Forget the Good Jobs Report, Long-Term Unemployment Is Still Terrifying

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http://www.theatlantic.com/business/archive/2013/03/forget-the-good-jobs-report-long-term-unemployment-is-still-terrifying/273859/

Jobs! The economy added 236,000 of them in February, which is good. And, as my colleague Derek Thompson points out, it added more construction jobs than at any time since March of 2007, which is even better. After all, housing is what makes recoveries go boom.

But let's be honest. Even with our nascent housing recovery, the overall recovery is still leaving behind far too many for far too long. People looking for work for 6-months or longer -- the long-term unemployed -- jumped by 89,000 last month. It's been three years since the labor market bottomed, but the long-term unemployment rate is still higher than it's been at any point since 1948. Technically-speaking, we're still in a deep hole.



Well, that's not quite true. The hole is depressingly deep for the long-term unemployed, but not so much for others. We increasingly have a bifurcated labor market. As I pointed out back in December, the Boston Fed has found that the job market looks normal for people who have been out of work for less than 6-months, and horribly dysfunctional for people who have been out of work longer than that. It doesn't matter how old you are, or the industry you are in, or even how much education you have -- the only thing that matters, as far as employers are concerned, is how long you have been unemployed.

Why?

It's about loss of skills, loss of trust, and loss of networks. The longer people are out of work, the more they presumably forget. That's the loss of skills. But even if that's not actually true, and it might not be, employers assume it is -- there's a stigma to being out of work that long. That's the loss of trust. Now, that's particularly hard for the long-term unemployed to overcome since being unemployed for so long hurts the kind of professional networks that are often so important to finding a job. The only way for the long-term unemployed to get a job is to already have one. It's a vicious catch-22.