Odds Aren't Improving For Long-Term Unemployed Workers

There is still be a huge number of people who have been out of work for six months or more. Steve Inskeep talks to David Wessel, director of the Hutchins Center at the Brookings Institution.

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STEVE INSKEEP, HOST:

All right. The government releases its monthly snapshot of the job market tomorrow. Employment numbers may tick up, may tick down. But either way, there will still be a huge number of Americans who have been out of work for six months or more.

David Wessel has been tracking people for whom the recession effectively never ended. He is director of the Hutchins Center at the Brookings Institution and a contributor to The Wall Street Journal.

David, good morning.

DAVID WESSEL: Good morning, Steve.

INSKEEP: So how many people count, now, as long-term unemployed?

WESSEL: Well, the pool of people who've been out of work for six months or more - which is the conventional definition - is unusually large now.

INSKEEP: Mm-hmm.

WESSEL: At last count, it was about 40 percent of all the people unemployed, 3.9 million people, three quarters of whom said they've been looking for a job for a year or more, and that only counts the ones who tell the government they're still looking for work. Many more have stopped looking, they've, quote, "retired," they've gone on disability or they're otherwise on the sidelines of the economy.

INSKEEP: And this has been one of the most disturbing features of the economic trouble of recent years, because the longer you're out of work, the harder it can be to get back in. But, the economy is improving. People are hiring. Are there odds for the long-term unemployed to find jobs soon?

WESSEL: Well, in today's economy, which is a little better, but still not good, the odds aren't very good. There's some interesting experiments by economists who, they see a job posting, they submit resumes and they've discovered that the longer you've been out of work, the less likely you are to get a callback. And generally, there's some thinking that maybe people get less aggressive in looking for work if they've been out for a long time.

There was a recent study by Alan Krueger of Princeton, a former Obama advisor. They talked to people who said that between 2008 and 2012, they've been out of work for six months or more, then they check back with them a year later, and what they found is most of them aren't working. Of those who had been working, many had only sporadic employment or are forced to work part-time, involuntarily. Only 11 percent of the people, a year later, had found steady full-time work.

INSKEEP: This is a vicious cycle. It seems like the more desperately you need work, the less likely you are to get a second look from an employer.

WESSEL: Exactly. That's the problem.

INSKEEP: And then there's the question of who the long-term unemployed are. If you look at the demographics, David Wessel, is there a big difference between people who've been out of work six months or more and everybody else?

WESSEL: Basically, there's - you're more likely to be out of work, in general, if you're younger, if you're unmarried and you have less education compared to the whole population. But when you compare the people who've just lost their jobs recently to people who've been out of work for a really, really long time, what jumps out at you is there's not a lot of obvious differences. They're not concentrated in any one industry, they don't look particularly different than the other unemployed and they're not in any one part of the country.

INSKEEP: Meaning, that the long-term unemployed aren't, for example, all 55-year-old men - which is a category that we hear a lot of concern about.

WESSEL: Exactly. They are little more likely to be over 50 than the short-term unemployed, but in general, the similarities are more striking than the differences.

INSKEEP: Do they have a better chance as the economy continues to improve, if the economy continues to improve?

WESSEL: Well, they definitely have a better chance. But the question is, are these people going to come back into the job market, come back and get jobs again when things get really back to normal, whenever they do? And there's actually an interesting debate on that right now. One side of economists - Mr. Krueger among them - say these people are never coming back to work. They think that basically, they're on the sidelines permanently and the best thing we can do is help short-term unemployed get jobs before they become long-term unemployed.

But interesting, Federal Reserve chairwoman Janet Yellen challenges that. She says that if employers were hiring more, if the job market were better than - as she put it this week - a significant share of the long-term unemployed would be working. And her opinions are really different than those of those other economists because she actually has power. And what that means is she's going to keep interest rates very low because she thinks if we keep on this track we'll get people back into the jobs, rather than having (unintelligible) on the sidelines forever.

INSKEEP: David, thanks.

WESSEL: You're welcome.

INSKEEP: David Wessel of Brookings, regular guest on this program. And again, that number, 3.9 million long term unemployed.

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