The 3.6 million long-term unemployed account for 2.3 percent of the
nation’s workforce — still a historically high level in Year 5 of the
recovery — posing potential problems for the economy.
By Mark Trumbull
WASHINGTON — Todd Hamilton was out driving a delivery route for
Hostess when a frightening message arrived: He would have to turn his
truck around and exchange the keys for a pink slip.
His employer, long known as Interstate Bakeries, was going out of business.
Many Americans at the time fretted (needlessly, it turned out) about
whether this meant the end of Twinkies and other Hostess snack cakes.
But on that November day in 2012, Mr. Hamilton had a much more
pressing concern: He was out of work in a tough economy, along with
the other workers.
For months, he struck out in his efforts to find a similar job near
his home in south central Michigan. He looked for both truck-driving
jobs and any other options, but says the only ones available seemed to
pay near minimum wage.
Helping him survive were unemployment benefits that Congress had
extended beyond the typical 26 weeks to address the labor-market
emergency. “Without that I wouldn’t have been able to pay my bills,”
Across the nation at least 3.6 million Americans — and probably many
more than that official count — are facing a similar challenge of
To grasp what that means for the health and future growth of the
economy, consider this: The “long-term unemployed” alone account for
2.3 percent of the nation’s workforce — a share that’s almost as high
as it’s ever been during the depths of any prior recession since Labor
Department tallies began in 1948. That’s the case even though this is
not a recession but roughly Year 5 of a recovery that began officially
in June 2009.
America’s high rate of long-term joblessness is important for a couple
of big reasons, economists who study labor markets say. First is the
toll it takes on affected individuals and their families, not just
financially but in other ways, such as on their physical and mental
“The human concerns are quite serious,” says Ann Huff Stevens, a labor
economist at the University of California, Davis.
More broadly, the historic upward spike in long-term joblessness could
potentially dent the pace of U.S. economic growth for decades ahead,
she and others say.
Growth, after all, hinges on things like an economy’s overall supply
of labor and the quality of “human capital” (education and skills).
The U.S. loses productive capacity when people drop out of the labor
force, or when workers’ skills and earning potential are held back by
a long period on the sidelines.
President Obama summed up the issue this way at a recent event
enlisting business executives in efforts to hire the longtime jobless:
“We are stronger… when America fields a full team.”
Hamilton’s story, meanwhile, embodies both the challenge and the hope
Fast-forward to today, and his situation has turned around. He has a
job he’s enjoying, for good pay, and he didn’t have to move. This
happy conclusion arrived just weeks ago, after a year-long odyssey
that included finding a new career path and going through intensive
His new employer is Hatch Stamping, which makes metal parts for the
reviving U.S. auto industry.
To those trying to find their way back from joblessness, Hamilton
offers words of encouragement and advice:
“I’m 54 years old and chose a completely different profession and a
completely different direction. Don’t be afraid to do that,” he says.
“It’s hard, but there’s people out there that’ll give you a chance.”
His story is not unusual.
Many Americans are getting jobs, finally. Yet, even more than four
years into an economic recovery, it’s still taking some 37 weeks on
average for the jobless to find new work — about twice as long as
during past economic expansions.
What can be done to solve the problem? Economists say the biggest
answer must be improvement in the overall job market — the ultimate
salve whether people have been out of work for a short or lengthy
stretch. Another important answer, though, may be targeted programs to
help ensure that would-be workers don’t get lost on what can be an
Hamilton, for example, followed a multistep course that was ultimately
successful. Stages along the way included the following:
–Realizing he needed a new career.
–Learning he was eligible for counseling help under a
government program for displaced workers.
–Selecting a new occupation (operating computer-controlled
manufacturing equipment) that held the promise of job opportunities
and good pay.
–Finding a local group (the Jackson Area Manufacturers Association)
that would train him, and persisting in the intense, four-month
Even after he was trained, Hamilton had several more months of looking
and waiting before he landed the job he started in January. In
December, Congress had let the extended federal unemployment benefits
expire amid partisan battles over broader budget issues.
The still-high level of long-term unemployment explains why Congress
is debating whether to renew those benefits, even though the nation’s
official unemployment rate has fallen from 10 percent in 2009 to 6.6
“We have huge numbers of people who have been out of work for more
than a year,” says Jerry Rubin, who heads the nonprofit group Jewish
Vocational Service of Greater Boston, part of the nation’s patchwork
of public, private, and charitable support for the unemployed.
In Massachusetts alone, he says, “thousands and thousands… lost
their benefits” at the end of 2013.
For now, some big questions are unanswered on how harmful to the
economy this sustained surge in long-term unemployment has been.
One is this: How many Americans have already stopped looking for work
because they are discouraged — and thus are not counted as officially
unemployed? The number could be 2.5 million or more, some researchers
say, although the Labor Department officially counts just 800,000 in
its “discouraged” category.
A follow-on question: How many people will return to the labor force
when and if the job market gets stronger?
