Bleak Prospects for Long-Term Unemployed

March 31, 2014

A new study indicates that the long-term unemployed run the risk of never reentering the workforce, says the New York Times.

Alan Krueger, Judd Cramer and David Cho, economists at Princeton University, show how the future job prospects of the unemployed deteriorate more rapidly the longer a person is out of the workforce.

  • Only 11 percent of the long-term unemployed in a given month return to full-time employment a year later.
  • The unemployed -- compared to the employed as a whole -- are younger, more likely to be single and less well-educated.
  • But comparing the long-term unemployed with the short-term unemployed, the long-term unemployed tend to be older and unmarried. Forty-four percent of the long-term unemployed were never married, while 20 percent are widowed, separated or divorced.

The long-term unemployed are only counted as "unemployed" if they are still looking for work (those who are no longer looking for work are not considered part of the labor force, and therefore are not included in unemployment figures). As such, why do those who do persist in looking for work become less and less successful in finding a job as time goes on?

  • The study provides two rationales. One is that workers become discouraged over time and search less intensively for a job.
  • The second is that employers discriminate against the long-term unemployed (expecting, whether valid or not, that there must be a reason that they have been unemployed for so long).

The paper also notes that the long-term unemployed tend to be older and more highly-educated than the short-term unemployed. This could mean that their labor is simply more expensive but that their prospects would improve with an improved economy.

The study also provides evidence that very few are able to find jobs in new industries -- that transitioning workers to growing industries such as the health care sector, for example, is a challenge.

Source: Binyamin Appelbaum, "Unemployed? You Might Never Work Again," New York Times, March 20, 2014. Alan Krueger, Judd Cramer and David Cho, "Who Are the Long-Term Unemployed and What Happens to Them?" Brookings Institution, March 20, 2014.

 

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