Long-Term Unemployed Struggle to Find - and Keep - Jobs

By Ylan Q. Mui, The Washington Post

19 April 14

or the long-term unemployed, finding a job is hard — but keeping one may be even harder.

New research tracking people who have been out of work for six months or longer found that 23 percent of them landed a job within a few months of the study. But a year later, more than a third of that group was unemployed again or out of the labor force altogether.

The findings are the latest in a bleak but growing body of literature suggesting long-term unemployment has become a trap that is difficult to escape.

Economists say that means the long-term unemployed could become a permanent underclass, left behind by the nation’s broader economic recovery.

“It’s not like when you get back to work you’re safe,” said John Fugazzie, who founded Neighbors-­Helping-Neighbors, a mentoring group for the jobless, and is in the midst of his second bout of unemployment since the recession. “The economy is a lot worse than people want to admit.”

Several factors are blamed for perpetuating the vicious cycle. Some economists argue that workers’ skills deteriorate during long spells of joblessness, making them less employable. Others counter that desperate workers are accepting jobs that are unstable or a poor match for their abilities, often for less money than they were making before.

In a paper for the Brookings Institution, former White House chief economist Alan Krueger looked at data on the long-term unemployed from 2008 to 2013 and documented the incidence of repeat joblessness. About 36 percent of those workers were in a job 15 months later, according to his analysis. A closer look at the data revealed something even more disheartening: Only 11 percent were in steady, full-time jobs. ​​

“It appears that reemployment does not fully reset the clock for the long-term unemployed,” Krueger, now at Princeton University, wrote with two colleagues there.

Roderick Negron is a textbook example of this. The New Jersey resident had worked at Sony for 23 years before he was laid off in 2011 after the sale of his division. He was out of work for nearly 11 months before getting hired as a consultant for a printing company at $10,000 less than his previous salary. But Negron said he was happy just to have a job.

Negron parlayed that job into what was supposed to be a permanent position at Canon a year later. He was considered one of the success stories at Neighbors-Helping-Neighbors, and he offered advice to those who were still out of work.

Then, earlier this month, he got a pink slip from Canon as sales in his department flagged. Now, Negron is back at square one.

“Once you go through that experience, you’re always mindful of the fact that it can happen again,” he said. “It brought to light the fragility of employment and the things that you take for granted.”

Negron’s experience echoed prescient research conducted nearly two decades ago by economist Ann Stevens, now at the University of California at Davis. She looked at data tracking workers from 1968 to 1988 and found that 41 percent who lost their job once were unemployed at least once more during that period. Almost all of the subsequent job losses occurred within five years of the first one.

Stevens’s study did not explore the fate of the long-term unemployed. Still, she found that multiple spells of unemployment depressed workers’ wages by 9 percent even after several years.

“I think of the unemployment issue as another form of inequality,” she said in an interview. “In some sense, it’s the same people experiencing repeated unemployment and repeated job ­losses.”

Other economists have demonstrated just how difficult it can be for the long-term unemployed to land a job in the first place. In research for the Federal Reserve Bank of Boston, Northeastern University economist Rand ­Ghayad sent nearly 5,000 mock applications in response to job postings. He found that résumés showing unemployment lasting more than six months were uniformly rejected — even when those applications listed significant work experience. In other words, Ghayad said, companies were more willing to hire people with little experience who were recently unemployed than they were to hire long-jobless candidates with relevant experience.

Ghayad said this dynamic creates what he called “the jobless trap,” in which those who are unemployed are increasingly likely to remain that way. He places the blame solely on the businesses doing (or not doing) the hiring.

“There’s no occupation where you lose your skills in one month, between six and seven,” he said. “I wouldn’t blame the unemployed people for 1 percent of what’s happening.”

Others worry that the longer workers are unemployed, the less employable they become. The concept is known as hysteresis in economic circles and historically has referred to countries such as Japan that got mired in years of slow growth. A study of Swedish workers in the 1990s found that a full year of unemployment translated into a five-percentile move downward in a distribution curve of skills. Some economists are worried the United States could be entering a similar period.

“Good evidence shows that both skill depreciation and stigma effects matter,” said James Sherk, senior analyst at the Heritage Foundation. “Workers do become less productive . . . and employers view long-term unemployment as a negative signal of employee quality.”

The resolution of this debate could have a profound impact on the biggest policy battles in Washington. Congress is fighting over whether to extend unemployment benefits to the long-term jobless. Democrats argue that the payments are necessary to tide over workers during a difficult job search, but Republicans say the strengthening recovery is all the help they need.

Meanwhile at the Federal Reserve, Chair Janet Yellen said Wednesday that writing off the long-term jobless would be premature. In a speech in New York, she cited the high rate of long-term unemployment as an argument for keeping the central bank’s easy-money policies in place. But other officials, including some within the Fed, question how much more can be done to help those workers.

But Negron thinks he has found a silver lining. The first time he lost his job, he said, was crushing. Negron had expected to work at Sony until he retired; he lived five minutes from company headquarters. Instead, he was thrown into a new world of online job boards and digital networking.

This time, Negron said, he is returning to the game prepared.

“I think I’ve got the tools. I think I’ve got the skills I’ve learned from that period and the understanding,” he said. “I know what I’m facing.”