The longer people stay out of work, the more trouble they have finding new work.
That is a fact of life that much of Europe, with its under class of permanently idle workers, knows all too well. But it is a lesson that the United States seems to be just learning.
America has some of the highest levels of long-term unemployment – out of work longer than six months – it has ever recorded. Meanwhile, job growth has been, and looks to remain, disappointingly slow, indicating that those out of work for a while are likely to remain so for the foreseeable future.
So the legions of long-term unemployed will probably be idle for significantly longer than their counterparts in past recessions, reducing their chances of eventually finding a job even when the economy becomes more robust.
“I am so worried somebody will look at me and say, ‘Oh, he’s probably lost his edge,”’ said Tim Smyth, 51, a New York television producer who has been unable to find work since 2008, despite having two decades of experience at places like Nickelodeon and the Food Network. “I mean, I know it’s not true, but I’m afraid I might say the same thing if I were interviewing someone I didn’t know very well who’s been out of work this long.”
Smyth’s anxieties are not unfounded. New data from the Labor Department, provided to The New York Times, shows that people out of work fewer than five weeks are more than three times as likely to find a job in the coming month than people who have been out of work for over a year, with a re-employment rate of 30.7 percent versus 8.7 percent, respectively.
Likewise, previous economic studies, many based on Europe’s job market struggles, have shown that people who become disconnected from the work force have more trouble getting hired, probably because of some combination of stigma, discouragement and deterioration of their skills.
This is one of the biggest challenges facing policymakers in the United States as they seek to address unemployment. Its underlying tenet – that time exacerbates the problem – means that the longer Congress squabbles about how to increase job growth, the more intractable the situation becomes. This, in turn, means Washington would need to pursue more aggressive (and, perversely, more politically difficult) job-creating policies in order to succeed. Even reaching an agreement over whether to extend benefits yet again has proved contentious.
Several factors lead to this downward spiral of the unemployed.
In some cases, the long-term unemployed were poor performers in their previous positions and among the first to be terminated when the recession began. These people are weak job candidates with less impressive resumes and references.
In other instances, those who lost jobs may have been good workers but were laid off from occupations or industries that are in permanent decline, like manufacturing.
But economists have tried to control for these selection issues, and studies comparing the fates of similar workers have also shown that the experience of unemployment itself damages job prospects.
Though economists generally agree that getting the long-term unemployed back to work quickly is necessary to keep people from becoming unemployable, the mechanism to do so is unclear.
The real threat, economists say, is that America, like some of its Old World peers, may simply become accustomed to a large class of idled workers.