Many struggle not to make a layoff a lifestyle

Washington Post

WASHINGTON — When Matthew Thomas of Alexandria, Va., was laid off in September from a downtown Washington advocacy group, he wasn’t too worried. The 49-year-old office worker had severance and never had trouble finding work. He sent a few r sum s out, signed up with a few temporary agencies and waited.

And waited.

His severance ran out. The proceeds from cashing his retirement savings ran out next. He filed for unemployment benefits. Those expired a couple of weeks ago. He got an extension, which was to start last week. When the check was late, he called the unemployment office, frantic.

The pace of job losses may be slowing — the government reported Friday that employers shed a net 345,000 jobs in May, far less than economists had expected — but for Thomas and other U.S. workers, things feel like they’re still getting worse. The unemployment rate is now at 9.4 percent, and a record 27 percent of the nation’s 14.5 million jobless have been unemployed for about six months or longer. Many are only now seeing their unemployment benefits expire, their homes falling into foreclosure and their lives upended.

The ranks of the long-term unemployed are not expected to recede until job growth picks up in earnest, and if past recessions are any guide, that’s not likely to happen for at least another year. After the recession of the early 1980s, it took seven months for the number of long-term unemployed to peak; after the 2001 recession, which was followed by historically anemic job growth, it took 19 months.

“While the overall unemployment rate was higher in the ’80s, people are getting stuck in unemployment longer than they did in that recession,” said Heidi Shierholz, an economist with the Economic Policy Institute.

The recent surge in long-term unemployment reflects the causes of the current downturn and decades-long shifts in the labor force.

The bursting of the housing bubble and the permanent downsizing of the U.S. auto industry mean many of the 7 million jobs that have been lost since the recession began aren’t likely to return.

“A far larger share [of the unemployed] are not going to be able to go back to the same line of work. Such structural shifts in their careers are not that easy to do,” said Andrew Stettner, deputy director of the National Employment Law Project in New York. “They might not have the right skills, and firms might not be willing to take the chance on people who don’t have the exact background.”

Over the past 30 years, long-term unemployment has become more common — largely because more of the unemployed are workers who have been laid off, who generally take longer to find jobs than new entrants to the work force. In the 1980s, millions of women were still joining the labor market for the first time, and the labor force was on average younger.

The consequences of long-term unemployment can be severe. The longer people are unemployed, the more likely they are to deplete their savings, fall behind on bills and even face foreclosure.

For those receiving unemployment benefits, long-term joblessness has tested the limits of the system. In April, 47.1 percent of all people collecting state unemployment insurance exhausted the usual maximum of 26 weeks of benefits without finding work, according to the Bureau of Labor Statistics. That is the highest rate on record, going back to 1972, when the Labor Department began keeping track.

The $787 billion stimulus package that Congress passed in February contained $27.1 billion to help states extend unemployment benefits. As of mid-May, 2.5 million people were collecting extended benefits. The time limit has been increased to 59 to 79 weeks.