Persistent Scars of Long-Term Joblessness

Hugely elevated levels of long-term unemployment remain one of the worst and most persistent scars from the Great Recession, as underscored yet again in the mediocre August jobs report. All in all, about 4.3 million Americans have been out of work for six months or more.

For those workers, the chance of getting a job gets slimmer and slimmer as time goes on, skills degrade and employers’ biases harden. Even if those workers do become re-employed, it is often for lower wages or worse work.

Granted, the number of Americans that count themselves among the long-term jobless has declined sharply over the last three years, dropping by about 2.4 million from a peak of 6.7 million in 2010. But the number remains significantly elevated, and hundreds of thousands out of work for long spells have simply given up and dropped out of the labor force.

The slowly improving economy is not really improving for the long-term unemployed: Short-term joblessness has actually declined a smidge since 2007. Long-term joblessness is up 244 percent.

Now, economists are debating how strong the recovery really is, given that the job reports have weakened through the year. “This report says that we’re barely creating enough jobs to keep the unemployment rate falling from its current high levels,” said Justin Wolfers of the Brookings Institution. “Policy makers have been looking for a signal that the recovery has become self-sustaining.  This report doesn’t provide it.”

Stuart Hoffman, chief economist at PNC, noted that payroll jobs have grown at a monthly pace of 186,000 in 2013. He called it a “solid number, with no signs of the labor market slowdowns that emerged in the spring and summer in each of the three previous years.”

But the further you dig into the numbers, the worse they look. “The jobs count may be up, but for recent college graduates and middle-aged adults seeking positions the situation is grim,” said Peter Morici of the University of Maryland. “Adding in part-timers who want full-time employment and discouraged adults who have abandoned searching for jobs, the unemployment rate becomes 13.7 percent.  This figure has fallen because more adults appear reconciled to permanent part-time status.”