Friday, April 5, 2013

Unemployment in America - Who's Suffering the Most?

I have posted on the issue of long-term unemployment in the United States and how, this time, it really is different in previous postings.  A recent article by Rob Valletta at the Federal Reserve Bank of San Francisco takes a more in depth look at the demographics of the long-term unemployed.

Let's open by looking at the number of civilian workers in the U.S. that have been unemployed for 27 weeks and longer:

In February 2013, 4.797 million workers had been unemployed for 27 weeks and longer, 140 percent more than were unemployed at this point in the recovery after the 2001 recession.

Here is a graph showing the average duration of unemployment:

In February 2013, the average duration of unemployment was 36.9 weeks, 85 percent (or more) longer than those who were unemployed at this point any recovery since the end of the Second World War.

While all of this looks grim, it's even worse for the very long-term unemployed.  The unemployment share of those American workers that have been out of work for 99 weeks or longer has risen from about 6 percent of all unemployed workers in 2009 to a whopping 14 percent in late 2012!

So, who are America's long-term unemployed?  Here are a series of bar graphs that look at unemployment duration by age, education, race and ethnicity with each group's incidence of short-term (under 6 months) and long-term (over 6 months) unemployment expressed relative to the overall share of civilian unemployment for that category:

To help you a bit, when the ratio number is above 1 (the faint blue dashed line), that category is over-represented relative to its share of overall employment.  To summarize, long-term unemployment as seen in light blue is over-represented in workers under the age of 24, among workers with some college or less and among black, Hispanic and other ethnicities.  Short-term unemployment as seen in dark blue is most frequent among younger workers, those who are less educated and those who are black, Hispanic or other ethnicities, very similar to what is seen among the long-term unemployed.

As shown here, there is one major sector of the economy that has suffered from more short- and long-term unemployment:

Surprisingly, the manufacturing sector is showing a relatively good employment picture compared to construction which was devastated after the housing market imploded.

Let's close by looking at the job-finding prospects for the long-term unemployed, comparing the monthly job-finding rates for the expansion between 2005 and 2007, the downturn between 2008 and 2010 and the recovery in 2011 - 2012:

Not unexpectedly, the graph shows us that, over the three time periods sampled,  the longer a person is unemployed, the lower their chances of finding a job.  What is interesting to note is that the chances of finding a job in the most recent recovery (in red) improved well above the normal trend line for those unemployed for 20 months and longer, the worst off among the unemployed.  Unfortunately, these Americans have only a 10 to 15 percent chance of finding a job in any given month.  This slight improvement may suggest that the elevated level of long-term unemployed will slowly dissipate as time passes.  Unfortunately, as time passes, the odds of another recession rise, particularly in light of the ongoing crisis in Europe.

The persistence of long-term unemployment after the Great Recession suggests that there is a good chance that there is a permanent, structural increase in the unemployment rate and that the new base level of inter-recessional unemployment  could well be in the 7 to 8 percent range rather than the 5 percent range that we are used to during an economic expansion.


  1. The drop in unemployment came even as Americans come back into the labor force to resume the hunt for work.

  2. The Guardian of this week dec 13 2013 reported that in UK the new retirement age will be 70 yrs old; That means that instead of Capitalism they will turn to Comunism, why? very easy where you will find out a job or somebody will give you an opportunity if you are over 60 yrs old.? So probably the US will be a better place to live than Europe...