The Broad Reach of Long-term Unemployment
(May, 2003)
by Andrew Stettner and Jeffrey Wenger
National Employment Law Project & Economic Policy Institute

To view a .pdf version of the full report, click here.

Long-term unemployment is the scourge of a declining economy. After the unemployment benefits run out, the bills are overdue, and the retirement fund is tapped, many Americans are still looking for jobs. Some people may believe that the long-term unemployed, those unemployed for more than six months, are not looking hard enough for work, do not have enough education, or are not good workers. The reality is that the long-term unemployed are better educated, older, and more likely to be professional workers.

In 2002, 18.3% of the unemployed spent more than six months looking for work; this number had increased to 21.8% by April 2003. In particular, long-term unemployment became more concentrated among three groups:

• mid-career workers (those over 45 years old)—34.8% of long-term unemployed workers were over 45 years old;
• college graduates—18.1% of the long-term unemployed had college degrees; and
• executive, professional, and managerial workers—20.1% of the long-term unemployed came from these occupations.

In April 2003, unemployment increased to 6.0%. Throughout this recession, analysts have anticipated higher unemployment rates resulting from job losses and weak economic growth in the United States. Despite the weak economic performance, the unemployment rate has remained low, largely because many people have given up looking for a job. Some people have returned to school to receive training, while others look for work only occasionally because they are discouraged by the lack of job prospects.

The weak demand for workers coupled with ongoing economic weakness means that losing a job may be relatively rare, but once lost, finding a new job is increasingly difficult. A good indicator of the difficulty many of the unemployed have finding a job is the average number of weeks spent looking for work. As of April 2003, the average spell of unemployment increased to 19.6 weeks. The average unemployment duration has not been that high since January 1984; at that time, the national unemployment rate stood at 8%. Although some analysts claim that the relatively low unemployment rate reflects an “adequate” labor market, in truth, the labor market is considerably worse than adequate for the unemployed.

Lower-wage workers, generally thought of as particularly vulnerable in a recession, are also an important part of the long-term unemployment picture. In terms of race, black workers are more prevalent among the long-term unemployed (making up 25% of this category) than among the total unemployed (20%), reinforcing the notion that lower-skilled black workers are likely to be the “last hired, first fired.” Manufacturing workers, who have experienced great economic dislocation in the past several recessions, have also fallen victim to long-term unemployment. One in five long-term unemployed workers in 2002 were from the manufacturing sector, compared to just one in six in 2000.

State Data:
The report also presents state data on the characteristics of the long-term unemployed in seven large states: California, Florida, Illinois, New York, New Jersey,  Pennsylvania and Texas.  New York and New Jersey are found to have the highest rates of long-term unemployment. California and Pennsylvania have long-term unemployment rates above the national average, and show a similar distribution of long-term unemployment as the rest of the country. Illinois has higher than average long-term unemployment and the problem in the state appears skewed to lesser skilled workers.  The two southern states studied (Florida and Texas) have long-term unemployment that is lower than the national average.