Long-Term Unemployment Is Rising At The Worst Possible Time

Congress is dithering and long-term benefits are expiring at the end of the year.

The temporary furloughs caused by springtime shutdown orders are turning into permanent job losses. And the one entity that could do something about it ― the government ― is doing nothing.

More than 2.4 million workers had been unemployed for at least six months as of September, according to the most recent data from the U.S. Labor Department. It’s the most people mired in long-term joblessness since 2015 and a huge increase of 781,000 from the month before.

“It’s the biggest increase in long-term unemployment we’ve ever seen,” said Heidi Shierholz, a former Labor Department economist now with the Economic Policy Institute think tank.

Six months is what economists consider long-term unemployment, and it’s bad. When a worker is unemployed that long, their resources dwindle, as does their likelihood of obtaining a new job, partly because employers don’t want to hire someone with a long gap on their resume.

“The jobs situation has shifted from a temporary crisis caused by a public health emergency to what looks like the beginning of a more normal recession.”

The increase in long-term joblessness is not a huge surprise considering the unprecedented wave of layoffs in March and April, but the increase does reflect an ominous shift in the economy.

Back in May, 73% of those who lost their jobs were on temporary layoffs and expected to return to work. Subsequent months saw huge declines in the unemployed population as states and cities lifted lockdown restrictions. In September, only 37% of layoff victims were on temporary layoffs, which is a more historically normal percentage. In other words, the jobs situation has shifted from a temporary crisis caused by a public health emergency to what looks like the beginning of a more normal recession.

The problem is, the public health emergency is worsening, with the country headed into a third wave of coronavirus infections, and Congress is doing nothing to mitigate the economic fallout. Lawmakers can’t agree on a plan to reauthorize some of the relief programs that expired over the summer, and ― it gets worse ― long-term unemployment benefits will disappear at the end of the year.

The long-term benefits, formally known as Pandemic Emergency Unemployment Compensation, kick in for workers who exhaust the six months of benefits provided by most states. A big transition is now happening: The number of claims for regular state benefits fell by about 800,000 in late September, according to the most recent data released by the Labor Department on Thursday, while claims for long-term jobless benefits rose by roughly the same amount.

Meanwhile, job growth has slowed, and waves of more than 800,000 fresh unemployment claims keep crashing every week. President Donald Trump says he won’t agree to Democratic demands for more spending partly because of “pride,” Senate Majority Leader Mitch McConnell (R-Ky.) has refused to go along with the president anyway, and House Speaker Nancy Pelosi (D-Calif.) is being extremely tactical, waiting endlessly for her bargaining position to strengthen.

In the aftermath of the Great Recession, long-term joblessness was the last thing to improve. It peaked at 6 million in 2010 and the proportion of unemployed workers in the long-term category remained abnormally high for the next eight years.

Older workers and Black workers were more likely to be long-term jobless after the Great Recession. And in the coronavirus recession, people with health problems could be especially susceptible to long jobless spells, as could people whose jobs simply can’t exist in a plague.

Marilyn Coyne, 67, is an oboist with the San Francisco Ballet, which has been canceled through the year, including its popular holiday production of “The Nutcracker.” The ballet received payroll funds from the Paycheck Protection Program ― the small business initiative created alongside expanded unemployment benefits as part of the CARES Act in March ― and Coyne said she’s been receiving unemployment benefits since the payroll money ran out in May.

When Coyne’s state benefits expire at the beginning of December, she should be able switch to Pandemic Emergency Unemployment Compensation, which lasts for 13 weeks ― or at least it would if Congress had not set it to expire on Dec. 26. She said she and her partner have savings, and they expect to have some work next year, so they feel better off than other people they know.

“Many of our friends and colleagues feel terribly that they committed themselves to being musicians,” she said.

Coyne lamented that the federal government seems to be doing less than it did in the Great Depression, when President Franklin Delano Roosevelt launched a series of public works projects to make work for people, including artists, as part of the New Deal.

“There’s no money for anything like that,” Coyne said. “We don’t have any New Deal.”

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