likely to become unemployed in the first place, they are just as vulnerable to long-term joblessness once they become unemployed. According to Pew, 31 percent of unemployed workers with a bachelor’s degree in 2012 were jobless for a year or more.
Which industries and occupations were hit hardest?
While long-term unemployment cuts across all sectors, these analyses have found that the hardest hit workers were in manufacturing, construction and leisure and hospitality.
Where is long-term unemployment most severe?
The Pew Center on the States has created an interactive map showing state-by-state concentrations of long-term unemployment.Here are the top states as of December 2013 with the highest percentage of long-term unemployed workers as a share of all unemployed:
- New Jersey – 46.6 percent
- Florida – 46.2 percent
- Rhode Island – 44.6 percent
- New York – 44.4 percent
- Connecticut – 43.4 percent
- North Carolina – 43.3 percent
- Georgia – 41.8 percent
- Illinois – 41.3 percent
- Mississippi – 40.8 percent
- California – 40.5 percent
Why is long-term unemployment a problem?
In comparison to past recessions, many more people who’ve lost work have been unemployed long-term. In May 2010 – after the official end of the recession – long-term unemployed workers accounted for as much as 46 percent of the total unemployed, according to BLS. In July 2014, the long-term unemployed still accounted for 33 percent of all unemployed. During the 1982-83 recession, by contrast, long-term unemployed workers made up at most 26 percent of the jobless.
One major issue is that many of long-term unemployed workers may end up never rejoining the workforce. As the JEC report puts it:
As job searches drag on, skills atrophy and networks fade, making it harder for the long-term unemployed to find work. In addition, technological advancements and shifts in high-growth sectors of the economy likely mean that the location of and knowledge and skills required for jobs of the future will not be the same as those of the jobs that were lost in the recession.
And if these workers do eventually find work, they are likely to do so at lower wages, says BLS. Four years out, men who had been long-term unemployed end up with average hourly wages that are about 7 percent lower than when they had a job.
There are potentially broader fiscal impacts of long-term unemployment as well. Pew argues that in addition to increased federal spending on unemployment insurance and other safety net programs such as SNAP (formerly food stamps), the federal government collects less revenue in income and payroll taxes. Even though the number of long-term unemployed has declined by 1.1 million over the last year, the economy will feel the effects of long-term joblessness for some time to come.