Just wanted to follow up on Patrice’s post about the harsh realities of long-term unemployment. As I noted earlier this week, the average duration of unemployment was higher in August (31.7 weeks) than it was at any point between January 1948 (when the Labor Department’s data series begins) and March 2010. Indeed, it was 50 percent higher than its peak following the 1981–82 recession (21.2 weeks), 63 percent higher than its peak following the 1990–91 recession (19.5 weeks), and 55 percent higher than its peak following the 2001 recession (20.5 weeks).
In a paper presented earlier this year, Princeton economists Alan Krueger, Judd Cramer, and David Cho offered a sobering look at the consequences of long-term unemployment:
“Although the long-term unemployed have about a one in ten chance of moving into employment in any given month, when they do return to work their new jobs are often transitory. After 15 months, the long-term unemployed are more than twice as likely to have withdrawn from the labor force than to have settled into steady, full-time employment. And when they exit the labor force, the long-term unemployed tend to say that they no longer want a job, suggesting that many labor force exits could be enduring. The subset of the long-term unemployed who do regain employment tend to return to jobs in the same occupations and industries from which they were displaced, suggesting that significant challenges exist for helping the long-term unemployed to transition to growing sectors of the economy.”
To understand why it’s so difficult for the long-term unemployed to secure a full-time job, consider the research findings of Brattle Group economist Rand Ghayad: “After six months of nonemployment, jobseekers experienced a dramatic drop-off in interview requests from prospective employers even if they had more work experience and better qualifications than candidates out of work for six months or less” (emphasis added).