Thursday, March 27, 2014

Who Are America's Long-Term Unemployed?

As has been repeatedly pointed out, the employment picture in this recovery is different than other recoveries and, as shown on this graph, is largely due to the elevated number of Americans that are unemployed for long-periods of time:

A paper "Are the Long-Term Unemployed on the Margins of the Labor Market" by Alan B. Kruger, Judd Cramer and David Cho looks at what has happened to America's long-term unemployed since the so-called "end" of the Great Recession and who they are.

America's long-term unemployed are a persistent problem for the economy as you can readily see in the first graph from FRED, and are pushing up the overall unemployment rate.  As you can see on this graph, a very significant 37 percent of America's total unemployed workers have been unemployed for 27 weeks or more:

While this is down from its post-Great Recession peak of 45.3 percent in April 2010, it is still three times the average level of long-term unemployed seen between 1948 and the beginning of 2008. 

In contrast, as shown on this graph, the number of civilians unemployed for 5 to 14 weeks (the short-term unemployed) is very close to normal levels looking back to the mid-1970s:

Here is a graph showing the percentage of total unemployed Americans that have been unemployed for 5 to 14 weeks:

It's interesting to see that the percentage of workers who have been out of work for 5 to 14 weeks is nearly the smallest proportion of the total unemployed looking all the way back to 1948.

Certain parts of the economy have a higher proportion of long-term unemployed than others; 36 percent were previously employed in sales and service and 28 percent were employed in blue collar jobs.  When these long-term unemployed do return to work, they tend to return to similar occupations that they held prior to being laid off.

Among workers who had been unemployed for 27 weeks or longer in a given month in the period between 2008 and 2012, fifteen months later:

- 30 percent were unemployed and looking for work
- 34 percent weren't working and weren't looking for work
- 36 percent were employed

Drilling down further into the data, of the 36 percent that were employed:

- 11 percent had been employed full-time for at least 4 months
- 14 percent had been employed for at least 4 months but at least 1 month was part-time
- 11 percent had been employed for some but not all of the previous 3 months

Long-term unemployed workers have problems finding jobs in all states, even those with low unemployment rates; among the 14 states with the lowest unemployment rate (average of 4.4 percent), long-term unemployment grew to 4.5 times its historical average.  In general, the authors found the following about the long-term unemployed:

1.) They tend to be younger with 40 percent of the long-term unemployed being between the ages of 16 to 34, 29 percent being between the ages of 35 and 49 and 31 percent being older than 50 years of age.

2.) They tend to be less educated with 18 percent having no high school, 35 percent having a high school diploma, 20 percent having some college and 18 percent having a Bachelor's Degree or higher.

3.) They tend to be unmarried with 44 percent having never been married, 37 percent being married and 19 percent being widowed, divorced or separated.

4.) Racially, there is a strong connection with long-term unemployment as shown here:

African-Americans make up 22 percent of the long-term unemployed compared to just under 13 percent of the total population and Hispanics make up 19 percent of the long-term unemployed compared to 16 percent of the total population.

In general, the longer that a worker is unemployed, the less time they spend looking for a job as the frustration over not having employment builds, compounding the problem.  Because of this, they become increasingly marginalized, particularly since the data shows that, in a given month, only 11 percent had achieved full-time employment for a continuous four month period since they returned to employment.  Sadly, many of these discouraged workers simply choose to leave the workforce simply because there are not sufficient job openings to accommodate them.

1 comment:

  1. just a thought; i see you're doing screenshots of the FRED graphs and linking to the originals, co-incidentially something i'm now forced to do as my use of them begins with an emailed newsletter...but you could save that step by using the embed code that FRED now gives at the bottom of each graph; i tried that last week with two graphs on my latest post on Marketwatch 666, a blogspot, and it worked well, even though it's an old html 4.1 blog..