Unemployment Rate Unchanged In June, Long-Term Joblessness Still Terrible

Long-Term Joblessness Still Terrible

WASHINGTON -- The U.S. economy added 195,000 mostly low-paying jobs in June, putting a tiny dent in the unemployment crisis -- too tiny a dent to bring the unemployment rate down from 7.6 percent.

Long-term joblessness accounts for a disproportionate share of current unemployment and is a bigger problem than it has ever been since the government began keeping track. Of the 11.8 million jobless Americans in June, 4.3 million had been out of work six months or longer. There were 1 million fewer long-term jobless than last year, but their ranks remain way above the previous high-water mark of 2.8 million in 1983.

What's happening? One theory holds that employers just don't want to touch anyone who has been out of work a long time. Another says overly generous unemployment insurance has made jobless workers too choosy. Mounting evidence points toward the former theory.

The latest is a policy brief released Monday by the Federal Reserve Bank of Boston, in which researcher Rand Ghayad examined whether long-jobless workers eligible for benefits are faring worse than ineligible workers. He argues his results should help discredit the notion that unemployment insurance has coddled workers.

"The story is simple now," Ghayad said in an interview. "More and more evidence is coming up showing employers are part of this big problem for the long-term unemployed."

Timothy Mailloux of Albany, N.Y., knows intuitively what Ghayad's research has shown. He said he's been unemployed for a year and a half except for a temp job here and an informal assignment there. He's grateful for the short-term jobs because they break up the gaps on his resume.

"You really can't show more than six months," he said. "It's sort of deadly."

Previous research by Ghayad and others has found that employers would rather hire someone with no relevant experience than a person who has been out of work a long time.

In 2009, Mailloux said he lost an IT job he'd held for 15 years. After that first layoff, he said he coped with intense feelings of depression. To pass the time not spent scanning the Internet for work, he rides his bike or reads. To reduce costs, he took on two roommates.

The unemployment insurance he's been using to pay his bills recently became less generous. Federal budget cuts known as sequestration reduced Mailloux's unemployment insurance from $253 per week to $225. The National Employment Law Project (NELP), a worker advocacy group, estimated this week that the cuts subtracted $2.4 billion from the wallets of the long-term unemployed.

Mailloux, 55, thinks that was ridiculous. "The sequester, my God it's hurting people so much more," he said. "You're out of work, and then they reduce your unemployment benefits because they couldn't come to a compromise?"

Claire McKenna, a NELP policy analyst, said the sequester is counterproductive. "Cutting benefits like this doesn't really create jobs," McKenna said. "[Long-term unemployment] is going to remain elevated."

Food stamps offset part of Mailloux's loss as the reduced income boosted his monthly food benefit from $53 to $96. The Supplemental Nutrition Assistance Program escaped sequestration but is now in congressional lawmakers' crosshairs.

Mailloux said he'll lower his sights from IT work if his situation gets more desperate. He may have to: Most new jobs aren't very glamorous. Retail, restaurants and temp services accounted for more than half of June's job gains, the continuation of a long-term trend.

Not having work can be surreal as weeks bleed into each other without the rhythm of days on, days off.

"I can't believe it's July already," Mailloux said. "When you're not doing anything, the days just flow by. There's no sort of milestones or things you can focus on and deal with and occupy your time."

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