economics

January 18, 2010

A Growing Underclass

Filed under: Uncategorized — ktetaichinh @ 6:24 am
Tags: , ,


By CATHERINE RAMPELL

Slowly but surely, longer-term unemployment seems to be becoming the norm.

While layoffs are slowing, the number of job openings relative to the unemployed population were still at a record low in November.

That means that those who have already been laid off must spend longer and longer periods looking for work. Take a look at the make-up of the unemployed last month, compared with a year earlier:

In December 2008, 22.9 percent of the unemployed had been out of work for at least 27 weeks. A year later, that portion rose to 39.8 percent. That translates to having about 4 percent of the total civilian work force categorized as long-term unemployed.

Here’s a look at how many weeks the average jobless person has been jobless for:

DESCRIPTIONSource: Bureau of Labor Statistics

The average person who was unemployed in December had been out of work for 29.1 weeks. By contrast, when the recession began two years earlier, the average unemployed person had been out of work for 16.5 weeks.

I would guess that these numbers might even understate the portion of Americans who lost their jobs long ago and have not been able to find work, as many of the laid-off have most likely dropped out of the labor force altogether after months of discouraging job searches.

These are bad trends.

Initially the labor market imperative facing Washington was cushioning the blow of layoffs with safety-net programs like unemployment benefits, so that the newly jobless could still put food on the table and make their car payments. Now the problem is figuring out what to do with this growing army of idle workers.

After all, all things being equal, the longer unemployed workers stay out of work, the less likely they may be to subsequently find work, for two reasons.

First, their skills may deteriorate or become obsolete — especially if they are in a dynamically changing industry like high technology.

Second, the stigma — both internal and external — of their unemployment grows. Studies have linked job loss to declines in self-worth and self-esteem, meaning these people will probably make less compelling job candidates.

Besides that, long-term unemployed workers will have a marketing problem: Even if their skills have not deteriorated, employers are going to worry about that big, gaping hole on their résumés anyhow.

If given the choice between a job candidate who’s been unemployed for a month and a candidate who somehow hasn’t been able to get hired for a year, wouldn’t you choose the former?

In other words, unemployment insurance benefits may tide these workers over for a few months. But eventually we will have to figure out a way to transition the long-term jobless back into the work force, whether through training or therapy or tax incentives or public service announcements or something more drastic. And for the two reasons above, the longer Washington waits, the tougher the transition for this growing underclass will probably become.

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