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Losing Your Job In A Recession Means A 30 Percent Chance Of Being Long-Term Unemployed

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"Losing Your Job In A Recession Means A 30 Percent Chance Of Being Long-Term Unemployed"

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Unemployed workers waiting to enter a career fair

Unemployed workers waiting to enter a career fair

CREDIT: AP

Someone who lost her job at the peak of the recession in 2009 had a 30 percent chance of staying unemployed for an extended amount of time, according to an analysis by Wonkblog’s Matt O’Brien.

Brien compared the overall unemployment rate and and a broader measure of unemployment that includes people who have given up looking for jobs or who can only find part-time work with the odds of becoming long-term unemployed, or out of work for six months months or longer. He found that “there’s no reason to think that the long-term unemployed are necessarily lazy or lacking skills” and it’s just that “more unemployment means more long-term unemployment.”

This was particularly true for the latest crisis. In the late 1990s, when unemployment was lower than 4 percent, the chance of ending up out of work for a long stretch was less than 5 percent. Those odds increased to 15 percent after the bursting of the tech bubble in the early 2000s. But when the unemployment rate peaked at 10 percent in 2009, the chances jumped to 30 percent. Those odds are still high. “[I]f you become unemployed today, you still have a higher chance of becoming long-term unemployed than you would have at the worst point of the tech bust,” he notes. There are still 3.5 million people who have been out of work for 27 weeks or more, accounting for more than 35 percent of all unemployed people.

Brien broke the data down at the monthly level, but the same patterns hold true year to year. Ben Casselman of FiveThirtyEight found that the single biggest predictor of being out of work for a year or more is the state of the economy when someone loses his job. He found that if the unemployment rate increases by one percentage point, the chances of someone staying unemployed for at least a year go up by about 35 percent.

Casselman also looked at whether individual characteristics like job, age, race, sex, education, or others impacted the chances of becoming long-term unemployed, but found that none of them compared to the impacts of the broader economy. Other research has found that this group of unemployed workers looks similar to those who have been unemployed for shorter periods of time when it comes to gender, career field, and health issues, and while they tend to be a bit older and more racially diverse, they also tend to have more education.

Beyond having the bad luck of losing a job during an economic catastrophe, what does set these workers apart is how they are viewed by prospective employers. Someone who is out of work for six months or more will get fewer calls back for an interview than someone who is employed but lacks the appropriate experience. One study found that being unemployed for longer than nine months is equivalent to losing four years of experience from a resume. They face steep odds in getting a job: just a third of the long-term unemployed between 2008 and 2012 were employed 15 months later, and even among those who found work, just 11 percent had a steady, full-time job.

Casselman also looked at whether receiving long-term unemployment benefits impacted the length of time people spent out of work, as some claim that the benefits themselves keep people from finding new jobs. But he didn’t find that to be the case. Given the job search requirements for receiving the benefits, research has found that recipients actually spend more time job hunting, while other research has found that benefits don’t discourage people from getting a job. Yet the long-term unemployed have been going without benefits all year because Congress let them lapse and Republicans have blocked any deal to extend them.

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