The so-called participation rate in the job market has been generally
falling in recent years. Demographics explain a goodly chunk of the
trend, since growing numbers of baby boomers are reaching retirement
Still, many economists expect some uptick in participation as the
economy continues to improve.
What’s promising is this: By many indicators the long-term unemployed
don’t look vastly different from the people who lose jobs and find
them again more quickly. Both groups have similar profiles when it
comes to things such as education and occupation.
Why is that a hopeful thing? It suggests that the long-term
unemployment problem has more to do with a weak rate of job creation
than with what economists call “structural” issues, such as when large
groups of people have obsolete skills.
One sign of this promise: The official level of long-term joblessness
has been declining fast. A big caveat is that, again, not all the
long-term jobless show up in that chart.
Older workers can face particularly difficult hurdles in getting back to work.
Deborah Wetterich of Cincinnati lost her job at a medical lab last
May, when her employer decided to consolidate its nationwide
operations. Since then, she’s looked for new work in her field but has
had only two job interviews and no offers.
She has lost jobs and changed jobs before, and has never had much
trouble finding work until this time.
“You get into health care and you think it’s untouchable” as a growing
segment of America’s service economy, she says. “I’ve come to realize
that nothing is secure.”
Part of the challenge, she believes, is that when a lab job does open
up, employers will choose younger applicants who are also trained in
the field. Employers “can pay them probably $10 an hour less than they
would pay me,” says Ms. Wetterich, who is in her mid-50s.
Wetterich is not eager to retrain for a new occupation, but the
difficulties in finding lab work have prompted her to start applying
for other kinds of jobs as well.
With her unemployment benefits now expired, she and her husband now
live solely off the income from his custodial job, plus some support
from their children who live nearby.
The long-term unemployed aren’t just people age 50 and older, however.
Rather they’re a cross section of the labor force.
Christopher Pafford, age 33, has a degree in chemistry and experience
in both the private and public sectors. But he, too, has been out of a
job more than half a year.
He and his family recently moved from Tennessee to the outskirts of
Atlanta for a job his wife found. Mr. Pafford says his challenge is
that, while there’s more demand for people with expertise in organic
chemistry or polymers, his background is in the environmental
chemistry of drinking water or waste water.
“What everybody is wanting I don’t have,” he says.
Pafford took his most recent job, with the Tennessee Health
Department, in part to broaden his skill range, but his section was
forced into job-cut mode before he could get the desired training.
What steps could policymakers take to help people like Wetterich and
Pafford get back to work?
Some targeted efforts might be able to help the long-term unemployed
fare better. Here are some ideas:
–General job-search skills. The unemployed often need support or
counseling on things such as how to look for job openings, fine-tune a
résumé, and sharpen their presentation during job interviews, Mr.
Rubin at Jewish Vocational Service says. “They still actually have
very marketable skills” but often lack confidence, he says.
–Support for retraining. New skills are often the ticket to a job. The
optimal model is a local one in which employers and local institutions
such as community colleges work together to match training with
demand, says Gregory Acs, a labor expert at the Urban Institute in
Even as this grass-roots model grows, federal dollars may have an
important role to play. Unemployed workers often lack money to pay for
courses, and federal funding has been falling far short of the
national need, Rubin says.
–Skills certification. In some cases, workers have up-to-date skills,
but the challenge is to prove that to a potential employer. Exams that
verify skills could make these applicants stand out as employable, Mr.
–Wage subsidies. Some economists have proposed temporary incentives
that offer payroll-tax breaks or wage subsidies to employers who hire
people who have been long out of work.
That’s not a perfect solution. Some of the subsidized hiring would
have occurred anyway, for example. And for each winner from the ranks
of the long-term unemployed there might be a loser (another job seeker
who missed out as a result). But Ms. Stevens of UC Davis says it’s
“probably worth trying” all the same, to help break the cycle whereby
the long-jobless look steadily less employable.
This means consumer demand and business investment from the private
sector, but it also means government policies that support job
formation rather than getting in the way. Some ideas being proposed by
the Obama administration or Republicans include corporate tax reform,
free-trade deals that can open export opportunities, and public
spending on needed infrastructure.
Some economists say an important piece of the jobs puzzle is to
encourage more new-business formation — which is currently running at
a slower-than-normal pace.
It’s not just that unemployed people might find jobs at new firms,
it’s also that they can help to create them. That was the story for
David Wadler when he faced a long jobless period in the early 2000s.
He had experience in the high-tech industry and, after his long bout
of unemployment, battled head winds to launch Twistage, a company that
helps businesses share video content online.
Eventually that wrote a ticket for 10 jobs, beyond just his own.
Mr. Wadler, in New York, knows what it feels like to run into dead end
after dead end. “The fear of rejection might be paralyzing,” he says,
whether someone is submitting job applications or seeking financial
backing for a start-up. But he urges people to stay focused on their
goals and persist.
Hamilton, in Michigan, echoes that idea. His experience felt like
being in a dark bedroom, and getting a job was like when “you open the
curtain and the sunlight finally shines in.”
His job came thanks to an improving economy that opened up more
manufacturing jobs, but also because of his own strategizing, study,