A job is becoming a dim memory for many unemployed (ZT)# Stock
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WASHINGTON (AP) -- For more Americans, being out of work has become a semi-
permanent condition.
Nearly one-third of the unemployed -- nearly 4.5 million people -- have had
no job for a year or more. That's a record high. Many are older workers who
have found it especially hard to find jobs.
And economists say their prospects won't brighten much even after the
economy starts to strengthen and hiring picks up. Even if they can find a
job, it will likely pay far less than their old ones did.
The outlook is unlikely to improve on Friday, when the government issues its
monthly jobs report. Economists predict it will show that employers added a
net 56,000 jobs in September.
That's far fewer than needed to reduce unemployment. The unemployment rate
is expected to remain 9.1 percent for a third straight month.
Federal Reserve Chairman Ben Bernanke last week called long-term
unemployment a "national crisis" and said it should be one of Congress' top
priorities.
When people are out of work for a year or more, their skills often decline.
Their professional networks shrink. Companies hesitate to hire them. The
problem feeds on itself.
"It's a serious threat," said Mark Zandi, chief economist at Moody's
Analytics. "A growing proportion of the labor force is becoming
disenfranchised."
Long-term unemployment sets this recession and weak recovery apart from any
other period since the Great Depression. Though the economy has endured "
jobless recoveries" before, in no previous recovery has such a high
proportion of the unemployed been out of work this long.
Labor Department figures show that for roughly the past year and a half, one
in three of the unemployed have been without a job for at least a year.
That's more than double the previous peak after the 1981-82 recession.
Businesses would have to start hiring much faster before a larger proportion
of the long-term unemployed would find work. Many employers see them as
riskier than other potential hires. Some might need additional training.
Companies aren't likely to take such risks until the economy shows
consistent strength.
Brian Wedding, a roofing contractor based in Baton Rouge, La., acknowledges
that he spends more time evaluating job applicants who have been unemployed
for long periods.
"A flag's going to come up, for sure," says Wedding, CEO of Jasper
Contractors, which employs about 800 at nine locations nationwide. "We'll
have to dig a little deeper into what's going on."
Those who have been out of work for many months describe troubling
experiences.
Linda Evans, 59, a home health care worker in Washington, D.C., has
struggled to find work since her last employer left the area three years ago
. She applies for openings online and attends job fairs. But she's found it
difficult even to get interviews.
"I don't know if it's my age or what," she said. "I never expected to be in
this situation. And I'm scared."
Long-term unemployment affects the economy in key ways:
-- It lowers skill levels, making it harder to match the unemployed with
available jobs. Harry Holzer, a Georgetown University economist, said that
once hiring picks up, employers tend to complain that they can't find people
with the new skills they need. Companies are already having trouble filling
advanced manufacturing jobs, Holzer said.
-- More people rely on government benefits. Unemployment benefits were
extended during the recession to a record 99 weeks in states with the
highest unemployment rates. The number of people receiving food stamps
topped 45 million in May. That's another record. Older workers unable to
find jobs often draw their Social Security benefits earlier. Many also have
health problems and end up on government disability programs.
-- The long-term unemployed who do find jobs again will likely do so at
lower pay. A study by the Congressional Budget Office found that the long-
term unemployed earn, on average, 20 percent less when they finally find
work.
Still, it's hard to predict the economic outcome because no one has seen
such levels of long-term unemployment before, said Steven Davis, an
economist at the University of Chicago.
"We're in uncharted territory," he said. "Those people are going to have
inferior outcomes in earnings and employment well beyond the current
weakness in the labor market."
During the recession, the proportion of the unemployed out of work for more
than a year rose, as it typically does during a downturn. Yet even as the
economy has modestly recovered, the figure has worsened.
Several factors help explain why. With the economy still struggling just to
grow, unemployment has stayed chronically high. The rate has been 9 percent
or higher in every month but two since the recession ended in June 2009.
That's the longest such stretch since World War II.
Another factor is the aging of the work force. The huge generation of 78
million baby boomers is nearing retirement. Though older workers are less
likely to lose their jobs, when they do, they typically struggle more to
find work again.
That's because older workers frequently have skills specific to their former
jobs, which they typically had held for decades.
"When they get laid off, those skills are not worth as much to a new
employer," said David Wyss, former chief economist at Standard & Poor's and
a visiting fellow at Brown University.
President Barack Obama last month proposed steps to try to aid the long-term
unemployed. His proposals include a tax break for companies that hire them
and a ban on discriminating against them in hiring. But some economists
think more drastic action is needed.
Brian Bethune, an economist at Amherst College, favors permanently reducing
the Social Security tax, a portion of which employers must pay for each of
their workers. Bethune would replace it with a sales tax.
