The Severe Crisis of Job Loss and the Accompanying Surge in Long Term Unemployment

The current recession, which started in December 2007, is well into its second year. The ongoing downturn is now about the length of the 1981-82 recession, which lasted 16 months. Given the current economic climate, the length of this downturn will likely surpass that mark by many months. The increased deterioration of the labor market has translated into higher unemployment—from 4.9% in December 2007 to 8.5% in March 2009—swelling the ranks of the unemployed to 13.2 million. The current rate of unemployment has not been seen in over 25 years. The situation has thus put enormous demands and strains on the unemployment insurance safety net as UI claims continue to set new records. There are now 8.6 million Americans collecting unemployment insurance, nearly triple the 3.0 million Americans collecting assistance a year ago.

The paper will first document the employment picture and analyze job loss by industrial sectors. Second, we turn our focus to a historical and contemporary look at unemployment, along with long-term unemployment. The long-term unemployed, a sub-group of the unemployed, are those who have been without work for at least six months.

Regular state unemployment benefits last only last 26 weeks. The long-term unemployed are dependent on federal extended jobless benefits if they do not find work by the time their state benefits end. In March 2009, 45.6 percent of all workers collecting state unemployment insurance reached the end of their maximum 26 weeks of benefits without finding work. That is the highest exhaustion rate on record, dating back to 1972 when the data were first reported.

Currently, nearly 2.4 million Americans are collecting federal emergency unemployment compensation (EUC) benefits, which last up to an additional 33 weeks in high unemployment states. However, a large number of these workers are on their final installment of EUC benefits, and we estimate that nearly 1.5 million workers will reach the end of their EUC between midMarch and August 2009. Section 2005 of the American Recovery and Reinvestment Act (ARRA) provided states with an option to provide an additional extension under the permanent extended benefits program, but over the next 3 months alone nearly 361,000 of these workers live in states where benefits would be potentially available won’t get the additional extension because their states have not taken advantage of the option under the ARRA.

The figures in this report point to the need for states and the federal government to maximize support for the long-term unemployed throughout 2009 and into 2010, which will require additional congressional action by the fall of 2009.