Posted on 04/06/2016 4:23:08 AM PDT by expat_panama
Friday’s jobs report from the Bureau of Labor Statistics, at long last, contained some good news. The labor force participation rate, long a laggard of the economic recovery, finally cracked 63 percent.
The labor force participation rate, the share of people either working or seeking employment, was 66 percent before the recession, and bottomed out at 62 percent last year. As the labor market gets tighter, wage growth has started to pick up as well. While the unemployment rate did tick up by a tenth of a percentage point, that is likely good news if it means more people have started actively looking for jobs, rather than staying out of the labor force entirely.
However, on one metric the employment situation remains stubborn: long-term unemployment. The share of unemployed persons stuck without a job for 27 weeks or longer is 28 percent, as opposed to 19 percent pre-recession. That is down somewhat from 37 percent when the economy was at peak unemployment, but still worryingly high.
In absolute terms, the difference in the quality of the recovery for the short-term and the long-term unemployed is vast. The number of people unemployed for 26 weeks or fewer is only 1.3 percent higher than it was pre-recession. However, the ranks of those who have been unemployed for 27 weeks or more have swelled 69 percent since 2006.
The Great Recession has drastically altered the landscape of the unemployed. Prior to 2008, one could expect to be unemployed for an average of 14 weeks. Even after previous recessions, the highest average unemployment duration even reached was 21 weeks in 1983.
However, after the Great Recession hit, average unemployment duration spiked to 41 weeks in 2011. It has since fallen to 28 weeks, but there is still a long way to go until it reaches the pre-recession level of around 17 weeks.
Long-term unemployment is a problem, and not only because it represents months or years of lost earnings. People who have been out of a job for a long period of time find it more difficult to get a new one, since employers are less inclined to consider resumes that show a large gap in work experience. In 2014, the latest data available, 35 percent of people who were unemployed 5 weeks or fewer found a job in the next month, ccording to a Bureau of Labor Statistics report. The rate for people unemployed over a year was just 11 percent.
Why have the ranks of the long-term unemployed remained so large in this economic recovery? One reason may be the extension of unemployment benefits. Normally such benefits can be claimed for the first 26 weeks of unemployment only, but during the recovery the period was extended to 99 weeks in many states.
Many have speculated that unemployment benefits increase the amount of time spent out of the workforce as individuals have less incentive to take jobs, a hypothesis illustrated in The Redistribution Recession by University of Chicago professor Casey Mulligan. This generates a vicious cycle—people are encouraged to spend more time out of work, which decreases their likelihood of being hired, which in turn keeps them out of a job for even longer, and so on.
Critics of this hypothesis argue that the termination of unemployment benefits may encourage people to take jobs that are not the best fit for them, reducing the unemployment rate but still causing inefficiency. However, given that longer unemployment durations reduce the likelihood of being hired, it is better to temporarily take a tolerable job than hold out for a great one. Extended unemployment benefits make choosing the tolerable job relatively less attractive.
What can be done about this? One idea, advanced by Economics21 director Diana Furchtgott-Roth, is to allow the newly unemployed to take their benefits in a single lump sum. This would not only reduce the incentive to hold out for more benefits, but would also enable individuals and families to finance moving expenses for relocation to an area of the country where the job market is better (such as the Great Plains). The downside is that this proposal might cost taxpayers more, if individuals who might be unemployed for only a few weeks get to take several months’ worth of benefits at once.
Whatever the solution, the problem of the long-term unemployed is clearly not one that has abated. Even as commentators celebrate a low unemployment rate and rising wages, remember that on some counts the recovery is not yet over.
Related article: 'Massive Recession' Already Here for Some People - Rick Newman, Yahoo
>>Even as commentators celebrate a low unemployment rate and rising wages, remember that on some counts the recovery is not yet over.<<
What “recovery?” It hasn’t even begun, except for low gas prices (which are growing to the levels approved by obozo).
recruiters just will not give anyone a chance if they have been out of work a long time.Its an impossible situation for them.
“”””Even as commentators celebrate a low unemployment rate and rising wages, remember that on some counts the recovery is not yet over.”””””
Funny stuff. This was a comedy piece, right?
Stocks pegged up another distribution day (Track Distribution Days To Spot A Market Top - Investor's) putting count now at 3 for the S&P and 4 w/ the NASDAQ. Also yesterday gold and silver got back up to $1,226.43 and $15.15. Today futures traders see metals more up and stocks more mixed; we also get the MBA Mortgage Index, Crude Inventories, and the 2:00 PM FOMC Minutes.
.--and:
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That's the tough part. The "recovery" from '08 has largely been on paper thru manipulation of statistics and thru the Fed pumping in money. The downturn will however be quite real. It will be interesting g to see if the government will be able to paper it over a 2nd time.
Not only is my wife STILL unemployed, having lost her job of 35 years during one of obamas “summers of recovery,” She also now has to pay, by law, over 200 dollars a month for health insurance, where she used to pay 35 a month for both her and myself, and that included dental.
And NOW, economists are saying we may be heading into ANOTHER recession, when we have not even had a recovery from the one that the new dim-0 congress pushed us into in 2007.
Good luck to you and your wife, especially if 0bama Recession #2 begins, as is predicted.
Fortunately, I was able to survive the cuts at my work several years ago. I’m a year away from retirement so I really did not need to be looking for new work at my age. I probably would have ended up with part-time work paying just enough to cover the 0-care premiums.
The scary part is that the traditional method of fighting recession is by the fed lowering interest rates to encourage consumption. With rates currently low there won’t be any room to cut. The alternative Keynesian method of government spending will doom us since we’re already running massive deficits.
There are folks that say that and there are some that actually believe it. Same w/ the goofy line "the only reason rates are lowered is to fund Wall Street. What's really happening is that the only employment the Fed controls consists of a couple thousand employees who work in the department, and the interest rate thing only works w/ monetary policy (inflation). There's no clear inflation so we got no clear rate raising.
To me what's scary is people deciding say, that we need a Marxist gov't 'cuase y'know that the Fed colluded w/ wallstreet and robbed the workers blah blah.
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