The New York Times
By: Catherine Rampell
December 2, 2010
The longer people stay out of work, the more trouble they have finding new work.
That is a fact of life that much of Europe, with its underclass of permanently idle workers, knows all too well. But it is a lesson that the United States seems to be just learning.
This country has some of the highest levels of long-term unemployment -- out of work longer than six months -- it has ever recorded. Meanwhile, job growth has been, and looks to remain, disappointingly slow, indicating that those out of work for a while are likely to remain so for the foreseeable future. Even if the government report on Friday shows the expected improvement in hiring by business, it will not be enough to make a real dent in those totals.
So the legions of long-term unemployed will probably be idle for significantly longer than their counterparts in past recessions, reducing their chances of eventually finding a job even when the economy becomes more robust.
"I am so worried somebody will look at me and say, 'Oh, he's probably lost his edge,' " said Tim Smyth, 51, a New York television producer who has been unable to find work since 2008, despite having two decades of experience at places like Nickelodeon and the Food Network. "I mean, I know it's not true, but I'm afraid I might say the same thing if I were interviewing someone I didn't know very well who's been out of work this long."
Mr. Smyth's anxieties are not unfounded. New data from the Labor Department, provided to The New York Times, shows that people out of work fewer than five weeks are more than three times as likely to find a job in the coming month than people who have been out of work for over a year, with a re-employment rate of 30.7 percent versus 8.7 percent, respectively.
Likewise, previous economic studies, many based on Europe's job market struggles, have shown that people who become disconnected from the work force have more trouble getting hired, probably because of some combination of stigma, discouragement and deterioration of their skills.
This is one of the biggest challenges facing policy makers in the United States as they seek to address unemployment. Its underlying tenet -- that time exacerbates the problem -- means that the longer Congress squabbles about how to increase job growth, the more intractable the situation becomes. This, in turn, means Washington would need to pursue more aggressive (and, perversely, more politically difficult) job-creating policies in order to succeed. Even reaching an agreement over whether to extend benefits yet again has proved contentious.
Several factors lead to this downward spiral of the unemployed.
In some cases, the long-term unemployed were poor performers in their previous positions and among the first to be terminated when the recession began. These people are weak job candidates with less impressive résumés and references.
In other instances, those who lost jobs may have been good workers but were laid off from occupations or industries that are in permanent decline, like manufacturing.
But economists have tried to control for these selection issues, and studies comparing the fates of similar workers have also shown that the experience of unemployment itself damages job prospects.
If jobless workers had been in sales, for instance, their customers might have moved on. Or perhaps the list of contacts they could turn to for leads is obsolete. Mr. Smyth, for example, says that so many of his former co-workers have been displaced that he is no longer sure whom to call on about openings.
In particularly dynamic industries, like software engineering, unemployed workers might also miss out on new developments and fail to develop the skills required.
Still, this explanation probably applies to only a small slice of the country's 6.2 million long-term unemployed.
"I can't imagine very many occupations and industries are of the type that if you're out for nine months, the world passes you by," said Heidi Shierholz, an economist at the Economic Policy Institute, a liberal research organization. "I think this erosion-of-skills idea is way overplayed. It's probably much more about marketability."
Many unemployed workers fret about how to explain the yawning gaps on their résumés. Some are calling themselves independent "consultants" or "entrepreneurs."
Mr. Smyth has been working on his own documentary film and trying to develop ideas for new TV shows with a friend. But with financing for such projects scarce, he says he is still looking for a full-time job.
Employers are reluctant to acknowledge any bias against the jobless, and many say they try to take broader economic circumstances into consideration.
"Generally speaking, when the economy's good and someone's been out of work for a year, you might look at them funny," said Jay Goltz, who owns five small businesses in Chicago. "These days I don't know if you can hold it against somebody."
Even so, old habits die hard, especially because unemployment has been unusually concentrated among a smaller group of workers in this recent recession than in previous ones, meaning that fewer workers bear the scarlet "U" of unemployment.
"From what I've seen, employers do tend to get suspicious when there's a long-term gap in people's résumés," said James Whelly, deputy director of work force development at the San Francisco Human Services Agency. "Even though everyone on an intellectual level knows that this is a unique time in the economy, those old habits are hard to break with hiring managers and H.R. departments who are doing the screening."
It does not help when job seekers are repeatedly rejected -- or worse, ignored. Constant rejection not only discourages workers from job-hunting as intensively, but also makes people less confident when they do land interviews. A Pew Social Trends report found that the long-term unemployed were significantly more likely to say they had lost some of their self-respect than their counterparts with shorter spells of joblessness.
"People don't have money to keep up appearances important for job hunting," said Katherine S. Newman, a sociology professor at Princeton. "They can't go to the dentist. They can't get new clothes. They gain weight and look out of shape, since unemployment is such a stressful experience. All that is held against them when there is such an enormous range of workers to choose from."
Though economists generally agree that getting the long-term unemployed back to work quickly is necessary to keep people from becoming unemployable, the mechanism to do so is unclear.
Most forms of stimulus try to create business conditions that foster the nation's output growth, which encourages companies to hire. Output has been growing slowly, however, and has not stoked much job creation. There have also been other indirect incentives, like a small tax break for hiring unemployed workers, but as yet their effectiveness is unknown.
Direct employment programs -- like the public works projects of the New Deal and World War II -- may be the fastest way to put people back to work, economists say. But those raise concerns of crowding out businesses and displacing other workers. Also the approach, which smacks of socialism to some, seems politically untenable at the moment.
One possible compromise might be broader-scale retraining and apprenticeship programs, suggests Lawrence Katz, a labor economist at Harvard.
"That's better than having more people just go on disability as a last resort, and then basically never return to work in their life, which many will do," he said. The Obama administration has recently thrown its support behind an effort to overhaul community college retraining programs.
"One of the reasons to focus on training for workers, even if you're not training workers for new jobs, is that when you have workers who have not been in a job for a long time, you need to do all you can to get them to look and feel job-ready when the openings do eventually come back," said Betsey Stevenson, the Labor Department's chief economist.
The real threat, economists say, is that America, like some of its Old World peers, may simply become accustomed to a large class of idled workers.
"After a while, a lot of European countries just got used to having 8 or 9 percent unemployment, where they just said, 'Hey, that's about good enough,' " said Gary Burtless, a senior fellow at the Brookings Institution. "If the unemployment rates here stay high but remain relatively stable, people may not worry so much that that'll be their fate this month or next year. And all these unemployed people will fall from the front of their mind, and that's it for them."