Long Time No See – A Job

There’s nothing hypothetical or academic about being unemployed.  It may be all well and good to pontificate about human nature.  Are we really all lazy sloths who would rather grow roots to the sofa while watching 24 hour marathons of Duck Dynasty than seek employment?  Meanwhile back in the very real world we got this release from the Department of Labor on December 6, 2013:

“The number of persons unemployed less than 5 weeks declined by 300,000 in November, partially reflecting the return to work of federal employees on furlough in October. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 4.1 million in November. These individuals accounted for 37.3 percent of the unemployed. The number of long-term unemployed has declined by 718,000 over the past 12 months.”

The long term unemployed was “essentially unchanged.” There’s no way to sugar coat this. That’s not good news.  So, who are these people?  We know what they are not.  They are not necessarily less educated.  Nor are they confined to a single ethnic group.  However, they do share two characteristics — they tend to be older, and they tend to be those who did not leave their previous employment voluntarily.  [Atlantic]

We can see some “improvement” since November 2012.

Long Term Unemployment 2013The number of long term unemployed, defined as those who have been seeking work for at least 27 weeks was a dismal 4,784,000,000 as of November 2012, improving slightly to 4,066,000 in November 2013.  A pie chart of the unemployment duration at present shows:

Unemployment Duration 2013In short, about 27.6% have been unemployed for five weeks or less, 23.8% have been unemployed between five and fourteen weeks, and 53.6% have been out of work for more than 15 weeks.  Of the latter category, 16.2% have been unemployed between 15 and 26 weeks, and a disappointing 37.3% have been unemployed for more than 27 weeks.

Unemployment over 27 weeks 2013So, why can’t the numbers break down below the shaded portion of the graph?   One recent study from Northeastern University provided a less than appealing observation:

“…it doesn’t matter how much experience you have. It doesn’t matter why you lost your previous job — it could have been bad luck. If you’ve been out of work for more than six months, you’re essentially unemployable.”  [WaPo]

Some employers have expressed fears that prospective employees may have “out of date” skills, or could be a “short timer” who will take any employment available only to leave when something better comes along. [WaPo] A Brookings analysis put this more elegantly, if not more optimistically:

“A worker’s success at finding a job tends to decline with the length of unemployment. The percentage of all unemployed who found work within a month fell from 28 percent in 2007 to 17 percent in 2011. But in both years, workers were much more successful finding jobs in the first weeks of joblessness. In 2007, for example, workers who had been unemployed less than 5 weeks had a 37 percent chance of landing a job within a month. Workers reporting unemployment longer than six months had only a 16 percent chance of finding employment in the coming month.

The Great Recession has thus pushed jobless workers into unemployment-duration groups with poor odds of finding work, even after economic recovery. From 2007 to 2011, the fraction of the nation’s unemployed who were unemployed six months or longer increased from 18 percent to 44 percent.”  [Brookings]  (Emphasis added)

Brookings posits three elements creating this situation. First, that the long term unemployed do not have the skill sets most commonly sought by employers.  Secondly, that the longer a person is unemployed and the more frequent the refusals the less time people spend seeking a job.  Note that this element appears to substantiate the right wing mythology of the Lazy Loafer, but it has to be combined with yet another element. Third, there is some outright discrimination going on.   Again, Brookings explains:

“A third reason: employers (legally) discriminate against job applicants who have been idle for a long time. Catherine Rampell of The New York Times reviewed job postings on Web sites like Monster.com and Craigslist and found hundreds “that said employers would consider (or at least ‘strongly prefer’) only people currently employed or just recently laid off.”

Even employers who do not impose outright bans on hiring the long-term unemployed may nonetheless follow a de facto policy of discrimination. Faced with résumés from three qualified applicants – a fresh graduate, a worker dismissed one week earlier when his employer went bankrupt and a laidoff worker who has been unsuccessful in 18 months of job search – it is hardly surprising that employers often assume the third applicant has the most problematic job record. Indeed, in a buyer’s market, it may not be rational for employers to expend the effort to dig deeper.”  [Brookings]

In short, the prospective employer made assumptions about the long term unemployed worker which may or indeed may NOT have been a realistic appraisal of the individual’s employ-ability.   And, we need to look more deeply at that “buyer’s market” inserted into the last line.

