Unemployment in this recession could have long-term ripple effects because many more of the long-term unemployed are educated, middle age and middle class. Retirement systems will face the consequences of lower contributions and early retirements. Parents are having trouble funding college as they lose income. Those previously with stable credit can't pay mortgages and other obligations.
The presence of so many older, educated people among the ranks of the unemployed requires a nuanced policy response.
Looking carefully at who faces long-term unemployment by education, age and occupation reveals that two groups have had the hardest time finding work: older workers and those just entering the labor force. But older workers were hardest hit in this recession. People 55-64 had the highest unemployment rates and the longest unemployment. Nearly 40 percent of unemployed people 25-34 had been jobless more than six months by November 2010, compared with 60 percent of those 55-64. For the less educated, African-Americans and the disabled, loss of work in greater percentages started at age 45. Older workers with long bouts of unemployment were increasingly likely to drop out of the labor force by 2011.
College-educated workers have seen big increases in unemployment. The recession led to a doubling of unemployment rates for those without a high school diploma, but the percentage of unemployed people with an associate's degree or more nearly tripled. Nearly the same percentage of people lacking a high school diploma worked in 2000 and 2010, while 5 percent fewer of those with college educations held jobs in 2010 than 2000, and 7 percent fewer of those with some college were employed.
Patterns suggest that employers shed any group of workers perceived to be more expensive or considered less productive than their ideal workforce. The same groups have trouble finding work. This includes older workers, who generally use more health care benefits and have higher salaries; the disabled, who are often believed to cost more due to accommodations and health costs; and people new to the workforce, like younger workers and recent veterans who may require training.
Businesses cutting costs contribute to who is laid off or hired, but discrimination also plays a role. This quote from a human resources representative is typical: "We are looking for candidates with experience, but not too much experience. If I received a resume that had more years of experience than the manager, I would discard it, because you don't want the manager to feel bad or have to work with someone who knows more than they do. And besides, someone with a lot of experience would not like to do that kind of job [with less responsibility]."
Employment specialists know about this trend. The leader in a Maryland state workshop for the recently unemployed suggested that experienced workers list only the last 10 years of their work history on resumes. Otherwise, they might appear overqualified or embarrass HR or management staff "who had not been born when you started work."
In previous recessions, unemployed workers sometimes started their own businesses when they could not find work. But this happens less often in this recession due to problems obtaining credit and economic conditions.
Stimulus funds helped some unemployed workers. Teachers were shielded from unemployment through much of 2010 by states spending stimulus dollars to delay layoffs. Unemployment for workers involved in road construction declined but then went up again after the paving season ended.
Differences in who is unemployed mean that strategies to help them find work need to shift, too. Job losses for older workers and challenges they face finding work suggest that states and the federal government need to develop a series of incentives and policies encouraging companies to hire and retain their seasoned workforce.
Given that many of the unemployed already have completed college and advanced degrees, focusing on training or retraining will do little for a significant portion of the unemployed. Instead, incentives like tax credits and health care cost supports for employers, combined with stronger enforcement of age discrimination statutes, may make a difference for this group.
Rather than simply verify that people are looking for work, helping unemployed workers develop new networks with their employed peers could also increase employment. Volunteer professionals in the same field who pledge to aid the long-term unemployed in locating employment could provide direct connections needed to find work.
None of these strategies will succeed, however, if business confidence does not improve. Addressing limited access to credit for everyone would also make a difference for both those seeking employment and potential entrepreneurs.
Jo Anne Schneider lives in Catonsville and is an associate research professor at George Washington University. Her email is firstname.lastname@example.org. Data referenced in this article can be found at http://www.thecyberhood.net/documents/papers/unemployment.pdf.