By Brian Pittelko, W.E. Upjohn Institute for Employment Research (Originally posted April 4, 2011 on the Upjohn Institute blog.)
In a previous post, I wrote about how the growing long-term unemployment caused a change in the Bureau of Labor Statistics (BLS) calculations. This week, I will examine the changing demographics of the long-term unemployed (those unemployed longer than 26 weeks). “What is behind the rise in long-term unemployment?” by Daniel Aaronson, Bhashkar Mazumder, and Shani Schechter is a recent paper from the Federal Reserve in Chicago that looked at the causes and consequences of long-term unemployment.
Part of the rise in long-term unemployment was the extension of unemployment benefits. Mazumder discussed whether unemployment benefits prevent people from returning to work in another paper, the subject of an earlier blog post.
According to the authors, the other cause of the rise in long-term unemployment is that before the start of the recession, the characteristics of the unemployed have changed. The authors compared the additional rise in unemployment to previous modern recessions. They found that about half of the unexpected rise in long-term unemployment was due to pre-recessionary demographic changes. In the 1980’s, the long-term unemployed were often less-educated males in the machinery and manufacturing sectors. However, by 2009, long-term unemployment had spread more evenly across gender, education and occupation. Professionals and workers in business services, finance, and insurance are all more likely to be unemployed for longer durations of time now than in the 80’s.
Additionally, the paper found that long-term unemployment was not following historical patterns which suggest that the national unemployment rate should be lower. Worse still, they suggest that “high levels of long-term unemployment typically persist well into an economic recovery, since firms tend to hire the long-term unemployed last.”
The authors suggest that the effects of the recent recession will be with us for a long time. The return to full employment may take years, and for people who are already suffering through long-term unemployment, the outlook is bleak.
Brian Pittelko can be reached at Pittelko@upjohn.org.