May 20, 2024

Off the Charts: For Long-Term Jobless, a Stubborn Trend

But the rate of firings soared during the credit crisis and Great Recession, hitting a peak of 20.4 percent in late 2009.

Now it has fallen to the lowest level ever recorded — 14.8 percent.

In other words, a worker’s chance of being fired is now less than it was when the job market was booming, and much less than it was when the economy was in trouble four years ago.

And yet, the job situation now is not a good one. While fewer people are being fired, the rate of hiring has barely picked up. And as can be seen in the accompanying charts, the long-term unemployment rate — the proportion of the labor force that has been out of work for more than 15 weeks — remains higher than the short-term rate. In October, the long-term rate was 3.8 percent, while the short-term rate was just 3.5 percent.

From 1948, when the Bureau of Labor Statistics began to publish monthly unemployment rates based on a survey of households, until mid-2009, the long-term rate was never as high as the short-term rate. Since then, it has consistently been higher, although the gap has narrowed.

What seems to have happened in the United States is that job mobility — historically an important feature of the nation’s labor market — fell rapidly during the recession and has yet to recover much.

The data on hirings and firings is compiled by the government in its monthly Jolts — Job Openings and Labor Turnover Survey — report. The charts on hirings and firings, as well as on voluntary departures, are based on actual numbers over 12-month periods, not on the seasonally adjusted figures.

By adding the monthly figures, the charts may overstate job mobility to some extent. In some cases, the same worker may have been hired several times during a year, and have left just as many jobs during the same period. That is particularly true in industries like construction, where many jobs are for relatively brief periods.

But even taking that into account, the fact remains that in a normal year the number of workers leaving jobs — whether voluntarily or involuntarily — amounts to more than 40 percent of the total number of jobs. The number of new hires is, of course, at a slightly higher rate if employment is rising.

In good times, most of that job mobility represents the choice of workers, as more people leave their jobs by choice than because they were laid off or fired. Some of those retired, but most quit, either because they had found a better job or because they expected to find one. But during the recession, the number of people leaving voluntarily plunged, and for the first time since the data was collected, the number of people losing their jobs because they were fired in 2009 exceeded the number who left voluntarily.

One measure of the health of the job market is the number of unemployed people for each unfilled job vacancy. At the end of 2000, when the data was first collected, that figure was just over one — an indication of the boom that ended with the 2001 recession. It soared to nearly seven to one during the recession.

The latest figures show the ratio has fallen back to 2.9. By that measure, the job market is finally a little better than it was at the low point early in the last decade.

But it appears that many of the people who have been unemployed the longest simply lack the skills to get the available jobs. The short-term unemployment rate is back to the levels that prevailed for most of the period before the recession. But the long-term rate, while it is falling, remains higher than it was at any time before the recession.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/11/30/business/economy/for-long-term-jobless-a-stubborn-trend.html?partner=rss&emc=rss

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