Thursday, October 6, 2016

Nick Bunker — Why do long-term unemployed Americans face difficulties finding jobs?

Why do Americans who’ve been out of work for a long time have such a hard time finding jobs? The answer is very important because long-term unemployment (longer than 26 weeks) as a share of the labor force and as a share of total unemployment has been on an upward trend over the past decade or so. Levels spiked during the Great Recession and are now on the decline, but they are still quite elevated. Why care about long-term unemployment? The rate at which these workers get hired is much lower than the rates for workers who’ve been unemployed for shorter periods of time. Do long-term unemployed Americans face more difficulties getting hired because they aren’t very productive or because of some other potential flaw? Or is it because of the experience of being unemployed itself?
This is the basis for an argument advocating an ELR, as MMT economists and proponents have been doing, Bill Mitchell and Pavlina Tcherneva in particular.

It's tautological that long term unemployment is a consequence of short term unemployment. Is it a causal factor" Seems so, stemming from a storage of supply in the employment market. As Warren Mosler puts it, ten dogs and only nine bones.

The problem is also apparently related to job shortage disciplining labor to accept lower wages so as not to be the god that doesn't get a bone. A buffer stock of unemployed is thus a tool of capital. However, it also leads to deterioration of the capacity of the labor force, with the result that employers shy away from hiring the long term unemployed as inherently less qualified for work.

Washington Center for Equitable Growth
Why do long-term unemployed Americans face difficulties finding jobs?
Nick Bunker


Bob said...

Excess of supply leads employers to rely on prejudice to make their hiring decisions. Bill Mitchell has covered this in the past.

Paul Chau said...

I think a lot of employers are going to wonder why these people have been out of action! Like what secrets are they keeping in storage that they weren't able to contribute to the economy or something.