The long-term unemployed... The ravages of time

[xchrom]

http://www.economist.com/node/21531005

AMERICA’S great labour market slump continues to cast its pall over the economy, leaving one lonely group in particular shrouded in shadows. Over 6m Americans, more than 40% of all those unemployed, have now been out of work for more than six months. Most of these, 4.5m, haven’t worked for a year or more. This crisis of long-term joblessness is unprecedented in the post-war period.

Lacklustre growth is the main problem. The pace of new hiring crashed during the recession and has scarcely recovered since. Although America’s unemployment rate is down a percentage point from its peak, this is little cause for cheer. Workers are escaping unemployment more slowly than at any time since 1948. The long-term unemployed are struggling most; in the year to June, the newly jobless were three times more likely to find new work in a given month than the long-term unemployed. Many of the latter have given up hope. For the first time in decades, jobless workers are more likely to drop out of the labour force (and cease to be counted as unemployed) than to get a job (see chart). Bit by bit, a large mass of American workers is losing touch with the labour market.

One might expect unemployment to carry less stigma after a deep recession—bad times, rather than personal shortcoming, being the more likely reason for a sacking. Yet a worker’s lifetime earnings are hurt more by a job loss in a weak economy. An experienced worker laid off when unemployment is at 9% faces a reduction in lifetime earnings nearly twice that of someone sacked when the rate is 5%: a loss of 20% on average, according to new work by Steven Davis and Till von Wachter. The unemployed increasingly face discrimination in the hiring queue, often enough that Barack Obama proposes to ban the practice. Such a rule might encourage employers not to hire at all, for fear of legal action.

Still, there are some signs that the long-term jobless can be coaxed back into the working world. New research by economists Michael Elsby, Bart Hobijn, Aysegül Sahin, and Rob Valletta shows that movement in and out of the labour force is actually more fluid than has been previously assumed. The ranks of the unemployed are often replenished by those moving from outside the labour force—that is, from not looking for work at all—into active jobseeking. The long-term unemployed pay close attention to the state of the job market and resume their job search in optimistic periods. A burst of optimism early this year, corresponding to a period when employment was growing by more than 200,000 jobs a month, coincided with a surge of workers back into the labour force to seek work. This may have reversed in recent months. In July, just 10% of workers polled by Gallup said it was a good time to find a decent job, down from 17% in April. The horizon has only grown cloudier since then.

[LiberalEsto]

1. I don't need coaxing

I need a decent job

[Johnny Noshoes]

4. Afrigginmen....

It has only been a month for me but it seems like forever. I lost my job when the company went bankrupt. I've been spending time learning new skills - Photoshop, Excel, probably a few others that I hope might help. So many places look for people with all of these skills and I get the impression they won't pay much. Then there are the scams - fake schools, fake job offers - I can't imagine what it is like when your out of work for a really long time and I sure hope I don't find out.

[LiberalEsto]

6. Three years this month.nt

[Johnny Noshoes]

7. Damn that's awful....

nt.

[supernova]

2. "Coaxing"? Bullshit!

I don't need "coaxing" back into the workforce. I need jobs to apply for for which I am qualified. I want and need to work, but there is a dearth of things that I am suited to. And millions are like me.

What weasel language, "coax."

Bah!

:grr:

[Johnny Noshoes]

5. I know what you mean...

I know what you mean about qualified. There are lots of things I did in the 32 years I worked at my job. None of it was formal training or education. I learn best by doing and I'm a fast learner but at 57 nobody wants to hear - Yeah but I can learn it as I go. Like I said up thread I have been taking on line tutorial classes and it has been the most note taking and study I've done in over 30 years. I'm hoping it works and I can land a job.

[the_chinuk]

3. So, exactly WTF is this article trying to say anyway?

Gotta love out-of-touch economists.

[Igel]

8. A few things.

Background:

The unemployed have traditionally been more likely to find jobs in the past. Even when unemployment was higher, few people were unemployed for 6 months or more. This kept them in the job market.

This is bad for two reasons: Long-term unemployment reduces one's life-time earnings by a wide margin; long-term unemployment discourages workers and they drop out of the labor market.


New information:

It's been assumed that once a worker left the job market s/he was unlikely to return. This assumption hasn't been overturned, but it's been modified: A worker who's left the job market is more likely to return than economists had previously thought, s/he can be coaxed back in more easily than was previously thought. Still, a large portion of the long-term unemployed do drop out and apparently stay out of the labor market.


"Coax" is an okay word. If you're applying or at least looking for work, you're in the labor market even if you have no job. It's the people who have stopped looking and have "settled" for being unemployed that need coaxing, who need some reason to return to the humiliation of looking for work week after week without any results. People in a lot of communities aren't resilient in the way they need to be, in the circumstances they need to be resilient in.


Background not in the article: Job turnover has been at a record low for the last few years. Even during the Depression, when unemployment was far higher, you had far lower rates of long-term unemployment. Part of this was the more agrarian nature of the US economy, but a lot of it was due to workers' not needing uber-specialized skills. Laborers could find work, quit and move on and quickly be replaced. "On the job training" might take a day or two, and competition from another state or overseas was less. Jobs were community based, and not like they are now--lots of people leave their communities to find work. Employer-employee relationships were also more personal, even if they were at times harsher.