APRIL 8, 2013
Long-Term Unemployment is Still a Vexing Problem

By Larry Good.

On Friday, the Bureau of Labor Statistics released its regular monthly unemployment report. Its headline that national unemployment fell to 7.6% in March masks a troublesome trend: the decline was caused mostly by a reduction in workforce participation (the number of people either working or looking for work). The participation rate fell to 63.3%, the lowest since 1979. Nearly a half million people dropped out of the labor force in March alone; the biggest one-month decline since 1979. According to the BLS data, 6 out of 10 of those dropping out are doing so voluntarily (could be retiring, going back to school, quitting work to raise kids, etc.)

But a large portion of the fall isn’t explained by those factors.Rather, it is concentrated among a) those under 25 who are neither going to school nor working and b) a continuing decline in labor force participation by those 25-54, which is 81%, the lowest level since 1984. In the past year, 500,000 people aged 25-54 were unemployed and gave up looking for a new job.

The data argues that we’re facing a struggle with long-term unemployment and its consequences for a substantial group of working age adults in the U.S., a trend of the past few years that has been unprecedented. The newest data suggests it is not going away any time soon, either.

Increasingly, workforce policy and strategies must be focused on this large cohort. The costs of not solving this vexing problem are just too high.

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