A bright spot beyond the unemployment rate
Ahead of tomorrow’s jobs report, here’s an interesting trend to consider. Unemployment in the U.S. has been dropping. That’s not new. It’s been dropping for more than four years. Not quickly, dramatically, or even very surprisingly: just a slow, steady, decent but not-quite-good-enough decline. The New York Times’ Neil Irwin memorably said “the jobs recovery in the United States is astonishingly consistent, astonishingly resilient, and astonishingly underwhelming.”
But recently, the pace of the drop has picked up and there’s reason to get relatively excited: most of the fall in unemployment is coming from a fall in long-term unemployment. Wonkblog’s Matt O’Brien has the good news: “in the past six months, unemployment has fallen much faster than expected, from 6.7 to 6.1 percent. And as you can see above, 88 percent of that has been due to declining long-term unemployment.” You can just see that change in the recent contraction in the portion of the unemployed who have been out of work for 27 weeks or longer in this Reuters chart:
And it’s even more startling in this chart compiled by O’Brien:
And not just reducing the unemployment rate by dropping out of the workforce, but by actually getting jobs. “38 percent of the long-term unemployed from a year ago have a job today“, he writes. That’s good news because long-term unemployment has far worse effects than shorter spells of joblessness. “It produces deep distress, worse mental and physical health, higher mortality rates, hampers children’s educational progress, and lowers their future earnings,” Kevin Drum wrote. It tends to be self-perpetuating because employers begin, Tim Hartford pointed out, to “ignore people who have been out of work for more than six months.” The fewer Americans who have to endure this particular kind of perverse hardship, the better.