Long-Term Unemployment Retreats from Pandemic PeakSeptember 20, 2021 Long-term joblessness retreated over the summer from a peak reached in the spring. Earlier this year we reached an unfortunate marker in the pandemic era; it had lasted long enough that 72,000 Oregonians fit the definition of long-term unemployed, as of April 2021. Almost half (47%) of April’s unemployed Oregonians had been unemployed longer than six months. The April figure was higher than at any time since 2011. But as job growth continued at a strong pace of recovery this summer, more of these workers found their next job. In August 2021, the number of long-term unemployed dropped to 38,500. The overall number of unemployed Oregonians has also continued to drop, so even after the progress over the summer, those unemployed long-term continue to account for an outsize share of unemployment, at 39% in August 2021, compared with 18% in the two years leading up to the recession.
Back in 2010, in the early stages of the economic recovery from the Great Recession, the number of long-term unemployed Oregonians spiked to nearly 102,000, the highest number on record. Long-term unemployed are those who have been unemployed for at least six months. The longer an unemployed worker remains unemployed, the less likely they are to find a steady full-time job, and the more likely they are to leave the labor force. Research has found that long-term unemployment can lead to a decline in workers’ knowledge, skills, and abilities, making it harder for them to qualify for available jobs. Other studies show that unemployed workers are less likely to receive an interview. These barriers to employment can exist even in a strong hiring climate with lots of job openings. It remains to be seen how the pandemic will affect employers’ perceptions about long-term unemployment.
Prior to the pandemic, overall unemployment dropped to low levels in recent years, dropping below 90,000 in 2017 through 2019, and reaching a record low of less than 70,000 in January 2020. The number of Oregonians unemployed for longer than six months averaged fewer than 15,000 in 2019. Still, even amidst the lowest unemployment rates on record in Oregon, roughly one out of five unemployed Oregonians had been unemployed for six months or longer.
It took about seven years of economic recovery to reduce long-term unemployment to the low levels seen in 2017 through 2019. In addition to how persistent long-term unemployment was post-recession, it’s unclear from the data whether most of the improvement came from the long-term unemployed finding work, or if many left the labor force altogether.
The pandemic caused a very different recession. Job losses happened in a sharp spike, driving unemployment to steep peaks in April and May 2020, before beginning to fall again within months. After a hiring slowdown late in 2020 as the virus surged, hiring has been strong so far in 2021. The pandemic recession surge in long-term unemployment seen earlier this year has quickly retreated as strong job growth brings us closer to recovery. Still, long-term unemployment is higher than it’s been in years, and these workers may need additional support in their return to work as the recovery continues.