Greater unemployment is a casualty of every recession, and the so-called Great Recession is clearly no exception. The unemployment rate grew from under 5% to just over 10% at its peak, and has fallen during the past few months a little to 9.7%. Most forecasters are predicting only a gradual further decline in the unemployment rate during 2010, and some even predict that this rate will increase before it continues to fall again. Aside from its level, the most disturbing feature of the unemployed is its composition since many of them have been without a regular job for over six months.
Men and women who are unemployed for a relatively short time-say for no more than a few months- create relatively few problems for themselves or the economy. They can usually finance their consumption while unemployed- such as on housing, food, and other basic expenses- out of their own savings, unemployment compensation payments, and from loans from family and friends. The long-term unemployed are the major problem. And the fraction of the unemployed who have been out of work for six months or more increased greatly during the Great Recession to reach over 40% of the unemployed in February 2010. The average period of unemployment for these long -term unemployed is about 7 months. Only a year earlier, in February 2009, the long-term unemployed constituted only 22% of the total number of unemployed persons, and even that percent was up from its share of the unemployed at the beginning of the recession in December 2007.
The long-term unemployed tend to lose confidence in their abilities, their resources to finance their consumption gets depleted, and their skills begin to depreciate. They may be forced to uproot their families to move to new communities where employment is more readily available. As a result of all these factors, their family life undergoes considerable stress, which leads to marital problems, and not infrequently to divorce. These effects are all reasons why special attention has to be given to reducing the rate of long-term unemployment, and mitigating some of its harmful effects.
In most respects, the characteristics of the unemployed are similar during this recently ended recession as it has been during all prior recessions, and even the Great Depression of the 1930s. Unemployment is concentrated among the young, less educated, and low skilled. For example, according to the March 10th report of the Bureau of Labor Statistics, (seasonally adjusted) unemployment rates in February of this year was 16% for high school dropouts, 11% for high school graduates, only 8% for persons with some college or associate degrees, and a quite low 5% for persons with a bachelor’s degree and higher levels of education. Similar differences are found by age and skill level. So despite all the attention given to the growth in the unemployment of highly educated persons from the financial sector, the burden of increased unemployment is still being mainly borne by the young and less skilled.
Although more educated and older workers are far less likely to become unemployed, once they do they have a much tougher time finding jobs that pay them close to what they had been getting while employed. This is why college educated and older workers constitute a much larger percent of the long term unemployed than they do of the total number unemployed. These differences in long-term unemployment are easy to understand. Many kinds of low paying jobs are available to the young and high school dropouts in all parts of the country. This means that these workers can relatively easily find other jobs if they become unemployed, even though the new jobs may not last so long and they may have to seek still other jobs. Finding other jobs with comparable pay to their old ones is much harder for more skilled and experienced workers since they are more specialized in their knowledge. They may have to move to another region to get suitable employment.
The fraction of workers who have been unemployed for at least 6 months tends to rise for a while after a recession, even after the overall unemployment rate starts to fall. This is not surprising since the fact that a person has been unemployed for many months is an indication that he or she cannot easily find a new job. As a result, the long-term unemployed are less likely than other unemployed workers to find jobs quickly after the economy begins to pick up.
In several of the prior recessions, the unemployment rate came down slowly after the recession was over. The Great Recession ended during the third quarter of 2009, yet the unemployment rate continued to rise for a few months after that. It has now started to decline slowly, and is likely to continue to fall at a slow rate. Regrettably, the decline may be particularly slow in the present situation because Congress and the President have created too much uncertainty about, among other things, health care costs to employers, taxes on higher incomes and on businesses, taxes on carbon emissions, caps on the pay of some executives, and the new regulations of lenders. Businesses are reluctant to take on many additional employees until they become more certain about their costs, and the direction the economy is moving in.
Unfortunately, several remedies that have been suggested to reduce the rate of long-term unemployment will be ineffective. For example, many people believe the solution is to retrain the long-term unemployed. However, retraining adults of all ages, but especially older workers, have generally been failures: it is much too costly relative to the benefits in terms of new jobs.
A current proposal in Washington is to give companies a subsidy if they hire workers who have been unemployed for longer than a few months. The problem with this proposal is that the Job Openings and Labor Turnover Survey (or JOLTS-I am indebted to Ed Lazear for bringing these data to my attention-) shows that even during this period of high unemployment, there are about four million new hires every month, and slightly more separations than that when employment is falling. So the great majority of the new hires that would receive a subsidy under such a proposal to stimulate employment would have occurred anyway. The program would end up being another costly subsidy to businesses.
The only real remedy for the long-term (and other) unemployed is to have the economy grow fast, as it did after the severe recession in 1982 when unemployment peaked in December of that year at 10.8%, and then fell rather rapidly. There is no magic bullet to accomplish this, but I do believe it would help a lot if the leaders in Washington did not try to radically transform various aspects of the economy while we are recovering from a serious recession, and thereby magnify the high degree of uncertainty that is typically caused by a recession. Instead, they should be concentrating on fighting the recession, and stimulating long-term economic growth.
I love your blog very much, more more info, I will concern it again!
Posted by: mbt shoes | 09/12/2010 at 03:40 AM
I wanted to congratulation with you for the commitment and the passion you put in your posts.
