The U.S. has a problem right now. Yes, unemployment levels are not as high as they were during the Great Recession, but for those who have been out of work for a long period of time, the problem is even worse.
According to the U.S. Bureau of Labor Statistics, the number of long-term unemployed – those who have been out of work for 27 weeks or more – was little changed at 4.1 million in October. These individuals accounted for 36.1 percent of the unemployed. The BLS noted that the number of long-term unemployed has declined by 954,000 over the year – whether that’s because these people were hired or dropped out of the labor force entirely is something we don’t know.
But that statistic is almost meaningless given that the number of long-term unemployed has actually increased over the years since the recession.
Add to that the number of people classified as “discouraged workers,” those who aren’t looking for work because they believe there are no jobs out there. The BLS counted 815,000 people in that category, essentially unchanged from the year before.
According to research from the Federal Reserve Bank of San Francisco that examined the job prospects of the long-term unemployed, those who have been out of work for six months have a 20 to 30 percent chance of finding a job. The research, reported in The New York Times, points to bleaker job prospects – a 10 percent chance of finding a job – for those who have been out of work for six months.
In Massachusetts, the general unemployment rate increased slightly to 7.2 percent in October, right around the overall U.S. unemployment rate of 7.3 percent the same month (as of Banker & Tradesman’s deadline, this was the most recent data available).
Meanwhile, other parts of the economy are still in full recovery mode. The housing market continues to perform well. According to The Warren Group, publisher of Banker & Tradesman, September home sales in the Bay State were the highest since 2005. The median price of single-family homes rose almost 16 percent to $323,625 in September, up from $280,000 a year earlier. A total of 26 communities in the Commonwealth are now above their pre-crash high for median price and others are closing in on previous highs. No, rising interest rates didn’t seem to cool down the market much.
The stock market has also been on a tear this year – a recovering housing market and stronger consumer confidence have been the main reasons for the boom.
But, that jobs problem is still, well, a problem and will have an impact on housing and other parts of the economy.
In November, there was talk from Democrats and the White House about extending unemployment benefits for those who have been out of work for 27 weeks or more. Without action from Congress, those benefits will expire during the last week of December, putting many people who are suffering the effects of long-term unemployment – 1.3 million by some estimates – in an impossible situation.
This would be a Band-Aid approach, but it’s an important recognition that our economy is still not working for everyone.
