The Mystery of Long Term Unemployment Rates

Current long-term unemployment rates are a mystery to economists. Long-term unemployment is defined as unemployment that lasts more than six months. Salim Furth writes in his article the Wall Street Journal, titled “What’s Causing the Increase in Long-Term Unemployment?” that although short-term unemployment has recovered to a normal level, long-term unemployment remains as high as 2%. Furth rules out extended unemployment benefits and lingering effects of the Great Recession as causes, explaining that few people considered long-term unemployed have been jobless for two years. Many have only been jobless for one year.

In their article for the Center for American Progress titled “The State of the U.S. Labor Market: Pre-January 2015 Jobs Release”, Michael Madowitz & Danielle Corley note that the long-term unemployement rate is “almost 50 percent higher than its highest prerecession level on record” (https://www.americanprogress.org/issues/economy/news/2015/01/08/104030/the-state-of-the-u-s-labor-market-pre-january-2015-jobs-release/). The long-term unemployed make up 30% of all unemployed persons.

Ben Casselman writes in his article for FiveThirtyEight titled “More Of The Long-Term Unemployed Are Finding Jobs” that the long-term unemployed should be hopeful as he indicates there is reason to believe things will improve (http://fivethirtyeight.com/datalab/more-of-the-long-term-unemployed-are-finding-jobs/). He brings up a good point about the vicious cycle of timing and the job search pursuit. The longer a person is unemployed, the more difficult their job search becomes. Employers are skeptical about blank spaces in resumes and this becomes more and more difficult to explain as time unemployed increases.

My hope is that as Baby Boomers age and retire, more jobs will be made available. In particular, some of these jobs may be high skilled and require even two or three people to do the job an older, more experienced Baby Boomer would have had. The Baby Boomers’ ages in 2015 will range from 51 to 69. According to a 2014 Gallup Poll conducted by Rebecca Rifkin titled “Average U.S. Retirement Age Rises to 62” Rifkin finds just that (http://www.gallup.com/poll/168707/average-retirement-age-rises.aspx). 62 is the highest reported retirement age by Gallup polls in the past 23 years. This increase in retirement age for the Baby Boomers could explain a lack of job vacancies. If this figure is accurate, the Baby Boomers will not be gone from the labor force for at least 11 more years. If the growth in average retirement age continues to grow, it will take even longer.

Employers need to be more aware of the state of our economy and sensitive to the fact that this cycle could keep the long-term unemployed from ever being hired. Instead of scrutinizing time spent unemployed, employers should review applicants skills and the value they could add.

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