An unusually large share of workers have been out a job for more than six months even as unemployment has remained low, a little-noted weakness...
WASHINGTON — An unusually large share of workers have been out a job for more than six months even as unemployment has remained low, a little-noted weakness in the labor market that analysts said threatens to intensify the impact of the unfolding economic downturn.
In November, nearly 1.4 million people — almost one in five of those unemployed — had been jobless for at least 27 weeks, the juncture when most unemployment-insurance benefits end. That is about twice the level of long-term unemployment before the 2001 recession.
Educated but jobless
The problem is ensnaring a broader swath of workers. Once concentrated among manufacturing workers and those with little work history, education or skills, long-term unemployment is growing most rapidly among white-collar and college-educated workers with long work experience, studies have found, making the problem difficult for policymakers to address.
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“What has happened is a polarization of the labor market. It was very strong at the very top and very strong until recently at the bottom,” said Lawrence Katz, a labor economist at Harvard University.
“But in the recent weak recovery, and now recession, demand has been very weak” for jobs in the middle.
Caroline Dixon never contemplated any of that when she resigned in April after nine months as a program officer with the Spina Bifida Association.
She left because the job was “a bad fit” and she was confident the economy was strong and she would soon find work.
For a long time, she never stopped in the unemployment office near her Washington, D.C., home.
But as weeks out of work stretched into months, Dixon, 41, became a fixture there. “I jokingly tell people that I’m headed to my office when I’m coming here,” she said, without a smile.
The growth in long-term unemployment has occurred even as displaced workers have taken bigger pay cuts to re-enter the job market.
A 2004 study found that workers who lost a job in 2001 to 2003 took an average pay cut of 17 percent in their new jobs, more than double the average cut of those displaced in the late 1990s.
“When people are losing good jobs these days, they have a very hard time getting back to the type of job they had before,” said Andrew Stettner, deputy director of the National Employment Law Project, a group pressing for more-generous unemployment benefits.
Strong corporate profits, low inflation and record manufacturing output characterized the recovery that followed the 2001 recession, but some economists call that period of expansion a “CEO’s recovery.”
Real wages were mostly flat, poverty ticked upward and an unusual number of people had a hard time finding work, a fact masked by relatively low overall unemployment rates.
“This tells you that this has not been as good an economy as the overall unemployment rate would make it seem,” said John Schmitt, a senior economist at the Center for Economic and Policy Research. “This dynamic causes anxiety among people even if they still have a job.”
Dixon has managed to stay afloat by occasionally working as a substitute teacher.
Still, things are getting tight for Dixon. “I need a safety net under my safety net,” she said.
Officials who work with the jobless said they are seeing more people like Dixon — educated, with stable work histories — having a hard time.
“It seems like for the skilled worker who has experience and credentials, finding a job that matches their skill and experience is like reaching for the brass ring on the carousel,” said Howard Marshall, manager of the Baltimore County Workforce Development Center in Maryland.
“A lot of people are grabbing for it, and only a few will get it.”