Relative to currently employed workers, those who have been out of work for more than 26 weeks (the long-term unemployed) tend to be less educated and are more likely to be nonwhite, unmarried, disabled, impoverished, and to have worked previously in the construction industry and construction occupations.
Exhibit 1 depicts the share of unemployed workers and the share of the total labor force that were long-term unemployed (unemployed for at least 27 weeks) from 1948 through 2012. The rise in the long-term unemployment share at the start of the Great Recession was far worse than at any other time in the postwar period, peaking at more than 45 percent of the unemployed. This compares with a rate of 25 percent during the 1983 recession. Even today, the long-term unemployment share remains at 39 percent.
The long-term unemployed have much more in common with workers who are newly unemployed and workers who have become discouraged and dropped out of the labor force. This suggests that solutions to long-term unemployment may be effective for other workers who have experienced other forms of labor market distress.
Exhibit 3 compares the long-term unemployed with three other groups: the employed, the newly unemployed, and the discouraged. Workers are divided into five education groups (less than high school, high school graduate, some college, college graduate, and advanced degree), five age groups (ages 16–25, 26–35, 36–45, 46–55, 56–65), four race/ethnicity groups (white, black, Hispanic, and other), two marital groups, and two gender groups.
Long-term unemployed workers are much less educated than employed workers but actually somewhat more educated than newly unemployed and discouraged workers. Specifically, 18.1 percent of the long-term unemployed are high school dropouts compared with 9.0 percent of employed workers, but 24.2 percent of the newly unemployed and 25.0 percent of discouraged workers are also high school dropouts. A similar pattern holds for the highest educated workers: 17.2 percent of the long-term unemployed hold a college degree or higher compared with 34.0 percent of the employed, 15.5 percent of the newly unemployed, and 14.5 percent of the discouraged, suggesting that increasing the education and skills of the long-term unemployed could help them find new jobs.
The age distribution is also notable because the long-term unemployed, employed, and discouraged all follow a similar pattern. For example, 14.8 percent of long-term unemployed workers, 15.7 percent of employed workers, and 17.8 percent of discouraged workers are age 56 to 65. In contrast, only 8.1 percent of the newly unemployed are age 56 to 65. Overall, the long-term unemployed are spread fairly evenly across the entire age distribution in contrast to the newly unemployed, where 40.5 percent of those job seekers are age 16 to 25. This suggests that the youngest job seekers are likely to experience shorter official spells of unemployment; if they cannot secure a job, then they drop out of the labor force, either as a discouraged worker or possibly to return to school.
Turning to racial/ethnic differences, we see that blacks, relative to other groups, are disproportionately represented among long-term unemployed and discouraged workers. They make up 22.6 percent of the long-term unemployed, 10.5 percent of the employed, 25.9 percent of discouraged workers, and 15.0 percent of newly unemployed workers. Hispanics make up a somewhat smaller share of the long-term unemployed (19.0 percent), the employed (15.7 percent), and the discouraged (20.2 percent) than of the newly unemployed (23.1 percent).
Another important demographic dimension is family type. Single parents are disproportionately likely to be long-term unemployed: They represent 13.3 percent of the long-term unemployed but only 7.6 percent of the employed. Single individuals without children are also disproportionately represented among the long-term unemployed, as well as among discouraged workers. Long-term unemployment among unmarried individuals is particularly worrisome because there is no spouse to ensure against the lack of labor market earnings.
In contrast to racial and family disparities, there are few gender differences between the long-term unemployed and other workers. Men make up 53 to 55 percent of the employed, the newly unemployed, and the long-term unemployed. However, discouraged workers are somewhat more likely to be men (59.8 percent) than are those in other worker groups.
Health limitations are an important potential obstacle to reemployment. Among the long-term unemployed, 6.5 percent have a work-limiting disability, compared with 1.8 percent of the employed. Discouraged workers have an even higher disability rate of 7.5 percent, whereas the newly unemployed have a somewhat lower rate of 5.0 percent. The long-term unemployed and discouraged workers with work limitations may ultimately turn to the Disability Insurance program
A final household characteristic and consequence of long-term unemployment is poverty. Among the long-term unemployed, 34.1 percent live in households that are below the poverty line, starkly higher than the 6.9 percent rate for the employed. The rate for discouraged workers is the highest, at 40.9 percent, but that for the newly unemployed is much lower, at 23.0 percent.
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