The monthly jobs report released this morning was widely hailed as great news for the U.S. economy. The 288,000 new jobs created in June and the upward revision of previous months make the case for an economy that is slowly, but surely, gathering its strength.
There is one segment of the population, though, that has not been sharing equally in the gains: the long-term jobless. The share of the unemployed who have been out of work for 27 weeks or more fell to 32.8 percent, but remains extremely high by historic standards. And what’s more, the data suggests that fall in the percentage of the long-term jobless, which had been 34.6 percent in May, is largely due to workers dropping out of the workforce rather than finding jobs.
The economy added 288,000 jobs in June, but the total number of workers out of a job for 27 weeks or more fell by 293,000. The data doesn’t break down how the new jobs are distributed among the previously unemployed, but given that the newly employed are spread across both the total number of previously unemployed persons and new entrants into the workforce, it seems clear that much, if not most, of the reduction in the number of long-term unemployed represents workers leaving the workforce rather than finding jobs.
This speaks to the intractability of the long-term unemployment problem, something Jason Furman, Chairman of the White House Council of Economic Advisers notes Tuesday, saying “we’re not there yet,” when it comes to helping the long-term unemployed.
"We've got a lot more work to do,” agreed Labor Secretary Tom Perez. “The Long-term unemployed rate is coming down but it's still too high.”
To be sure, an unknown percentage of the long-term jobless who leave the labor force are likely older workers who elect to transition into retirement. But it is a mistake to view the long-term unemployed as a largely older demographic sitting on the doorstep of retirement. An Urban Institute study last year determined that “the long-term unemployed are spread fairly evenly across the entire age distribution.”
Part of the problem is the well-documented reluctance of employers to hire someone who has been out of work for an extended period of time. The stigma of long-term unemployment becomes another obstacle to re-entering the labor force.
Federal Reserve Board Chair Janet Yellen has argued that as the economy picks up and workers are increasingly in demand, employers will be forced to put aside prejudices against the long-term jobless and many of them – even those who have left the workforce in frustration, will be drawn back in.
There has been an ongoing – and unsuccessful – effort by some members of Congress to renew a program that created a federal extension of state-level unemployment insurance benefits, which typically ends after 26 weeks. The federal extension expired in December 2013, and Republicans in the House of Representatives have blocked several attempts to renew it.
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