The end of extended unemployment benefits, which for Minnesotans can run up to 86 weeks, will likely hit older workers hardest, according to a recent U.S. Bureau of Labor Statistics report that shows that group more likely to be facing long-term unemployment in the current slump.
The Senate’s refusal last week to extend long-term unemployment benefits through the end of 2010 may be the line in the sand Republicans hope to draw against deficit spending as the economy sputters in a slow, protracted recovery.
The last extension, which expired June 2, will start to run out as soon as next week for nearly 81,000 Minnesotans on extended benefits, according to the Minnesota Department of Employment and Economic Development (DEED). That is slightly more than half of the nearly 163,000 Minnesotans currently receiving unemployment benefits. The number of Minnesotans receiving long-term unemployment benefits is up 88 percent from a year ago.
Monthly Long-term Unemployment Rate 1990 – 2009
Jim Hegman, spokesman for Minnesota’s Unemployment Insurance program said that about 500 to 600 people a week normally roll off benefits, but with the expiration of extended benefits, that rate of roll-off will increase steeply beginning in late August. While up to 99 weeks of unemployment benefits are available in some states, the maximum amount available in Minnesota is 86 weeks.
Hegman noted that the 81,000 figure for Minnesotans affected by the end of extended benefits will be reduced in coming months, though, as more people “[move] back into regular employment. That’s becoming a bigger number, thankfully.”
The BLS reported that 40 percent of the unemployed, or 6.1 million nationwide, had been jobless for 27 weeks or more, by far the highest proportion of long-term unemployment going back to 1948. While the long-term unemployment rate increased from 0.8 percent in 2007 to a high of 2.9 percent in 2009 across all age groups, it affected age groups differently.
Younger workers, ages 16 to 24, have been hard hit in the recent recession, and they have made up a disproportionately larger share of the long-term jobless in every recession but one since 1976. At the end of 2009, they made up 19.5 percent of all long-term unemployed but only represented 13.9 percent of the labor force.
But once unemployed, a younger worker is less likely to stay unemployed. In 2009, 23.1 percent of all unemployed younger workers fell into the long-term unemployment category. On average, younger workers stayed unemployed 19.9 weeks.
One-third of prime-age workers, ages 25 to 54, were considered long-term unemployed The age group makes up nearly two-thirds of the total workforce, and were unemployed an average of 25.3 weeks, just under the threshold for long-term unemployment.
But 39.4 percent of unemployed workers 55 and older experienced long-term unemployment, and the average duration of joblessness for workers in this age group lasted 29.5 weeks in 2009.
Minnesota presents the data somewhat differently, but the situation is similar. Through the end of May, the long-term unemployment rate for workers under age 22 was 22.6 percent. For prime-age workers (22 to 59) long-term unemployment was 27.8 percent, and for older workers, it was 34.6 percent.
Part of the reason the BLS offers for the growth of long-term unemployment is that “the rate of successful job search plummeted” for all age groups.
In 2009, only 17.3 percent of all the unemployed in one month found jobs by the next month, compared with about 28 percent in 2007. Eighteen percent of workers 25 to 54 and 16.9 percent of younger workers were successful in their job search in 2009. But older unemployed workers were the least likely of all to find jobs. Only about 15 percent of jobseekers 55 and older found jobs each month in 2009, compared with about 22 percent in 2007.