One of the most depressing aspects of the 2007-2009 recession was the unprecedented rise in long-term unemployment. This is depicted in the chart below.
But while long-term unemployment has been falling over the past four years, it is nonetheless far more prevalent than it was before the recession. In 2015, a full 18.9 percent of the unemployed had been jobless over a year, nearly double the rate from 2007. As can be seen in the table below, unemployed workers in 2015 were more likely to be out of work 52 or more weeks, 27 to 51 weeks, and 15 to 26 weeks than unemployed workers from 2007[i]:
All Unemployed Workers by Duration of Unemployment
|52 Weeks & Over||27–51 Weeks||15–26 Weeks||5–14 Weeks||Less than 5 Weeks|
Source: Bureau of Labor Statistics
There are many reasons to worry about the economic and human costs of long-term unemployment. Long-term unemployment has been associated with depression, anxiety, loss of self-respect, and strained family and social relationships. Moreover, the long-term unemployed seem to face discrimination in the job market. Employers are less likely to call back applicants who have been out of work six months or longer; and some job postings explicitly tell the long-term unemployed to not bother applying.
In 2014, three researchers from Princeton University looked at the probability of reemployment for workers who had been unemployed six months or longer during the Great Recession. They found that fifteen months later, just 11 percent of the long-term unemployed had landed steady, full-time work. About 30 percent were still unemployed and searching for work, while another 34 percent had stopped looking.
From a policy perspective, there are three points worth noting. First, the long-term unemployed became ineligible for Unemployment Insurance (UI) benefits in January 2014 when Congress decided to cut funding for workers who had been unemployed over 26 weeks. As a result, in 2015 over a quarter of all unemployed workers were ineligible for UI. For the sake of alleviating the pain of long-term unemployment, it makes sense to restore this funding. Second, fiscal stimulus should be pursued in order to create job opportunities and boost today’s low hiring rate. Third and finally, it may be worth investing in worker re-training programs. While it’s clear that job training programs aren’t crucial to the overall recovery – the problem is lack of jobs, not lack of skills – they may be important for the long-term unemployed. In France, an experimental program providing the long-term unemployed with unpaid jobs at virtual companies seems to be improving workers’ confidence while also keeping their skills from deteriorating.
Nearly seven years after the end of the recession, long-term unemployment remains a serious problem. Last year there were over 2.3 million workers who had been unemployed six months or longer, including more than 1.5 million who had been unemployed over a year and more than 700,000 who had been unemployed over two years. Many more prospective workers have simply given up the search for work. This is a serious national crisis that is not getting the attention it deserves.
[i] In 2013, the Bureau of Labor Statistics began tracking the number of workers unemployed 99 weeks or longer. While we don’t have 2007 data for this statistic, it’s worth noting that there were more workers unemployed 99+ weeks in 2015 than were unemployed 52+ weeks in 2007.