"If you want to attack (the problem), you have to do something dramatic," he
said. "It cries out for some fairly significant change."
permanent condition.
Nearly one-third of the unemployed -- nearly 4.5 million people -- have had
no job for a year or more. That's a record high. Many are older workers who
have found it especially hard to find jobs.
And economists say their prospects won't brighten much even after the
economy starts to strengthen and hiring picks up. Even if they can find a
job, it will likely pay far less than their old ones did.
The outlook is unlikely to improve on Friday, when the government issues its
monthly jobs report. Economists predict it will show that employers added a
net 56,000 jobs in September.
That's far fewer than needed to reduce unemployment. The unemployment rate
is expected to remain 9.1 percent for a third straight month.
Federal Reserve Chairman Ben Bernanke last week called long-term
unemployment a "national crisis" and said it should be one of Congress' top
priorities.
When people are out of work for a year or more, their skills often decline.
Their professional networks shrink. Companies hesitate to hire them. The
problem feeds on itself.
"It's a serious threat," said Mark Zandi, chief economist at Moody's
Analytics. "A growing proportion of the labor force is becoming
disenfranchised."
Long-term unemployment sets this recession and weak recovery apart from any
other period since the Great Depression. Though the economy has endured "
jobless recoveries" before, in no previous recovery has such a high
proportion of the unemployed been out of work this long.
Labor Department figures show that for roughly the past year and a half, one
in three of the unemployed have been without a job for at least a year.
That's more than double the previous peak after the 1981-82 recession.
Businesses would have to start hiring much faster before a larger proportion
of the long-term unemployed would find work. Many employers see them as
riskier than other potential hires. Some might need additional training.
Companies aren't likely to take such risks until the economy shows
consistent strength.
Brian Wedding, a roofing contractor based in Baton Rouge, La., acknowledges
that he spends more time evaluating job applicants who have been unemployed
for long periods.
"A flag's going to come up, for sure," says Wedding, CEO of Jasper
Contractors, which employs about 800 at nine locations nationwide. "We'll
have to dig a little deeper into what's going on."
Those who have been out of work for many months describe troubling
experiences.
Linda Evans, 59, a home health care worker in Washington, D.C., has
struggled to find work since her last employer left the area three years ago
. She applies for openings online and attends job fairs. But she's found it
difficult even to get interviews.
"I don't know if it's my age or what," she said. "I never expected to be in
this situation. And I'm scared."
Long-term unemployment affects the economy in key ways:
-- It lowers skill levels, making it harder to match the unemployed with
available jobs. Harry Holzer, a Georgetown University economist, said that
once hiring picks up, employers tend to complain that they can't find people
with the new skills they need. Companies are already having trouble filling
advanced manufacturing jobs, Holzer said.
-- More people rely on government benefits. Unemployment benefits were
extended during the recession to a record 99 weeks in states with the
highest unemployment rates. The number of people receiving food stamps
topped 45 million in May. That's another record. Older workers unable to
find jobs often draw their Social Security benefits earlier. Many also have
health problems and end up on government disability programs.
-- The long-term unemployed who do find jobs again will likely do so at
lower pay. A study by the Congressional Budget Office found that the long-
term unemployed earn, on average, 20 percent less when they finally find
work.
Still, it's hard to predict the economic outcome because no one has seen
such levels of long-term unemployment before, said Steven Davis, an
economist at the University of Chicago.
"We're in uncharted territory," he said. "Those people are going to have
inferior outcomes in earnings and employment well beyond the current
weakness in the labor market."
During the recession, the proportion of the unemployed out of work for more
than a year rose, as it typically does during a downturn. Yet even as the
economy has modestly recovered, the figure has worsened.
Several factors help explain why. With the economy still struggling just to
grow, unemployment has stayed chronically high. The rate has been 9 percent
or higher in every month but two since the recession ended in June 2009.
That's the longest such stretch since World War II.
Another factor is the aging of the work force. The huge generation of 78
million baby boomers is nearing retirement. Though older workers are less
likely to lose their jobs, when they do, they typically struggle more to
find work again.
That's because older workers frequently have skills specific to their former
jobs, which they typically had held for decades.
"When they get laid off, those skills are not worth as much to a new
employer," said David Wyss, former chief economist at Standard & Poor's and
a visiting fellow at Brown University.
President Barack Obama last month proposed steps to try to aid the long-term
unemployed. His proposals include a tax break for companies that hire them
and a ban on discriminating against them in hiring. But some economists
think more drastic action is needed.
Brian Bethune, an economist at Amherst College, favors permanently reducing
the Social Security tax, a portion of which employers must pay for each of
their workers. Bethune would replace it with a sales tax.
"If you want to attack (the problem), you have to do something dramatic," he
said. "It cries out for some fairly significant change."