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New Report Paints Bleak Future for Long-Term Unemployed

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For the unemployed, the road back to employment is littered with potholes and landmines. For many, the roads have simply collapsed or disappeared.

In a paper presented this week at the Brookings Institute, Princeton University professor Alan Krueger discussed the prospects for turning around long-term unemployment. In what seems quite harsh but regrettably very real, he called people who have been out of a job for six months or more an "unlucky subset of the unemployed" ... with faint hope of returning to productivity.

Here are a few takeaways:

  1. The long-term unemployed have a hard time not only finding a job, but also keeping one.
  2. Long-term unemployed who leave the labor force are unlikely to come back.
  3. The long-term unemployed don't switch careers.
  4. A stronger economy doesn't help.

Let's dive a little deeper into the findings and look at what happens to the long-term unemployed over 16 months based on data from the Current Population Survey.

Only one-quarter of long-term unemployed people were hired. Of those hired, a little over one-third were unemployed again or left the workforce within a year. The bottom line is that only one in 10 of the long-term unemployed return to work that lasts. Even when the long-term unemployed find work, it's still unstable.

Of the one in 10 jobless who stopping job hunting altogether, most stayed out of the labor market after a year. The most common reason for leaving -- they no longer wanted to work!

For those short-term and long-term jobless who were rehired, many returned to the job and industries they left. Here's the long and short of it: the research says that long-term unemployed are reluctant to make a big career switch. Familiarity seems to rule.

That's a significant problem for solving the unemployment problem. Many jobs are racing toward extinction. More than 25 percent of the jobs that were lost during the Great Recession are probably lost for good.

Going back to the beginning of the 20th century, we've seen dozens of occupations disappear. As computers and automated systems increasingly take the jobs humans once held, more and more professions are becoming or are now extinct.

Consider the iceman. Before electric refrigerators became pervasive in the 1940s, iceboxes needed to be stocked regularly with ice to keep food cold. With advances in manufacturing and automation, the need for deliverymen to haul 25 to 100 chunks of ice into homes disappeared.

Or does anyone remember the lector? Probably not, unless you lived nearly 100 years ago. Lectors In the early 1900s read newspapers and political tracts aloud to factory workers. The occupation was particularly popular in cigar makers in Florida and New York City. Today a lector would easily be replaced by two ear buds and a smartphone.

Other jobs used to employ thousands of people that have disappeared during the latter part of the 20th century include elevator operators, copy boys, bowling alley pinsetters, river drivers, lamplighters, milkmen, switchboard operators, typists, typesetters and telegraph operators.

The loss of jobs due to occupation extinction is expected to continue unabated over the next decade. At least 50 percent of workers in the American job market today work in people-powered industries like fast-food restaurants, delivery companies, hospitality and warehousing. All of these jobs are prime targets for robotic replacement, says Marshall Brain, the author of How Stuff Works. They will likely fall victim to automation and globalization just like textile jobs did beginning in the 1970s.

Even jobs that might have similar titles to the ones the unemployed held just a few years ago have different and more advanced skill requirements today.

The long-term unemployed are spread throughout all corners of the economy, with a majority previously employed in sales and service jobs (36 percent) and blue collar jobs (28 percent).

For those that think a stronger economy is the answer, Krueger and his colleagues burst that bubble too: "Overall, there is little evidence... to suggest that the long-term unemployed fare substantially better in the states with the lowest unemployment rates" when compared with long-term unemployed in high unemployment states.

My colleague Edward Gordon's research unfortunately previously forecast what Krueger reported: "low-skill jobs will shrink to just 26 percent of the total jobs in the U.S. Worst of all, just 44 million people will be needed for those jobs, but 150 million or more candidates will be seeking those jobs."