In fact, only 10% of the long-term unemployed find a job each month, according a new report by the San Francisco Federal Reserve. This is worse than the 30% per month of the short-term unemployed who are successful.
However, the situation is far from hopeless. The study also found that half of the long-term unemployed will find a job in six months, and 75% will do so within a year. Even that group who still haven't found a job in 18 months will eventually find something if they keep looking. The San Francisco Fed found that the chances of finding a job didn't decline for those unemployed for that long. (Source: CNN Money, Long Term Unemployment, June 14, 2012)
Long-term Unemployment Statistics:
Causes of Long-term Unemployment:
Long-term, cyclical and structural unemployment feed off of each other. A recession causes a massive rise in cyclical unemployment. Those that can't find jobs become long-term unemployed. If out of work long enough, their skills become outdated. In time, this contributes to structural unemployment. These unemployed have less money to spend, reducing consumer demand. This slows economic growth, leading to more cyclical unemployment.
Many say there are three other reasons for long-term unemployment: welfare, unemployment benefits and unions. These government assistance programs requires recipients look for work. This inflates unemployment statistics by .5%-.8%, because they may not really be actively looking and really shouldn't be considered part of the labor force. Benefits may encourage people to hold out for better paying jobs, further extending unemployment.
Unionization creates classical unemployment by forcing companies to offer higher wages than they normally would. These companies must lay off workers to maintain budget and profit goals. These workers may only have skills for this industry, and may be unwilling to take lower wage jobs. This can result in structural, and ultimately long-term, unemployment. (Source: Lawrence H. Summers, "Unemployment" The Concise Encyclopedia of Economics, 2008, Library of Economics and Liberty.)
Effects of Long-term Unemployment:
- More than half (56%) saw their income decline, compared to 42% of the short-term unemployed and 26% of those who kept their job.
- Nearly half (46%) experienced strained family relations, compared with 39% of those who weren't unemployed as long, and 43% lost close friendships.
- Almost one in four (38%) lost self-respect, and 24% sought professional help for depression, compared with 29% and 10% of the short-term unemployed.
- The recession has had a "big impact" on their ability to achieve career goals for 43% of them, compared to 28% of their short-term peers.
- More than 70% say they changed careers. Nearly a third (29%) became underemployed, with lower pay and benefits than the one they had. Not surprisingly, they became very pessimistic about their chances of finding a good job. Only 16% of the short-term unemployed were worse off.(Source: Rich Morin and Rakesh Kochhar, Pew Research Center, The Impact of Long-Term Unemployment, July 22, 2010
Long-term Unemployment Benefit Extensions:
However, unemployment benefits only help those who were laid off. Some employers fire workers for cause, or ask workers to resign in return for a severance package, so they don't have to pay benefits. Workers who quit, part-time workers, the self-employed, and students or mothers just entering the work force also aren't eligible for benefits.
Not all of those eligible for benefits will receive the entire 99 weeks. They've got to live in a state that meets a minimum unemployment rate.