Long-term unemployment has increased significantly during the COVID-19 pandemic. To be counted as "long-term unemployed" by the Bureau of Labor Statistics (BLS), you must be unemployed for 27 weeks or longer and have actively sought employment during the past four weeks. To get a better understanding of long-term unemployment, it helps to know what the statistics say and what the causes and effects are.
Current Long-Term Unemployment Rate
In June 2021, the number of long-term unemployed people increased from May's 3.75 million to 3.99 million. June's share of long-term unemployed increased 1.2 percentage point month-over-month to 42.1% of the total number of unemployed people.
The number and percentage of long-term unemployed have been high in recent months as a result of the COVID-19 pandemic.
The current rate is lower than previous recessions. During the 2008 recession, the record high of nearly 46% occurred during the second quarter of 2010. The June rate, however, is worse than the darkest days of the 1981 recession. At that point, 26% of the unemployed were out of work for 27 weeks or more.
The chart below illustrates the divisions among unemployed workers based on the length of unemployment between 2010 and 2021.
Main Causes of Long-Term Unemployment
The two causes of long-term unemployment are cyclical unemployment and structural unemployment. Cyclical unemployment itself is often caused by a recession. Structural unemployment occurs when workers' skills no longer meet the needs of the job market.
A third type of unemployment, "frictional unemployment," refers to temporary unemployment you face during a job search. These are typically short-term situations and aren't included in long-term unemployment discussions.
Long-term cyclical and structural unemployment feed off each other.
A recession causes a massive rise in cyclical unemployment. Those who can't find jobs become long-term unemployed. If out of work long enough, their skills become outdated. In time, this contributes to structural unemployment. They have less money to spend, resulting in reduced consumer demand. It further slows economic growth, leading to more cyclical unemployment.
Main Effects of Long-Term Unemployment
Being unemployed for six months to a year will almost always strain personal finances. A Pew Research study about the Great Recession found that recession affects the long-term unemployed worse than others in the areas of personal relationships, career plans, and self-confidence.
In particular, the long-term unemployed reported the following:
- More than half, or 56%, saw their income decline, compared with 42% of the short-term unemployed (less than three months) and 26% of those who kept their jobs.
- Almost half experienced strained family relations. That's compared with 39% of those who weren't unemployed as long. Forty-three percent lost contact with close friends.
- Nearly 40% lost self-respect. Almost one-quarter sought professional help for depression compared to 10% of the short-term unemployed.
- The recession had a "big impact" on their ability to achieve career goals for 43% of them. That's true for only 28% of their short-term peers.
- More than 70% say they either changed careers or seriously considered a career change. An additional 29% became underemployed with lower pay and benefits than their previous job.
How Long-Term Unemployment Benefits Extensions Help
Federal unemployment benefits extensions assisted the long-term unemployed in their job search efforts after the Great Recession. Congress approved the extensions in the 2009 American Recovery and Reinvestment Act. They were reauthorized every year until 2013.
The benefits provided the long-term unemployed with up to 99 weeks of unemployment checks. It helped support them until they could find decent jobs. Without the extensions, they would have had to take any job they could, leading to underemployment. This might preclude them from ever catching up as their skills became more outdated.
Unemployment benefits typically only help those who were laid off, though. Some employers fire workers for cause or ask workers to resign in return for a severance package so that they don't have to pay benefits. Workers who quit, part-time workers, the self-employed, and students or mothers just entering the workforce aren't eligible for benefits.
Federal unemployment benefits were extended to the self-employed as part of the pandemic relief efforts. The weekly benefit was also increased, and you could receive unemployment benefits for an extended period depending on your situation.
How to Calculate the Long-Term Unemployment Rate
The long-term unemployment rate is easy to calculate because the BLS breaks down the statistics each month in its Employment Situation Summary. The number of people who have been unemployed for 27 weeks or more is in Table A-12.
The BLS also calculates the percentage they make up of the total unemployed. This table gives you the data for the past five months and year-over-year, seasonally adjusted. It also allows you to compare the last two months and year-over-year, not seasonally adjusted.