US Long-Term Unemployment / Why so many people have been out of work for so long

Democrats generally point to the anemic recovery, in which weak demand for goods and services results in less hiring. The cyclical nature of unemployment, they say, can be addressed with more government stimulus.

Republicans tend to focus more on structural problems, in which the education and experience levels of the unemployed don’t match what employers say they want in job candidates. More government spending, they say, would be a waste of money because it won’t close the skills gap. Some Republicans also think that extended unemployment benefits are a disincentive to job hunters.

Recently, though, economists in both camps have come to agree that something bigger — and more insidious — is at work: Unemployment causes social scarring. In other words, the stigma of long-term joblessness is, by itself, causing persistent joblessness. This is true whether you have a college degree or a high-school diploma, whether you are middle-aged or 20- something. It’s also true whether your collar is blue or white.

When researchers at the Federal Reserve Bank of Boston sent fake resumes to employers with job openings, the length of time candidates had been out of work mattered more than their job experience in determining who got called in for an interview. Applicants who had only recently lost a job but had no relevant experience were far more likely to be called than those with many years of experience who had been out of work a long time. So much for the skills gap.

One way to thwart such bias is to make sure the unemployed understand that their chances of getting work improve if they are in a job-training program or working at least part-time. Not sitting idle is paramount. This is where government can help.

Unfortunately, the U.S.’s job training effort is a mishmash of 47 programs spread across nine agencies. At $18 billion a year, it’s also costly. The effectiveness of those programs is hard to quantify because of poor data collection and management oversight, the Government Accountability Office concluded in 2011.

Only five of the 47 programs could demonstrate whether a positive outcome — meaning a trainee got a job, for example, or obtained a new credential — could be attributed to the program. About half the programs hadn’t had a performance review since 2004.

Chosen excerpts by Job Market Monitor

via Long-Term Unemployment Is Turning Jobless Into Pariahs – Bloomberg.