Jobs Market Is Improving, But the Long-Term Unemployed Still Can't Catch a Break

Niraj Chokshi and Catherine Hollander

The good news? Employers in February added jobs at a faster-than-expected pace, a further sign that the labor market is gaining vigor after years of weakness in the aftermath of the Great Recession. The bad news? Those who have been out of work the longest are still struggling. 

The plight of the long-term unemployed has become one of the more intractable problems of the economic recovery. The economy added 236,000 jobs and unemployment fell to 7.7 percent last month, down from 7.9 percent in January, according to the Labor Department's latest monthly jobs report. But the percentage of Americans who have been out of work for 27 weeks or more has remained near record highs.

The number of long-term unemployed people grew to 4.8 million in February from 4.7 million in January, according to the report. Those who have been out of work for 27 weeks or more now account for 40.2 percent of the unemployed.


 

And persistent high levels of long-term unemployment can have economy-wide ramifications, as Federal Reserve Board Vice Chairwoman Janet Yellen, widely seen as a potential successor to Chairman Ben Bernanke next January, recently warned. The nation could see baseline unemployment rise or suffer from a more-discouraged populace, she said:

To add insult to injury, those receiving federal long-term unemployment benefits will see their payments shrink as early as April because of the spending cuts under sequestration. Problems can also multiply for those who have been out of work the longest. In 2010, the Pew Research Center analyzed employment data, surveyed nearly 3,000 adults and interviewed more than 800 adults who were unemployed or had been unemployed since the recession's beginning. Close to half of those who had been out of work for six months or more said it strained family relations, and more than 40 percent said they’d lost contact with close friends. The long-term unemployed were more likely than those who were out of work for brief periods to have sought professional help for emotional issues, and to report decreased self-respect. Being out of work for six months or longer took a toll, in other words, and not just on pocketbooks.

Finding a solution to this problem has confounded economists throughout the recovery, as the scourge of long-term unemployment has pervaded many sectors of the economy. The Federal Reserve Bank of Cleveland noted in August:

The problem is far from unique to the United States, as the Economist reported last month, citing research from the Organization for Economic Cooperation and Development: "Because rich countries have seen no sustained recovery in aggregate demand since the 2008-09 global recession, more workers are losing touch with the world of work, says the OECD, a think-tank,” the magazine reported. Ireland saw the sharpest rise of any OECD country, with the share of the jobless who were long-term unemployed more than doubling from 29 percent to 63 percent.

The headline number—overall jobs added, drop in unemployment rate—in today's jobs report is probably going to snag a lot of positive headlines. But the situation isn't rapidly improving for the ranks of the long-term unemployed.