Long-term unemployment at all-time high, looks like it's here to stay
Today, I wrap up Unemployment Week here at the Ticker by looking at long-term unemployment, which is at an all-time high.
Last Friday, the government told us that the official unemployment rate in the U.S. is 10.2 percent, the highest since the crippling early '80s recession.
But that only tells us part of the story, so I've been unpacking the data all week.
On Monday, I told you that the U.S. unemployment rate is now higher than Europe's (even France's!). On Tuesday, I examined the alarmingly high teenage unemployment rate (27.6 percent). Wednesday was Veterans Day, so I took at look at unemployed vets, focusing on the high joblessness among veterans of the recent wars in Iraq and Afghanistan. Yesterday, I examined unemployment among Hispanics.
Today, it's long-term unemployment, which the government defines as being unemployed for at least 27 weeks.
The percentage of Americans who have been unemployed for more than six months is at its highest level since the government began keeping this statistic in 1948, according to data from the Labor Department's Bureau of Labor Statistics.
According to the BLS data, 35.6 percent of all unemployed Americans have been out of work for at least 27 weeks. That number was hit in September and held in October.
That's a pretty staggering number and it speaks to the length and depth of the Great Recession, which began in December 2007 and officially ended in September, when GDP turned positive. Though it probably doesn't feel that way for the unemployed.
The 35.6 percent figure is much higher than highs set during the most recent big recession, the one that lasted from January 1980 to November 1982. As I've written before, unemployment is a lagging indicator, and unemployment rates continue to rise after recessions end. The previous high for long-term unemployment prior to this recession came in June 1983, clocking in at 26 percent.
If you look at the BLS data, long-term unemployment is a fairly recent phenomenon.
Double-digit long-term unemployment didn't kick in on a consistent basis until 1958. Prior to that, it hung in the low-to-mid single digits, bottoming out at 2.9 percent in May 1953. These were the postwar boom years, driven by manufacturing and construction, as Americans helped build new suburbs all across the country.
Double-digit long-term unemployment really took hold in 1959, as the nation entered a recession, and then another one in 1960, creating a six-year funk. But then the Vietnam War years kicked in, young men were drafted into the military, and hiring in the military-industrial complex pushed long-term unemployment back down into the single digits until the mid-'70s oil crisis recessions.
By 1991, however, double-digit long-term unemployment took firm hold and it looks like it's simply part of the economy now, thanks to lengthier unemployment benefits and shifting labor patterns, as more low-end jobs go overseas.
Here's what's important to take away from this: Long-term unemployment appears to have decoupled from the overall unemployment figure.
At 10.2 percent, the national unemployment rate is near but not higher than the nation's all-time unemployment rate of 10.8 percent, set in November 1982.
But the long-term unemployment rate in November 1982 was 19.5 percent and topped out during that recession seven months later at 26 percent.
Another way to look at it: During the previous worst recession, in the early '80s, the long-term unemployment rate was a little more than double the national rate.
During this recession, it's more than triple the national rate. And it's closing in on four times the national rate.
Those long-term unemployed workers create a lasting and heavy burden on the system, which will not only impede recovery -- think of an overloaded airplane struggling to get off the runway -- but may also build in higher unemployment rates than we're used to, for good.
-- Frank Ahrens
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November 13, 2009; 11:39 AM ET
Categories: The Ticker | Tags: BLS, unemployment
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