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Study shows long-term unemployment substantially higher than official level


FEBRUARY 2012, Allentown/Bethlehem/Easton edition of The Union News

Study shows long-term unemployment substantially higher than official level


REGION, January 20th- According to a new study released by the Center for Economic and Policy Research, a nonpartisan economic think tank in Washington DC, the Great Recession pushed the share of the long-term unemployed (defined as being unemployed more than six months) to over 40 percent throughout 2010 and 2011. The new report shows that this standard measure estimate understates the extent of long-term hardship in the United States labor market.

According to the Department of Labor and Industry (DOL), the national seasonally adjusted unemployment rate was reported to be 8.6 percent, decreasing by four-tenths of a percentage point from the previous report. However, the number did not include the long-term unemployed because workers that have exhausted their unemployment benefits, are no longer counted as unemployed unless they continue to apply for work.

“Long-term unemployment rates have been at unprecedental levels for two years now, but the full group facing long-term hardship in the labor market is likely to be at least twice as high as the official figure,” stated John Schimitt, co-author of the report and a senior economist as the Center for Economic and Policy Research.

The report, “Down and Out: Measuring Long-Term Hardship in the Labor Market,” proposes a broader definition of long-term unemployment that encompasses the underemployed, (workers that have lost their full-time job and are now only able to find part-time work) and those workers experiencing long-term hardship in the labor market, Mr. Schimitt added.

He continued that the report expands on the official concept of unemployment by including data on discouraged workers, those not in the labor force who want a job but have stopped looking because they believe there are no jobs available; marginally attached workers, those who want a job and have looked in the last 4 weeks; and workers who are part-time for economic reasons, those who want a full time job only have part-time work. Together with the unemployed, these groups are the basis for an alternative Bureau of Labor Statistics’ measure of unemployment, known as U-6, which the authors of the report argue gives a more complete picture of long-term hardship.

While the Bureau of Labor Statistics does not track the length of time workers have fallen under these categories, the authors stated it demonstrates that under reasonable assumptions, the share of workers facing long-term hardship may be twice as high as the share that is long-term unemployed by the standard measure.

“Under these same assumptions, between 2007 and 2010 long-term unemployment increased almost as much in these unofficial channels as it did under the more narrow definition,” added Mr. Schimitt.

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