Long-Term Unemployment a Problem That Won't Go Away

Long-term joblessness does not spare older or well-educated workers.

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The U.S. economy has added jobs for 18 straight months, but those jobs continue to bypass some of the people who need them most, according to new research.

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In the first quarter of 2012, nearly 30 percent of the 13.3 million unemployed Americans had been jobless for over a year, according to a Pew Charitable Trusts analysis of Labor Department data. That figure is starting to tick downward but remains remarkably high. At its peak in the third quarter of 2011, 31.8 percent of workers had been jobless for a year or more. However, the figure was much lower at the start of the recession.

"When you look at the overall long-term unemployment rate in early 2008, it was about 9.5 percent," says Ingrid Schroeder, director of the Pew Fiscal Analysis Initiative at the Pew Charitable Trusts. "And when you look at where we are today, at 29.5 percent, you expect it to be worse [than where it was at the beginning of the recession], but it's more than triple where it was at the beginning of the Great Recession."

The data complicates the picture of joblessness in the U.S. It is by now widely known that younger people are less employed than older people and that higher education levels correlate with lower jobless rates. While that remains true, the patterns for longer-term unemployment don't follow those patterns.

For example, while unemployment for older workers is far lower than for younger age groups—6.8 percent of the labor force over 55 was unemployed in the first quarter, compared to 23.5 percent for people under 20 and 14.2 percent for those age 20-24—those older workers who are out of work are less likely than younger workers to be rehired, and therefore can stay on the unemployment rolls far longer.

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As of the first quarter of 2012, nearly 44 percent of unemployed workers over 55 had been jobless for a year or longer. That share of longer-term unemployed people shrinks as one moves further down the age spectrum. Among workers aged 20 to 24, only 21.4 percent had been unemployed for a year or more, and among workers under 20, that share is 12.1 percent.

Likewise, while education can reduce the risk of joblessness, it does not protect against long-term unemployment, notes Schroeder.

"Although people with higher degrees are less likely to become unemployed in the first place, they're just as likely as other education groups to stay unemployed for a long period of time," she says.

More education makes for less unemployment—14.1 percent of the labor force with less than a high school diploma was unemployed last quarter, compared to 3.3 percent for people with an advanced degree. However, in both of those categories, as well as for high school and college grads and people with some college, roughly one-third of the jobless had been unemployed for more than a year, ranging from 29.7 percent for those with less than a high school education to 35.6 percent for those with some college.

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For those who have been out of work for over a year, the ramifications of prolonged unemployment can be profound. Being out of work for an extended period of time causes what some call "unemployment scarring," making a candidate less attractive to an employer, who may fear a loss of job skills. Likewise, it can make for depressed future wages for that worker, says Schroeder.

And the problem will take a long time to heal. While the unemployment rate is a lagging indicator, the recovery in long-term unemployment is lagging even further behind.

"Long-term unemployment numbers are showing some slight improvement, but it's persistent," says Schroeder. "This problem is not recovering as quickly even as the regular unemployment numbers are. Long-term unemployment is this nagging thing that's still there."

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via e-mail at dkurtzleben@usnews.com.