Search Penny Hill Press

Saturday, April 17, 2010

Long-Term Unemployment and Recessions

Gerald Mayer
Analyst in Labor Policy

Linda Levine
Specialist in Labor Economics

The recession that began in the United States in December 2007 has been one of the deepest and longest since World War II. One feature that distinguishes the recent recession from its postwar predecessors is the historically high percentage of unemployed persons without jobs for more than six months (the long-term unemployed). This report analyzes the trend in long-term unemployment over the postwar period and compares the individual, job, and household characteristics of the long-term unemployed during the latest recession (2007-2009) with the long-term unemployed at the end of the two previous recessions (1990-1991 and 2001). 

In each of the last three recessions, older unemployed workers were more likely than younger workers to have been unemployed for more than six months. On the other hand, during the last two recessions, an equal share of unemployed men and women were without work for over half a year. At the end of the 1990-1991 recession, unemployed women were less likely than men to have been out of work for more than six months. Unlike the two previous recessions, in 2009, unemployed workers with less than a high school education were more likely than unemployed workers with more education to have been out of work for at least six months. 

Long-term unemployment varies by industry and occupation. In 2009, workers laid off from the financial activities and information industries were the most likely to have been jobless longer than 26 weeks. Workers displaced from management, business, and financial occupations were most at risk of long-term unemployment during recent recessions. 

Unemployment affects both the individuals who are without work and their families. Households of the long-term unemployed have lower earnings and income than other households (where households include married couples, single parents, and single individuals). In 2008, the most recent year for which data are available, the long-term unemployed were more likely than all unemployed workers to live in households with incomes below the official poverty line. They were more likely than other unemployed workers to receive benefits from the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program) or be covered by Medicaid. In 2008, only 2.7% of the long-term unemployed received public assistance. 

Over half (55%) of the long-term unemployed had some type of health insurance coverage at some time during 2008, compared to 84% of employed workers. Although a majority of the longterm unemployed (58%) were homeowners in 2008, they were less likely than employed workers (72%) to own their own homes. 

As the economy recovers and employers increase hiring to meet the growing demand for goods and services, many currently unemployed workers will be able to find new jobs. However, finding work may be more difficult for the long-term unemployed if, for example, employers think their skills have deteriorated during their lengthy time away from the workplace. The longterm unemployed displaced from industries in which restructuring has occurred may also have a hard time finding new jobs in other industries, especially if the jobs require skills different from those they possess. Policies to encourage employers to hire the long-term unemployed include wage and training subsidies. Offering wage insurance and reemployment bonuses to unemployed workers may encourage them to accept jobs sooner than they otherwise might have.

Date of Report: April 14, 2010
Number of Pages: 30
Order Number: R41179
Price: $29.95

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.