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July 16, 2010
When Being Out of Work Becomes a Chronic Condition
By FLOYD NORRIS
IN the United States, unemployment has typically been a relatively brief affair. The vast majority of people who lost jobs soon found new work.
That is not the way it has been in many other developed countries. In Europe and Japan, long-term unemployment is far more common. At any given time, most of the unemployed people in many European countries have been out of work for more than six months.
Now the United States appears to be becoming similar to Europe. Even as the overall unemployment rate has begun to drop — falling to 9.5 percent in June from a peak of 10.1 percent last October — the proportion of the work force that has been out of work for more than six months has risen to 4.4 percent, as can be seen in the accompanying charts.
The long-term unemployment rate has not approached such a level since the government began keeping the statistic in 1948, although the rate was almost certainly much higher during the Great Depression of the 1930s. Only in the early 1980s did the figure ever climb above 2 percent.
The latest figures indicate that 46 percent of Americans classified as unemployed — meaning they are out of work and actively seeking a job — have been unemployed for at least six months. That is nearly twice the previous post-World War II high, set in 1983.
But it remains below the proportion in much of the developed world. The Organization for Economic Cooperation and Development, a group of 27 industrialized countries, estimates that the average among its members in the first quarter of this year was almost 50 percent.
Historically, the differences among countries reflected different safety nets. In some countries, laws made it hard to fire workers, but those who did not already have jobs found little protection.
In Germany, which traditionally has had high long-term unemployment relative to overall unemployment, government subsidies helped prevent layoffs in the recession by encouraging companies to reduce work hours while keeping people on the payroll. The German unemployment rate did not begin climbing until months after rates in other countries rose. But now that a recovery has started, hours are being lengthened, rather than new jobs being created. For those who are out of work, that leaves few opportunities.
European safety nets are now in jeopardy to some extent because of the need in many countries for austerity measures to deal with deficits. “With recovery, schemes to protect existing jobs should move to programs to encourage new hiring,” like temporary reductions in payroll taxes for new employees, Stefano Scarpetta, the deputy director of employment, labor and social affairs at the O.E.C.D., said in an interview.
In a new report, “2010 OECD Employment Outlook,” Mr. Scarpetta and his colleagues forecast that it will take years for most countries to return employment to prerecession levels.
“Despite signs of recovery in most countries, the risk remains that millions of people may lose touch with the labor market,” said Ángel Gurría, the organization’s secretary general, as he released the report earlier this month.
For the United States, that risk may be greater than it was after previous recessions. It is common for the long-term rate to keep rising after recessions end, as can be seen from the chart, but the number of long-term unemployed now is already far greater than it was after those downturns.
http://www.nytimes.com/2010/07/17/bu...l?ref=business
That is not the way it has been in many other developed countries. In Europe and Japan, long-term unemployment is far more common. At any given time, most of the unemployed people in many European countries have been out of work for more than six months.
Now the United States appears to be becoming similar to Europe. Even as the overall unemployment rate has begun to drop — falling to 9.5 percent in June from a peak of 10.1 percent last October — the proportion of the work force that has been out of work for more than six months has risen to 4.4 percent, as can be seen in the accompanying charts.
The long-term unemployment rate has not approached such a level since the government began keeping the statistic in 1948, although the rate was almost certainly much higher during the Great Depression of the 1930s. Only in the early 1980s did the figure ever climb above 2 percent.
The latest figures indicate that 46 percent of Americans classified as unemployed — meaning they are out of work and actively seeking a job — have been unemployed for at least six months. That is nearly twice the previous post-World War II high, set in 1983.
But it remains below the proportion in much of the developed world. The Organization for Economic Cooperation and Development, a group of 27 industrialized countries, estimates that the average among its members in the first quarter of this year was almost 50 percent.
Historically, the differences among countries reflected different safety nets. In some countries, laws made it hard to fire workers, but those who did not already have jobs found little protection.
In Germany, which traditionally has had high long-term unemployment relative to overall unemployment, government subsidies helped prevent layoffs in the recession by encouraging companies to reduce work hours while keeping people on the payroll. The German unemployment rate did not begin climbing until months after rates in other countries rose. But now that a recovery has started, hours are being lengthened, rather than new jobs being created. For those who are out of work, that leaves few opportunities.
European safety nets are now in jeopardy to some extent because of the need in many countries for austerity measures to deal with deficits. “With recovery, schemes to protect existing jobs should move to programs to encourage new hiring,” like temporary reductions in payroll taxes for new employees, Stefano Scarpetta, the deputy director of employment, labor and social affairs at the O.E.C.D., said in an interview.
In a new report, “2010 OECD Employment Outlook,” Mr. Scarpetta and his colleagues forecast that it will take years for most countries to return employment to prerecession levels.
“Despite signs of recovery in most countries, the risk remains that millions of people may lose touch with the labor market,” said Ángel Gurría, the organization’s secretary general, as he released the report earlier this month.
For the United States, that risk may be greater than it was after previous recessions. It is common for the long-term rate to keep rising after recessions end, as can be seen from the chart, but the number of long-term unemployed now is already far greater than it was after those downturns.
http://www.nytimes.com/2010/07/17/bu...l?ref=business
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