Long-term unemployment drops for the first time during the Covid pandemic

Long-term unemployment drops for the first time during the Covid pandemic


A store advertises a Help Wanted sign in Annapolis, Maryland on May 12, 2021.

JIM WATSON | AFP | Getty Images

Long-term unemployment fall for the second consecutive month in May, an encouraging change from recent near-record levels fueled by the economic carnage of the Covid pandemic.

Economists classify long-term unemployment as a period of unemployment that exceeds six months.

It’s a particularly risky financial period for households, during which it also generally becomes more difficult to find a new job.

The number of long-term unemployed fell from 431,000 in May to 3.8 million people, or 40.9% of the total unemployed, according to the Bureau of Labor Statistics. This is a reduction from 43% in April and 43.4% in March.

March’s share had flirted with the all-time high of 45.5% in April 2010, in the wake of the Great Recession.

“It’s an encouraging sign to see long-term unemployment drop,” said Daniel Zhao, senior economist at Glassdoor, a job and recruiting site. “It will always be a difficult number to change.”

The number of workers unemployed for over a year also fell in May, from about 31,000 people to about 2.6 million. They represented almost 30% of all unemployed people. (These figures do not include a seasonal adjustment.)

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However, the reduction may not be due solely to job gains – some long-term unemployed may have left the workforce, according to Nick Bunker, an economist at the job board Indeed.

“Was this decline for a good reason as opposed to a bad reason? Said Bunker.

The data to make this assessment are not yet available, he said.

Scar effects

Often, those who haven’t been in the workforce for a long time have the hardest time finding jobs in the news, Zhao said. This may be due to factors such as skills atrophy or loss of links with networks and employers, he said.

It is also a period during which household income can drop significantly. Their potential for future earnings usually decreases and the chances of losing a job (if they find one) increase, according to labor economists.

An additional 2.6 million long-term unemployed remain from pre-pandemic levels, according to the Bureau of Labor Statistics.

“This is usually where you see permanent economic scars,” Zhao said of the long-term unemployed.

As a rule, the unemployed can only receive state unemployment benefits for a maximum of six months. (Some states offer less, however.)

Federal lawmakers have extended the compensation period three times through pandemic relief legislation and broadened the pool of workers eligible for unemployment compensation. Long-term unemployed people can now benefit from assistance until 6 September.

However, two dozen states are termination of benefits in June or July, claim that improved benefits create labor shortages. Critics say temporary factors in the pandemic era such as health risks and childcare issues are more to blame.

“This is a group of workers who are obviously going through a very difficult time right now, and they are a big part of the unemployed,” Bunker said of the long-term unemployed. “If employers hire people from this pool, the possibility of other unemployed people getting jobs is pretty high.”

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