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Unemployment Holds Steady in June; Long-term Joblessness Remains Troubling

unemployment

The economy gained only 195,000 jobs in June, most of them low-level and low-paid positions. This works out to a nearly insignificant change in the U.S. unemployment crisis — too small to lower the unemployment rate below it’s currently level of 7.6%.

Long-term unemployment accounts for an alarming part of the current rate of joblessness, and is a more significant problem at this point than it’s been since U.S. employment agencies began tracking it. Out of nearly 12 million out-of-work Americans in June, 4.5 million had been unemployed for longer than six months. Granted, this counts for 1 million less long-term unemployed Americans than there were last year, but those numbers are far above the previous high point of 2.8 million in 1983.

So what’s going on? One economic theory states that employers just don’t want to give a position to someone who’s been out of work for a long period of time. Other assessments hold that expanded unemployment insurance has made jobless Americans too picky. Yet a growing body of evidence indicates that the facts line up with the first theory.

Employment attorneys point out that the latest piece of evidence can be found in a policy brief published earlier this week by the Federal Reserve Bank of Boston, in which economist Rand Ghayad studied whether long-standing job seekers eligible for benefits are faring better or worse than those ineligible for benefits. He claims the results should help dispel the idea that unemployment insurance has spoiled American workers.

“The story is simple now,” Ghayad said in a discussion with workers compensation lawyers. “More and more evidence is coming up showing employers are part of this big problem for the long-term unemployed.”

Earlier research on unemployment discrimination conducted by Ghayad and others has shown that employers generally prefer to hire candidates with no relevant experience than job applicants who’ve been out of work for long periods of time. This is also compounded by denied workers compensation claims and other cuts to benefits.

Josh Mailloux, an IT specialist recently interviewed by the New York Times, told about his experience following the loss of his job in 2009 (which he’d held for 15 years). The unemployment insurance he used to pay his bills recently diminished due to sequestration (federal budget cuts), falling from $253 per week to $225. The National Employment Law Project (NELP), a workers rights group, estimated that cuts amounted to $2.4 billion lost by long-term unemployed Americans.

Claire McKenna, a policy analyst with NELP, points out how counterproductive sequestration has proved to be. “Cutting benefits like this doesn’t really create jobs,” she said.  Long-term unemployment will very likely remain elevated.

Food stamps helped counteract part of Mailloux’s loss, since the income reduction boosted his monthly food benefit from $53 to $96. The Supplemental Nutrition Assistance Program was exempt from sequestration but may now be entering the crosshairs of congressional lawmakers.

Mailloux is now considering the prospect of reducing his goal of a new IT position, especially if his situation grows more serious. And he may not have a choice: the majority of new jobs being added to the economy aren’t especially glamorous. These include retail positions, restaurant work and temp services, which together made up over half of June’s job gains, and continued a long-term trend.

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

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Emery Reddy