WASHINGTON — When Matthew Thomas was laid off in September from a downtown Washington advocacy group, he wasn’t too worried. The 49-year-old office worker had severance and never had trouble finding work. He sent a few resumes out, signed up with a few temporary agencies and waited.
And waited.
His severance ran out. The proceeds from cashing out his retirement savings ran out next. He filed for unemployment benefits. Those expired a couple of weeks ago. He received an extension, which was to start last week. When the check was late, he called the unemployment office, frantic.
“I have up days and down days,” he said. “I keep trying to tell myself this is my only moment (away from work). I have to do my damnedest to enjoy it.”
The pace of job losses may be slowing — the government reported Friday that employers shed a net 345,000 jobs in May, far less than economists had expected — but for Thomas and other U.S. workers, things feel like they’re still getting worse. The unemployment rate is now at 9.4 percent, and a record 27 percent of the nation’s 14.5 million jobless have been unemployed for about six months or longer. Many are only now seeing their unemployment benefits expire, their homes falling into foreclosure and their lives upended.
The ranks of the long-term unemployed are not expected to recede until job growth picks up in earnest, and if past recessions are any guide, that’s not likely to happen for at least another year. After the recession of the early 1980s, it took seven months for the number of long-term unemployed to peak; after the 2001 recession, which was followed by historically anemic job growth, it took 19 months.
“While the overall unemployment rate was higher in the ’80s, people are getting stuck in unemployment longer than they did in that recession,” said Heidi Shierholz, an economist with the Economic Policy Institute.
The recent surge in long-term unemployment reflects the causes of the current downturn and decades-long shifts in the labor force.
The bursting of the housing bubble and the permanent downsizing of the U.S. auto industry mean many of the 7 million jobs that have been lost since the recession began aren’t likely to return.
“A far larger share (of the unemployed) are not going to be able to go back to the same line of work. Such structural shifts in their careers are not that easy to do,” said Andrew Stettner, deputy director of the National Employment Law Project in New York. “They might not have the right skills, and firms might not be willing to take the chance on people who don’t have the exact background.”
Over the past 30 years, long-term unemployment has become more common — largely because more of the unemployed are workers who have been laid off, who generally take longer to find jobs than new entrants to the work force. In the 1980s, millions of women were still joining the labor market for the first time, and the labor force was on average younger.
“What’s happened over the last three decades is, even ignoring recessions and just looking at good times, we see the unemployment pool shift toward permanent job losers,” said Rob Valletta, an economist with the Federal Reserve Bank of San Francisco.
The consequences of long-term unemployment can be severe. The longer people are unemployed, the more likely they are to deplete their savings, fall behind on bills and even face foreclosure.
The cutoff notices are piling up for Alicia Manning of Alexandria. Va. The 24-year-old single mother was laid off from her $30,000-a-year administrative job in November. After her severance ran out, she applied for unemployment but ran into problems. While she sorts that out, her mother has been supporting her, but she may not be able to help much longer. The other day, Manning spotted a big “Now Hiring” sign at a Roy Rogers restaurant and went in to get an application.
“That’s not what I want to do,” she said. “But it’s something I would do if I had to.”
For those receiving unemployment benefits, long-term joblessness has tested the limits of the system. In April, 47.1 percent of all people collecting state unemployment insurance exhausted the usual maximum of 26 weeks of benefits without finding work, according to the Bureau of Labor Statistics. That is the highest rate on record, going back to 1972, when the Labor Department began keeping track.
The $787 billion stimulus package that Congress passed in February contained $27.1 billion to help states extend unemployment benefits. As of mid-May, 2.5 million people were collecting extended benefits. The time limit has been increased to 59 to 79 weeks.
Workers who exhaust their benefits and don’t get new training tend to become disconnected from the labor force, said Harvard University economist Lawrence Katz. “A lot of them have ended up on disability rolls,” he said. “They’re basically never coming back into the work force.”
Extending unemployment benefits and making it easier for the jobless to be retrained could help workers avoid some of the most negative consequences of job loss. But under state regulations, the unemployed often have to give up benefits if they return to school. President Barack Obama earlier this month said he will try to persuade states to allow unemployed workers to keep their benefits as they seek a broader range of schooling.
Until then, Mark Beaupre, 49, of Providence, R.I., is wondering whether he and his family will be able to rejoin the middle class. He lost his $8-an-hour job at a ringmaking factory more than a year ago. It was the last in a string of manufacturing jobs he’s held since the 1980s. His wife, Cathy, was let go from her customer service job a year ago. The couple used to earn about $50,000 a year. Now they have fallen behind on their mortgage and applied for food assistance.
“Three cars. College money. We went from that to poverty,” Beaupre said. “I never thought I’d be in this sort of situation.”
Beaupre has applied for scores of jobs, keeping him out of the pool of “marginally attached workers” who have given up looking and are no longer counted as unemployed by the government’s primary measure of joblessness.
But the odds of finding a job have steadily gotten worse. In December 2007, there were about two unemployed workers for every opening, Labor Department data show. As of March, there were five for every opening. Beaupre found that out when he tried to go to a job fair in Providence two weeks ago. Three thousand people turned out.
“I couldn’t even get into the parking lot,” he said.
Recently, the sight of other middle-class refugees living in a tent city in town unnerved him, reminding him of how quickly his life has changed.
“We were doing OK,” he said. “It’s shocking. I don’t know what to say. We are walking around in dazes.”
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