Older workers hit hardest by long-term unemployment

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.

* Percent of all unemployed / Source: U.S. Bureau of Labor Statistics

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.

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Comments (7)

  1. Submitted by Glenn Mesaros on 06/28/2010 - 11:24 am.

    Well, it’s official now. Paul Krugman has declared this is the third great depression in US history. All this clap trap about recovery is baloney. Millions of unemployed will NEVER again be employed in any meaningful jobs.

    Krugman: June 27, 2010:
    “Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.”

    “We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.”

    This depression will last until Americans realize Wall Street and London banks, and their puppet, Obama, are parasites which must be expunged from the world economy for human beings to survive.

  2. Submitted by susan stokes on 06/28/2010 - 12:43 pm.

    Will Obama and the senate take July 4th holiday and leave americans stranded once again? Obama has the power to make the senate stay in session until they come up with a bill , he is doing no better than all the others everyone should email him and tell him what we think I already haveContact the White House | The White House
    WhiteHouse.gov is the official web site for the White House and President Barack Obama, the 44th President of the United States. This site is a source for information about the President, White House news and policies, White House history, and the federal government.

  3. Submitted by Richard Schulze on 06/28/2010 - 07:39 pm.

    There are at least five factors at work:

    1. Mature, but still growing industries continue to realize productivity gains, often taken through attrition, while also exploiting existing underutilized capacity. The key growth sectors, notably healthcare and higher education, are under great cost reduction pressure as well as suffering from drops in investments

    2. New growth industries/technologies are not at a state of high job creation. For example, various wireless technologies and medical technologies may create sudden winners such as the iPhone, but these often leverage existing workforces and capital assets.

    3. Counter-cyclical measures, especially low interest rates on short-term deposits, are impacting employment in otherwise stable sectors such as state and local government. The number 2 cause of layoffs in governments and public agencies is typically low interest rates paid on their financial reserves.

    4. Extensive rebuilding of personal and corporate balance sheets dampens the multiplier effect of economic growth as well as of stimulus. From a cash flow perspective, a majority of stimulus has been in the form of lower governmental collections as opposed to higher than normal direct governmental spending.

    5. The absence of a consensus-supported counter-cyclical strategy has preempted bipartisan support for targeting further stimulus investments. A somewhat bizarre populist Hoover-ism infects the Republican Party, which in turn forces the Democratic Party to trim its already somewhat diffident support for business recovery.

  4. Submitted by Richard Schulze on 06/28/2010 - 09:41 pm.

    It seems to me that if job creation is a ‘need’ then we’d do well to ask ourselves if we’d prefer to spend our time trying to figure out how to create an ever larger number of jobs in perpetuity or if we’d like to spend our time figuring out how to create a stable population. While this may be an uncomfortable topic for some, it also happens to be reality.

    But we’ve got a growing population and we’ve got debt-based money and that’s the long and the short of it. Hence, we are stuck with the political reality that we “need” growth in the economy and job creation (even though these “needs’ are self-inflicted by our decisions, not due to some fundamental law of the universe like gravity).

  5. Submitted by Henk Tobias on 06/28/2010 - 10:07 pm.

    Susan, it may be a good idea if you contact your Republican Congress people as well. They are killing every attempt to help the long term unemployed:

    “The 57-41 vote fell three votes short of the 60 required to crack a GOP filibuster, …
    The rejected bill would have provided $16 billion in new aid to states, preserving the jobs of thousands of state and local government workers and providing what White House officials called an insurance policy against a double-dip recession.”

    Republicans are filibusting at record levels. Email, call and write letters and tell Republicans to stop filibustering.

  6. Submitted by John Olson on 06/29/2010 - 07:35 am.

    Some other points merit mention as well:

    – Younger workers are usually more mobile and are willing to move to get work. Older workers with families, homes and deeper roots in a community are less inclined to move.

    – Younger workers are typically willing to do the same job for less money than an older worker.

    – Younger workers are often–but not always–more adept with technology than their older peers. They are usually more comfortable adapting to and learning new technology than their older counterparts as well.

    – Benefits for younger workers are less expensive.

    With respect to extending UI benefits again, the long-term question is “how long?” How long do benefits keep getting extended, extended again and extended again after that?

  7. Submitted by William Pappas on 06/29/2010 - 07:39 am.

    Mr. Schulze is absolutely correct in that a strange kind of Hooverism is infecting the Republican Party. Conservatives, in their attempt to stretch their idological approach, have always reinvented history and are doing so now in not heeding the lessons of the Great Depression. You can argue if it was the New Deal or WWII that brought the US out of the Depression and into economic growth but you can’t argue that it was budget balancing that did it. Add the GI bill and the effects of a massive public subsidy to higher education and you begin to see what wise government stimuls money can do. Tax cuts just don’t cut it.

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