Your blog is precious info source.
p.s. sorry for my english
Posted by: mascali | 09/24/2010 at 08:39 AM
This is such a great topic to discuss, I've learned a lot of things specifically regarding unemployment. Keep up posting discussio like this as t help a lot of people, one of them is me-- thanks
Posted by: Harold "buy term life insurance" Sanders | 09/29/2010 at 02:02 AM
Your article makes me feel my own shortcomings,support your article forever.Your blog is too good-looking,I like it very much,hope your new articles.
Posted by: Supra Shoes | 10/31/2010 at 10:59 PM
I'm not favoring war as a "solution" only what can be done in a hurry through leadership and public investment. I'd hope the direction would be that of a "greener" more sustainable economy and one that serves our people to a greater extent than the one we see crashing around us as a result of too much self-serving political power held by "banking" insurance, and other corporate entities. At one time the fear of a democracy was that the people would vote themselves too many benefits, instead we're suffering much more from too much corporate power and the lack of a sensible campaign funding mechanism that makes Congress something of a fully owned subsidiary.
Posted by: hemorrhoid information | 11/09/2010 at 05:00 AM
Commercial lending is still incredibly weak, (ii) consumer loans are slightly down, (iii) household starts are still very low harming the construction industry, (iv) a continuing weak retail market, (v) continued deflationary pressures (seen the CPI lately?) posing a risk to the recovery making employers more skeptical of a sustained, robust recovery, and (vi) a continually weak export market.
Posted by: lower back pain | 11/23/2010 at 10:03 AM
Searched Google and ended up here - its good so I posted the site on my Facebook account !
Posted by: Emma | 11/27/2010 at 10:45 AM
God shall wipe away all the tears from their eyes, and there shall be no more death. Neither shall there be sorrow or dying, neither shall there be any more pain, for the former world has passed away.
Posted by: Toyota tester | 12/24/2010 at 12:28 AM
Really interesting articles. I enjoyed reading it. Thanks for sharing a nice info
Posted by: armani jeans | 01/10/2011 at 01:07 PM
You first write the young and those with lower educational attainment are suffering from severe job losses. Then you go on to say that jobs are easily available to the young and those with lower education. Something doesn't jive there ...
Posted by: skincare | 03/27/2011 at 12:15 AM
Im very willing to do it as long as it's for my good. Nice to hear some good news here.
Posted by: virginia orthodontist | 04/19/2011 at 01:55 AM
His new series of black and white portraits expresses the humanity and dignity behind the pathology of persons living with severe mental illness. Accompanying the images are short narratives about their lives, hopes, and dreams. Join us on Saturday::@
Posted by: oakley sunglasses | 05/19/2011 at 09:04 PM
The long-term unemployed tend to lose confidence in their abilities, their resources to finance their consumption gets depleted, and their skills begin to depreciate. They may be forced to uproot their families to move to new communities where employment is more readily available. As a result of all these factors, their family life undergoes considerable stress, which leads to marital problems, and not infrequently to divorce. These effects are all reasons why special attention has to be given to reducing the rate of long-term unemployment, and mitigating some of its harmful effects.
Posted by: Rosetta Stone | 05/21/2011 at 03:19 AM
Of course, this only applied to dignified rifle-hunting of stags and boars.
Posted by: crystal-cooperate-trophy | 07/24/2011 at 09:25 PM
Wonderful writing and a fascinating story, Matt! I was fearful all might not end well for a moment there but boy was I smiling when that jackrabbit took off!
Posted by: crystal-model-truck | 07/24/2011 at 09:27 PM
Thanks for your comment. I liked my first one. It brought back the pain of finding out how unfair life and education can be.
Posted by: buy-solar-water-heater | 07/24/2011 at 09:30 PM
This sheds some light on the possible roots of your misogynistic tendencies Matt.
Posted by: solar-water-heater-supplier | 07/24/2011 at 09:32 PM
solution" only what can be done in a hurry through leadership and public investment. I'd hope the direction would be that of a "greener" more sustainable economy and one that serves our people to a greater extent than the one we see crashing around us as a result of too much self-serving political power held by "banking" insurance, and other
lol
Posted by: nfl jerseys | 08/24/2011 at 11:03 AM
You gave great points here. I did some research on the subject and have found nearly all people agree with your blog.
Posted by: Jersey | 08/26/2011 at 01:32 AM
Thanks for sharing, I have collect your post!
Posted by: china wholesale beads | 10/19/2011 at 02:05 AM
Hey just a thought, you would probably get more readers if you interviewed controversial people for your blog. I really like this article. It contains a lot of useful information.
Posted by: oil paintings | 11/13/2011 at 09:53 PM
Hey just a thought, I completely agree with you. I really like this article. It contains a lot of useful information.
Posted by: oil painting | 11/13/2011 at 09:54 PM
I wanna thank you for sharing with people such fresh and hepful information. impotence
Posted by: impotence | 01/11/2012 at 03:06 AM
Great!
Thanks for your sharing, is so great and i learned something from this article, i like this very much!
i waiting for your regular update!
Tks!
Posted by: oil painting | 04/12/2012 at 10:14 PM
bodybuilders style pose workout side body trophy lose muscle protein bodybuilding legal sleep supplements class building bodybuilder build posing athletes.
Posted by: Steroids | 04/27/2012 at 05:15 PM