Long-term unemployment and the jobs report
(MoneyWatch) This morning's positive jobs report certainly had some good news -- unemployment is slightly down (from 7.9 to 7.7 percent) while jobs are returning in many sectors. But labor force participation is also down a tenth of a percentage point, at 63.5 percent. And that directly points to the long-term unemployed, a group that is vulnerable to eventually giving up and leaving the labor force altogether. Earlier this week, I spoke to Gary Burtless, Senior Fellow, Economic Studies, at the Brookings Institute, and Robert Valletta, Research Advisor with the Federal Reserve Bank of San Francisco, to get their take on the current state of long-term unemployment in this country. Here's what they said:
There's some good news.
Long-term unemployment is slowing falling as the economy regains its foothold, says Valletta, who recently wrote about long-term unemployment for the FRBSF. "The decline is good because long-term unemployment is quite damaging to those who experience it, as a result of the current economic hardship that they endure and also their reduced future earnings prospects. This means that long-term unemployment is also damaging to the economy overall, because it causes human resources to be wasted," says Valletta.
- Long-term unemployment ended: 4 success stories
- Long-term unemployment: why you still can't get a job
- Job interview? 9 great tips to get you to round 2
But there's bad news, too.
Long-term unemployment is decreasing at a snail's pace -- and is still higher than it was at any point in recent history. "The peak long-term unemployment rate before 2009 occurred in 1983, when 2.6 percent of the labor force was unemployed for 6 months or longer. That's lower than the long-term unemployment rate we saw in January 2013. In general, unemployment -- including long-term unemployment -- has remained stubbornly high in this economic recovery," says Burtless.
Recovery numbers can be deceiving.
Valletta wrote in his recent piece that while people are finally finding jobs, they may be desperate and accepting jobs that pay considerably less than the ones they had before. Burtless adds that some may not be finding jobs at all -- but simply giving up. "In 2011, whereas 10 percent of workers in unemployment spells lasting longer than 6 months found a job in the 30 days after they were interviewed, about 20 percent said they stopped looking for work 30 days after that first interview when they reported being unemployed. I'm fairly confident the statistics have improved some since then...but I'm also sure a lot of the long-term unemployed give up their search for employment because the job market remains so weak," says Burtless.
This is the first installment in a 3-part series about long-term unemployment. Please check back in on Monday to read part 2, Interviewing After Long-Term Unemployment.
Popular on MoneyWatch
- Reverse cell phone lookup service is free and simple
- Bernanke sends stocks, bonds skittering
- Why geniuses don't have jobs
- Bernanke holds the line on Fed monetary policy
- Microsoft slashes Surface prices to lure buyers
- Have you mastered the art of listening?
- Look who doesn't deserve financial aid at NYU
- Fed says it will continue $85B in bond purchases