Of all the mediocre and bad news in the June 2012 employment situation report from the Bureau of Labor Statistics, there is one item that deserves serious concern: the fact that long-term unemployment continues to plague the labor market.
The average duration of unemployment is stuck at about 40 weeks, where it has been for about a year. Even in the worst recessions of the past six decades, this figure has rarely exceeded 20 weeks. The median number of unemployed weeks stands at about 20 weeks, down from 22 weeks a year ago and 25 weeks two years ago, which is promising. But this means that a smaller and smaller segment of the labor force is suffering longer and longer periods of unemployment.
Holding Back Recovery
The long-term unemployed are the real black spot on the slow economic recovery — not discouraged workers, which have declined by about one-third the past two years;
not the declining labor-force participation rate, which is mostly a demographic feature of retiring baby boomers.
The real trouble with the labor market is that, since the end of the recession three years ago in June 2009, the number of workers unemployed for over half the year (26 weeks) has increased by about 1 million (from 4.4 to 5.4 million). Over this same time period the number of unemployed workers overall has declined by over 1.9 million, and the unemployment rate fell from 9.5% to 8.2%. As a result 42% of the unemployed have been out of work for at least six months. If the overall recovery is stuck in second gear, the long-term unemployed are going in reverse…
via The Long Shadow of Long-Term Unemployment | The Exchange – Yahoo! Finance.
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