Long-term unemployment still an issue for US job market, Indeed economist says

Long-term unemployment still an issue for US job market, Indeed economist says
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  • Long-term unemployment — defined as having been out of work for 27 weeks or more while still actively seeking a job — has returned to levels in the U.S. seen before the Great Recession (about 0.67%), but is “significantly higher” than in 2000, Nick Bunker, economic research director for North America at Indeed, wrote in a March 17 report.
  • Long-term unemployment is highest among the youngest (ages 16 to 24) and oldest (65 and older) segments, per the report, but youth long-term unemployment also has yet to recover from the 2001 “dot-com” recession. Long-term unemployment is more likely to affect black workers than those of other ethnicities, and is more likely to affect men than women.
  • Possible explanations for stagnant long-term unemployment rates include a long-term decline in the demand for workers as well as structural changes to the economy due to new technology and trade, Bunker wrote. Other explanations include what economists call “hysteresis,” or when workers lose skill sets or fail to keep up with changing work methods after being out of the workforce too long. Workers surveyed by Indeed say they’ve faced barriers on the basis of traits such as a nontraditional background, a disability, a criminal record or because they belong to a minority group.

It’s a persistent narrative in the HR industry that a low unemployment rate in recent years has made it difficult for U.S. companies to compete for talent. Economic data from the U.S. Bureau of Labor Statistics indicate that the unemployment rate dipped slightly in February to 3.5%, where it has hovered since September 2019.

But stakeholders have indicated in the past that low unemployment isn’t the entire story of the U.S. labor market. Despite low unemployment, most industries have experienced only minor wage growth, including an average of 2.6% year-over-year growth between 2018 and 2019, a PayScale report showed. Meanwhile, employers may have hiring processes that overlook talent due to qualities including long-term unemployment.

“It is time for employers to make sure they are not passing over potential workers just because of long jobless spells,” Bunker wrote in the Indeed report. “To do so is an opportunity lost.”

Employers have expanded their talent pools in recent years in order to include categories of workers like those who have disabilities. Research earlier this month from software development and information technology operations platform GitLab found that introducing a remote-work benefitcould allow people with disabilities or chronic conditions to contribute to the workforce.

One prominent push in the talent space has been geared toward those who are formerly incarcerated or who have a criminal record. SAP North America, which works with Televerde to operate call centers in correctional facilities and hires currently incarcerated workers, is one of many employers to adopt the trend. Companies like The Body Shop are experimenting with new hiring models that encourage workers to apply for certain positions without completing a background check, which the company said removes barriers to applicants including those who are formerly incarcerated.

Source: HR Dive

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