Economy

For the Long-Term Unemployed, Job Growth Is a Mixed Blessing


Job seekers wait in line to enter a job fair in New York on Jan. 16

Photograph by Victor J. Blue/Bloomberg

Job seekers wait in line to enter a job fair in New York on Jan. 16

Misery loves company: If you lose power in a storm, you hope that the whole area lost power with you, because the utility will work hard to restore electricity when many people are affected. It’s a little bit like that with unemployment: It’s not good to be the only one around without a job, because you’re easily forgotten in the general prosperity.

That’s why today’s jobs report is a mixed blessing for the long-term unemployed. The ADP Research Institute said that private employers added 175,000 jobs in January, a respectable gain given the harsh winter. “There’s a lot of uncertainty on the weather effect, but the broader message from ADP is that the trend in private payrolls remains pretty solid,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, N.Y., told Bloomberg News.

Economists surveyed by Bloomberg predict that the Bureau of Labor Statistics will announce on Friday that overall payrolls, which include government jobs, rose by 184,000 in January. They’re predicting the unemployment rate to stay at 6.7 percent, the lowest since 2008.

But the more the overall job market recovers, the more the long-term unemployed tend to get ignored—or even worse, treated as losers or shirkers. Congressional Republicans have blocked extended unemployment benefits for the long-term unemployed this year in part because of concern that those benefits breed dependency. “I’m not against having unemployment insurance,” Senator Rand Paul, the Kentucky Republican, said on ABC’s This Week in January. “I do think, though, that the longer you have it, that it does provide some disincentive to work and that there are many studies that indicate this.”

To his credit, President Obama has put a spotlight on the plight of the long-term unemployed, both in his State of the Union address and in a White House report (pdf) last month called “Addressing the Negative Cycle of Long-Term Unemployment.”

The report says that while short-term unemployment is back to normal, “the current long-term unemployment rate is 2.5 percent, more than double the pre-financial crisis average of 1 percent, and close to the highest rate on record prior to the recession.”

The long-term jobless aren’t losers. Surprisingly, the report says: “Today, the long-term unemployed are slightly more educated on average than their recently unemployed peers: 27 percent of the long-term unemployed have postsecondary credentials, compared to 24.5 percent of the short-term unemployed.”

What they suffer from, more than anything, is an image problem, as economists’ experiments using fake résumés show. “The long-term unemployed are about half as likely as the short-term unemployed to get a callback. Interview ‘callback’ rate for otherwise identical resumes falls sharply as the length of unemployment rises, with callbacks 45 percent lower for those unemployed for eight months compared to those unemployed for just one month.”

Citing work by Northeastern University’s Rand Ghayyad, the White House report says, “Applicants unemployed for seven months need to send an average of 35 resumes to online job postings to receive just one interview, compared to just 10 resumes per interview for those unemployed for only one month.”

Vigorous job growth is good for the long-term unemployed if it means the job market is tightening and employers will finally give them the second look they deserve. But it’s bad if it means that triumphant policymakers—and myopic employers—decide to write them off as yesterday’s problem.

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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