Stigma Of Long-Term Unemployment Boosts Jobless Rate: CBO
WASHINGTON -- The stigma of long-term unemployment is so bad that it actually contributes to a higher national unemployment rate, according to an analysis by the Congressional Budget Office.
As workers sit idle for months and years, their skills deteriorate and the very fact of their joblessness makes them even less employable. The CBO estimates that stigma and skill-erosion combined have boosted the unemployment rate by a quarter of a percentage point since the start of the recession in December 2007 -- and that the jobless rate will be half a percentage point higher for the next several years.
"Regardless of its initial cause, unemployment in general and long-term unemployment in particular can lead to subsequent difficulties for the affected workers," the CBO says. "One mechanism by which unemployment reduces future employment prospects is through the stigma attached to long-term unemployment -- that is, an employer's inference that people who have been unemployed for a long time are low-quality workers."
Explaining the source of unemployment stigma, CBO cited hearings by the Equal Opportunity Commission that examined discrimination against the jobless. Starting in 2010, employers' inferences that the unemployed make poor workers manifested repeatedly as job advertisements with conditions like "must be currently employed." Such ads received so much negative attention that in 2011, Democrats in Congress, along with the Obama administration, proposed new laws banning discrimination against the jobless.
George Seed, an executive at a Georgia recruiting firm, explained the reasoning behind such ads last year. "When my clients hire me, they want people who are motivated to go to work for the right reasons," he said. "And if someone is currently employed in a good position, then their motivation to move to a different company would be that the company offers better benefits or offers more growth for advancement, or whatever. They're not people who have to have a job, they're people who want to move for the right reasons."
As of January, 5.5 million workers had been unemployed for six months or longer, and nearly 2 million of those had been jobless for 99 weeks or longer -- beyond the reach of unemployment insurance.
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The CBO's report suggests the longer a person is out of work, the greater the stigma becomes. "Long-term unemployment may thus produce a self-perpetuating cycle wherein protracted spells of unemployment heighten employers' reluctance to hire those individuals, which in turn leads to even longer spells of joblessness."
Jesse Rothstein, an economist with the University of California at Berkeley who has studied unemployment, said he was surprised the CBO would attempt to quantify the effect of stigma and skill-erosion on the jobless rate. "My view is there's pretty limited research that helps us understand this," Rothstein said. "My hunch is that the stigma effect must be smaller than what they think it was."
Lawmakers contribute to the stigma of joblessness -- at least in the eyes of worker advocates -- with proposals that demonize the unemployed. On Friday, Congress is expected to pass a bill that will allow states to require drug testing of people who apply for unemployment insurance (though it's unclear how many people will actually wind up peeing in cups as a result of the bill).
Martina Howell of Langhorne, Pa., said she lost her job as an officer manager in December 2010. Since then, she said she's been paying the mortgage and raising her son with the help of her parents and unemployment insurance.
Howell, 46, said she'd never heard of job ads that discriminated against the jobless, nor did she feel offended by drug testing proposals. Nevertheless, she said, "The stigma of being unemployed is terrible."
The stigma comes, she said, from the mere fact that she has no work, and it's compounded by everyday small talk and watching other people happily live their lives on Facebook. She said she gained 30 pounds last year.
"Your self-worth, your value inside," Howell said. "People are like, 'Oh what do you do? ... When did you lose your job?' When I say December 2010, people say, 'Oh my god.'"
But Howell said she is hopeful, thanks in part to a newfound commitment to exercise. She said she's participating in a "Biggest Loser"-style competition put on by a local paper, and has lost six pounds in the last two weeks. "That has really gotten my spirits up."
Arthur Delaney is the author of "A People's History of the Great Recession," HuffPost's first e-book.