Young Adults Falling Into a Black Hole of Long-Term Unemployment

It’s a scary economic world out there, one not fully captured by the headline unemployment rate. On the surface we’ve had 30 straight months of job growth, albeit mostly at levels far below what is needed to make up for an expanding workforce. But look a little deeper and the trends are unsettling. The long-term unemployed are essentially carrying around a scarlet letter that makes them unemployable and the number who are stuck in part-time, dead end jobs is growing.

The worrisome reality was brought into the light by economist Rand Ghayad, who conducted a field study in which he sent out fake resumes to see which earned a call back. Matthew O’Brien reports on the findings for The Atlantic:

“It turns out long-term unemployment is much scarier than you could possibly imagine. The results are equal parts unsurprising and terrifying. Employers prefer applicants who haven’t been out of work for very long, applicants who have industry experience, and applicants who haven’t moved between jobs that much. But how long you’ve been out of work trumps those other factors. . .

As long as you’ve been out of work for less than six months, you can get called back even if you don’t have experience. But after you’ve been out of work for six months, it doesn’t matter what experience you have. Quite literally.”

The fear, according to some human resource managers is that “a worker may have outdated skills, or may be a short-timer who is desperate enough to take any work now but will leave when something better comes along.”

This is especially troubling for the 5.6 million young adults who can’t find work. The youth demographic makes up an incredible 45 percent of America’s unemployed, and that doesn’t even could the 4.7 million who are stuck in part-time jobs despite wanting full-time work.

Many of these young people are a threat to be lost in the vicious cycle in which they can’t find a job, continue looking for a period of time, then become unemployable because they’ve been out of work too long. Ghayad’s study finds that once you’re in the cycle it is nearly impossible to break out because employers won’t even look at your resume.

In an attempt to break out of the rut and avoid a gaping hole on their resume many workers are turning to part time work. The only problem is that this too appears to be a dead end. The New York Times reports:

“in March, 7.6 million Americans who want more hours were stuck in part-time jobs, about the same as a year earlier and three million more than there were when the recession began at the end of 2007.

“These almost invisible underemployed workers do not count towards the standard jobless rate of 7.6 percent. A broader measure, which includes the involuntary part-timers as well as people who want to work but have stopped looking, stands at 13.8 percent.

. . . While increases in part-time and temporary work can sometimes be an early sign that employers will soon take on more permanent hiring, many workers have been trapped in such jobs far longer than they anticipated.”

Trapped. It’s a sad descriptor of what all-too-many workers are living through. They are left with a Hobson’s choice of either taking a part-time job that they could be stuck in against their will, or risk ending up in the long-term unemployed pool and the quick march toward becoming unemployable. Neither option is attractive, but it’s sadly the best that many young graduates will be able to aspire to.

This is the dreaded “new normal” in the Obama economy. Unless something is done soon the effects will ripple through the economy for years as a generation of under- and un-employed buy fewer things, require more government assistance and produce less. It’s yet another vicious cycle, and one we would be wise to break.