1 October 2020

Drop in Long-Term Unemployment

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The number of Americans out of work at least six months fell by 192,000 to 3 million and is down 31% over the past year, a much steeper decline than that of any other jobless segment based on duration. The long-term unemployed now make up 31.2% of all jobless Americans. That's still historically high, but is down from 38% a year ago and 45.3% in April 2010.

Through much of the five-year-old recovery, long-term unemployment remained stubbornly high and studies showed that employers were reluctant to hire those out of work six months or longer. Economists voiced concerns that their skills had atrophied or were no longer suited to the new jobs being created.

Employers added only 142,000 jobs in August — the fewest in any month this year. But monthly payroll growth in 2014 has averaged 215,000, up from 194,000 in 2013. Since the chronically jobless represented a disproportionate share of the unemployed early in the recovery, they're now benefiting more as the labor market picks up, Bivens says.

A Federal Reserve research paper last month found that a decline in long-term unemployment accounts for nearly all of this year's drop in the unemployment rate. It has fallen to 6.1% from 6.7% in December.

Another factor that could be pushing down long-term unemployment is Congress' cut-off of extended unemployment insurance — beyond the six months provided by states — at the end of 2013. Some of those who lost benefits likely accepted relatively low-paying jobs they previously rejected, though others stopped looking for work and so were no longer counted as unemployed.

The drop in long-term unemployment, in fact, would not be welcome news if most of the jobless workers were dropping out of the labor force. But the Fed's paper found that 38% of Americans unemployed a year ago are working today, vs. 32% that left the labor force.

Click here to access the full article on USA Today. 

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