Bringing Down the Unemployment Rate Depends on Getting the Long-Term Unemployed Back to Work

A few weeks ago, the Washington Post’s Wonkblog published an interesting chart that broke down the nation’s unemployment rate by workers’ duration of unemployment. The key takeaway is that in order to bring down the nation’s jobless rate in any substantial way, we need to get the long-term unemployed — those individuals out of work for at least six months — back to work. These workers, who face unique obstacles to finding jobs, represent a significant share of the nation’s unemployed.

Applying a similar analysis to unemployment in California tells a comparable story: California’s unemployment rate remains high — at 8.9 percent — in large part because long-term unemployment remains high. As of August, slightly more than 40 percent of the state’s unemployed workers had been out of work for at least six months. If these workers all found jobs tomorrow, California’s jobless rate would be below 6 percent. Consistent with the national trend, the number of long-term unemployed Californians is getting smaller, but it is not clear that this is because they are finding work. Some of this drop may due to individuals giving up their job searches altogether — meaning they are not considered part of California’s labor force and thus not counted as unemployed. A recent national analysis by the Oregon Office of Economic Analysis found that the long-term unemployed are around twice as likely to drop out of the labor force as to find a job.

Even though long-term unemployment has started to decline, it remains close to historic highs. Today in California, the share of workers who have been out of work for at least six months is far higher than at any point during the recessions of the early 1990s and 2001. Also, while California’s overall unemployment rate is down from recent highs, it is still higher than at any point during the 2001 recession.

There is clearly the need for a sustained policy response focused on helping these individuals find work and giving them the support they need amidst a difficult economy. Unemployment can create a stigma that makes employers reluctant to hire those who have been out of work, and the long-term unemployed lose crucial skills while facing the significant financial challenges that accompany long durations of joblessness. Unfortunately, as our executive director Chris Hoene blogged about last week, federal policymakers, by not funding the federal government, are jeopardizing the economic recovery and disrupting key services. If the federal shutdown continues, California’s Employment Development Department warns this could mean a delay in unemployment benefits and reduction of vital services such as job training for unemployed Californians — exactly the kinds of services and support the long-term unemployed need today.

— Luke Reidenbach