Number of long-term unemployed workers swells as hiring lags
Job seekers fill out applications at the Coach table while attending the job fair held at the Walt Whitman Shops in Huntington Station Wednesday morning. (Oct. 9, 2013) Credit: Steve Pfost
One of the most detrimental effects of the job market's devastation during the last recession is the unprecedented number of workers who remain unemployed after six months or more.
More than four years after the end of the recession, 4.3 million workers in the United States have been unemployed for at least 27 weeks -- 38 percent of the unemployed population, according to U.S. Bureau of Labor Statistics data from August, the most recent month available. That share is down from 45.3 percent in March 2011, the peak in the aftermath of 2007 to 2009 recession.
Long Island and the nation face the same economic factors that have swelled the ranks of the long-term unemployed.
Slow hiring, evaporating jobs, outdated skills in an era of rapidly changing technology, and the stigma against hiring unemployed workers have produced persistently high levels of long-term unemployment not seen since the Great Depression, several economists said. And no end is in sight in the near term.
"We are still going to be talking about this issue two years on," said Ken Goldstein, economist at The Conference Board, a Manhattan business-research group. "It's about how deep a hole we fell into in terms of the overall country."
The latest August figure for long-term unemployment dwarfs the levels reached after earlier recessions. In June 1983, 26 percent of job hunters were considered long-term unemployed. That month was the peak following the recession lasting from 1981 to 1982, which was regarded as the worst modern downturn until the most recent one. The most recent recession, however, was far more severe.
"This high level of unemployment is precisely what you would expect given the severity and the duration of this weak economy," said Heidi Shierholz, a labor-market economist at the Economic Policy Institute in Washington, D.C.
Some employers look askance at workers who have been unemployed for long stretches.
"If you can get somebody for the same wage who has not been unemployed for very long, you tend to have a little more confidence in their marketability," said Lawrence Southwick, associate professor emeritus of finance and managerial economics at the University at Buffalo.
Federal Reserve Chairman Ben Bernanke has expressed concern that long-term unemployment dents workers' skills: "The very high level of long-term unemployment has probably led to some loss of skills and labor force attachment among those workers," he said.
Moreover, as workers' unemployment lengthens, their financial squeeze tightens. The federal emergency extensions that once provided jobless workers with as many as 99 weeks of unemployment benefits have dwindled. Workers who filed for benefits on or after June 24 of this year qualify for just the regular 26 weeks.
Though statistics for the long-term unemployed aren't published on a county level, Long Island's job market has all the telltale signs of a long-term unemployment problem: Job growth remains relatively weak, unemployment remains stubbornly high and the skills of many unemployed workers are obsolete.
The Island's unemployment rate has trended down the past few months. But at 6.2 percent in August, it remains significantly above the 3.9 percent -- considered full employment -- in August 2007, four months before the recession began, according to the state Department of Labor. Long Island has made up all the jobs it lost -- in numbers -- overall during the recession. Most of the jobs created, however, have been in low-wage areas, such as retail.
Moreover, key sectors like manufacturing, whose higher-wage jobs have a multiplier effect of generating employment in other areas of the economy, continue to shed jobs. The Island had 72,000 manufacturing jobs in August, compared with 83,400 in August 2007.
"This is no longer a manufacturing center," Goldstein said of the metro area. "It means that we are not going to bounce back quickly."
Some workers who lost jobs in areas like light assembly work have no jobs to go back to or little chance of finding something else requiring their current skills.
"Both the severity of the recession and some of the structural changes have not just eliminated the jobs they had, but the kinds of skills they had are not in demand anymore," Goldstein said.
The same holds true for the nation. The U.S. unemployment rate was 7.3 percent in August, compared with 4.6 percent in August 2007. In that pre-recession year, the long-term unemployed accounted for just 17.5 percent of unemployed workers. Now it's more than double that level.
"These figures indicate that the labor market hasn't created enough jobs to result in large reductions of the number of long-term unemployed," Martin Kohli, chief regional economist in BLS' Manhattan office, said in an interview before the government shutdown.
To be sure, the number of long-term unemployed has been declining nationwide. In the past 12 months ended in August, the number of long-term unemployed in the U.S. has dropped by 733,000, noted John A. Rizzo, chief economist for the Long Island Association, the Island's largest business group.
"So it appears that long-term unemployment is improving, but we still have a long way to go," Rizzo said.
Weak hiring is the chief cause of the stubbornly high number of long-term unemployed workers. The U.S. economy, for example, generated 169,000 jobs in August, short of the 180,000 a panel of economists surveyed by Bloomberg News expected.
"Hiring has just been so weak for so long," said Shierholz of the Economic Policy Institute, "that we just have this huge group of long-term unemployed."Long-term unemployment isn't a new experience for Chris Palermo, who lost his communications manager job at a local educational technology company in January, after two years.
The last time the 44-year-old Ronkonkoma resident was unemployed was in October 2009, shortly after the Great Recession ended. It took him 14 months to find another job. He hasn't been lucky this time either.
He is still jobless after sending out close to 500 resumes. He believes the intense competition from numerous other long-term unemployed people is the problem, but he remains hopeful.
"I'm still confident that my skills and experience will land me a great opportunity," he said.
Paulette TheaGene, 54, of Mastic, thought she would get back to work soon after losing her Medicaid coordinator's job at a home-health-care agency on Oct. 26 last year.
"I have never been without a job for a month," said TheaGene, who was at the Suffolk County One-Stop Employment Center in Hauppauge to hone her skills in Word, Excel and PowerPoint. "So I thought that in three months I could get something." But with so much competition, she said, you have to know someone to get a job.
"If you don't know someone, it's very difficult."
Medford resident Michael Lawless, 59, has been unemployed since August 2012, when he lost his sales job at a home-improvement store after six years. He got a license to become a security guard, but he said the minimum-wage pay and the cost of gas made that line of work too expensive.
Lawless was visiting the Suffolk County One-Stop Employment Center in Hauppauge recently to look for posted jobs. Lawless, who is divorced, believes his age may be working against him, because he has sent out more than 100 resumes and received few responses. He now is weighing entrepreneurship as his only option for finding a job.
"The only person that's going to hire me," he said, "is me."