The right wing mythology/ideology clings like lint to the notion that “there’s always work to be done,” all the unemployed have to do is “just get a job.”   This is the point at which we need get a JOLT, or the Job Openings Labor Turn-Over figures.   We have some from 2013:

“Taken together, the September level of job openings remained at 3.9 million. However, there were 11.3 million job seekers in September (unemployment data are from the Current Population Survey and can be found here). That means there were 2.9 job seekers for every job opening in September. In other words, for nearly two out of every three job seekers, there simply were no jobs.”  [EPI]

And, the numbers weren’t all that different when the Bureau of Labor Statistics released the last JOLT statistics on December 10, 2013:

“There were 3.9 million job openings on the last business day of October, little changed from September,  the U.S. Bureau of Labor Statistics reported today. The hires rate (3.3 percent) and separations rate (3.1 percent) were also little changed in October.”

Less politely, the situation in September 2013 when there were almost 3 people seeking a job for every one that was open, wasn’t improved by the time the November numbers were released in December.   This doesn’t often impede the extension of ideologically driven retorts from the right — Why don’t these people move? Find a job in another field? Open their own business? Mow lawns? Shovel snow?

We human beings are adaptable.  That’s in part why there are so many of us, but there are some limits.  When faced with unemployment people can expect some “stages,” rather like grief. [WIJC][PsychToday] Assuming the individual has the support necessary to get to the analysis and action stage, and most do, there’s the realistic matter of the job market.

There are two ways to stop being counted among the long term unemployed.  (1) Get a job and (2) Stop looking for employment.

Getting a job requires action from two quarters.  There must be a person looking for the work and there must be an employer offering a position.  For the millionth time — we need to recall the First Law of Personnel Management — There is one and only one rational explanation for hiring someone: There is more demand for goods and services than current staffing levels can meet.  Firms which hire “because there will be a tax credit,” or “because Aunt Minnie’s boy needs a job,” or for any other extraneous rationale are NOT business models to be emulated.

Contrary to the bloviating of the right, tax policy has precious little to do with rational hiring decisions.  One thing to notice when this contention is raised is that the reporters are basing the conclusions almost always on opinion surveys not actual HR Department activities.   It is perfectly possible for an executive or manager to whine to the Heavens about “taxes” while hiring staff during periods of increased demand.  For example, in the 1950s the top income tax bracket, those earning over $400,000 annually, was 84.375% [Stanford pdf] the unemployment rates in 1951 and 1952 were 3.3% and 3.0%. [BLS]

If we assume that no one’s repealed the laws of supply and demand, and we further assume that most employers haven’t lost their minds and do, in fact, make rational hiring decisions, then the issue boils down to (1) how to create jobs by increasing demand for goods and services, and (2) how to keep people motivated to seek out those jobs.

One way to stabilize demand while promoting job searches is, inconveniently for some persuasions, the extension of long term unemployment insurance benefits.  Why?

“The macroeconomic benefits of UI (keeping spending power in the economy from falling as far as it otherwise would) are large and completely unambiguous, while the microeconomic impacts (for example, the incentive it may provide people to search either more or less hard for work while collecting benefits) are small and can actually cut in very useful directions for the economy.” [EPI]

The supporting study (pdf) demonstrates what the hypothetical and academic discussions do not.  That is, the extension of unemployment insurance benefits help to maintain demand, acting as our old friend the automatic economic stabilizer, while the individual (in his microeconomic world) has a cushion to sustain the basics while continuing to look for work.  Phrased less elegantly — Want to see a person hit the fatalistic last stage of “unemployment grief?” Pull the rug out from under him.

There are some immediate and some structural answers to our long term unemployment situation.  In the immediate time frame, some states have suggested making it illegal for employers to blatantly discriminate against long term unemployed workers.  While they might still be innately suspicious of a person out of work for 6 months, they would not be able to insert “no unemployed need apply” elements in the announcements.

We could also extend our unemployment benefit insurance payments to at least keep people spending at a basic level, and keep them in the job hunt.

A second, and obvious intermediate proposal to create jobs is to invest in the nation’s infrastructure needs. Lord knows we need it,  continuing to rely on Providence to protect us from crumbling bridges is intrinsically irrational.

Third, as suggested previously, this nation needs a manufacturing policy that goes beyond prattling on about “free trade” which is all too often merely a reference to the freedom of capital to move over borders even if the products don’t.  Any trade policy which doesn’t  give environmental, export, and personnel policy issues precedence over capital transfer is missing the entire point.

Fourth, we could see the effects of increased demand should this country require a living wage.  Australia’s minimum wage is $16.88 per hour. [WaPo] Their unemployment rate is 5.8%. [WSJ]  They must be doing something right down under, even if their mining boom is fading a bit.

What we do NOT need is an increase in the number of individuals who have hit the wall, those who have moved from the frustration of continuous unemployment into the fatalistic last stage “there’s just nothing out there for me” end of the road. … Sitting on the couch waiting for the next Duck Dynasty marathon.

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