“In July, the number of unemployed persons was 14.5 million,” according to the Bureau of Labor Statistics. Another quarter million jobs were lost; however, as Chart 2 indicates below, the month-to-month decline is about half the job loss rate six months ago.
The bad news in the BLS report for July is on page 2:
The number of long-term unemployed (those jobless for 27 weeks or more) rose by 584,000 over the month to 5.0 million. In July, 1 in 3 unemployed persons were jobless for 27 weeks or more.
According to NPR, long-term unemployment is higher than at any time since 1948 when the data began being collected. Long-term unemployment –- the stuff of foreclosures and household devastation — is now increasing much faster than short-term unemployment:
The problem of long-term unemployment is a main reason I predict we will see many years of “green shoots” before we have any significant economic growth. For those interested in the topic, there is an outstanding and still relevant 2005 briefing paper from the Economic Policy Institute entitled The Rising Stakes of Job Loss: Stubborn Long-Term Joblessness Amid Falling Unemployment Rates:
A different pattern emerged after the 2001 recession. With far fewer job gains in the most recent recovery, long-termers found their pathway out of unemployment blocked. The fact that job losses declined meant that the overall jobs picture started improving, but this did little to help those who had already lost their jobs during the heart of the slump. It was these workers who became and remained long-term unemployed as job creation languished many months into the recovery.
The decline in job growth stemmed from many factors: employer reluctance to hire because of continued instability fostered by weak demand, escalating fixed costs of hiring (especially health care costs), and the escalated use of just-in-time employment practices.
Several options enable employers to avoid hiring the more traditional full-time permanent worker and instead resort to just-in-time hiring, which is likened to inventory-adjustment practices used by firms to respond to demand. To meet cycling demand, “just-in-time” hiring practices include more traditional options, such as the use of overtime, but it also includes newer practices such as the use of contingent workers, temporary workers hired (and fired) through temp agencies, and contract workers (many of whom were once employees of the firms they contract for). While such strategies may raise profits, they prolong the lack of job creation, and as such likely help explain the unusually weak job creation in this recovery.
Topics: Economy, Jobs, Middle class
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