Long-Term Unemployment and the World’s Largest Economy

Governments around the world are willing to do whatever it takes to minimize the impact of the coronavirus pandemic on the local economy. However, the pandemic is far from being over. In fact, it is hard to determine how long it would take to stabilize the situation. Importantly, even the world’s largest economy is struggling to cope with problems.

Interestingly, the number of unemployed workers continue to fall in the U.S., reflecting a rebound from economic problems created by the coronavirus pandemic in the early spring. However, this is not the end of the story. Millions of people across the country are still out of work.

It is worth noting that, long-term unemployment, which is defined as a period of joblessness lasting more than six months continues to rise in the country.  Interestingly, it’s an important metric because workers who remain out of work for this long enter a financially precarious period.

Importantly, last month about a third of the roughly 11 million jobless workers were long-term unemployed. This information came from the Bureau of Labor Statistics and once more underlines the severity of the problem. People should take into account that, in September only 19% of the unemployed were out of work for at least six months. Notably, the number of long-term unemployed increased by 1.2 million people in one month, to 3.6 million in October.

Economy and risk factors

It is worth mentioning that, October’s ratio is also quickly approaching the peak hit in the aftermath of the Great Recession. As a reminder, at that time more than 45% of unemployed workers were out of work for more than half a year. Interestingly, this is happening even as the overall unemployment rate fell to 6.9% in October from 7.9% in September. Based on the information provided by the Bureau of Labor Statistics, the economy added 638,000 nonfarm jobs.

However, the dip in unemployment was largely a result of furloughed workers, getting recalled to the jobs.

Unfortunately, long-term unemployment is a serious issue for people. It is not surprising as many people in the country are struggling to meet ends meet. Moreover, these individuals are more likely to have depleted personal savings and other financial resources after half a year without job income.

However, there is another issue as well. Importantly, employers are less likely to hire such workers. Also, the number of unemployed workers exceeds job openings by roughly a 2-to-1 margin. As a result, it is quite difficult to find a job.

The new president should work with lawmakers to approve a new stimulus package. They should reach an agreement as soon as possible.