Rampell on the Long-Term Unemployed and Job Searches

I wanted to comment on this great article by Catherine Rampell, The Help-Wanted Sign Comes With a Frustrating Asterisk, which is all about how employers are looking for workers with jobs right now rather than hiring from the long-term unemployed.  Two quick points:

- This image of a collection of want ads was in the article:

At an event at the FDR Presidential Library on the creation Social Security, there was a blow-up of Great Depression-era ads about discrimination against older workers, a problem that was one of the motivations behind Social Security:

These are similar.  Indeed, older workers are more likely to be long-term unemployed at this point in the recession.  From Pew’s recent report on long-term unemployment:

longtermbyage.png

Using the CPS data, Pew calculated that the persistent problem of long-term unemployment is occurring across education and age groups but those who are older than 55 are most likely to remain jobless for a year or more. Additionally, a high level of education only provides limited protection against long-term unemployment — the rates are similar across degree attainment: 31 percent of unemployed workers with a bachelor’s degree have been out of work for a year or more, compared to 36 percent of high school graduates and 33 percent of high school drop-outs.

Why aren’t the older, long-term unemployed dropping out of the labor force already? The Federal Reserve Bank of San Francisco wrote in Labor Force Participation and the Future Path of Unemployment that “trends in retirement and health benefits will probably remain in place and the recession’s severe shock to wealth will likely compel even greater numbers of retirement-age workers to stay in the labor force.”  Or health care is so expensive, housing is in a mess and retirements are so shaky older workers need to find a job. We could bolster Social Security and temporarily lower the retirement age, we could do something about the housing market, we could push for more jobs, etc. Or we could give 66 year olds the fun experience of buying health insurance on the private market.

-  When we dug into some of the unemployment -> employment movement by duration in May, I was surprised that long-term unemployment was increasing as percent of jobs gained.

It is very hard for the long-term unemployed to find jobs.  But what I’ve seen makes me think it is combination of a rapid and quick series of layoffs during the recession (creating a long-term unemployed cohort) and an issue of a lack of jobs for everyone since then, rather than a bifurcated labor market.  Meanwhile employers can sit on job openings longer, as there is not enough aggregate demand or a strong-enough workforce to make them hire more.

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14 Responses to Rampell on the Long-Term Unemployed and Job Searches

  1. Thank you for the picture of old help-wanted ads separated into male and female categories. Younger colleagues think I’m joking when I describe the way things used to be.

  2. Misaki says:

    >as there is not enough aggregate demand or a strong-enough workforce to make them hire more.

    The problem with economists saying things like this is that it causes the public to believe that if they only spend more money, jobs will be created. One might be lead to assume that even if the amount of work needed to produce the goods one buys isn’t high, the people who receive that money could create jobs depending on their pattern of spending.

    This assumption is invalidated by the correlations between the amount of income one receives as surplus value from the sale of one’s products or services, and the prices one is willing to accept in higher qualities of a good, as described once again in the detailed explanation of how to fix unemployment. One cannot just assume that spent money will “eventually” lead to the same effect no matter how it is spent, since on average purchasing products whose price is not justified based on absolute utility (but only on marginal utility of money for one’s specific financial situation) will just cause that money to flow within the wealthy subset of the population at much slower velocities than money spent on cheaper goods, again as mentioned in the above link.

    Buying iPods simply does not have the same effect on the economy as purchasing goods made by people who have more reason to be attentive about how they spend their money. The focus on simplifying the economy’s problem to “low aggregate demand” ignores this complexity and prevents any improvement of the problem because it causes people to accept overwork as mentioned on this blog several days ago and to spend their money in ways which do not contribute to an increase in the total amount of work done.

    This, then, is the result of the failure by the economic profession to understand the implications of patterns of spending. People become uninformed on the best way for them to contribute to the return to a healthy economy.

    Unfortunately, there does not seem to be any hope of educating the economic profession on the consequences of their failure, as all efforts have shown there is a high resilience to comprehension or change.

    To make this comment even longer, here is part of a similar explanation that was posted on Mr Jared Bernstein’s blog:

    it may be worth mentioning that the ‘iPod effect’ may actually be intensified in the social and psychological conditions that persist during a (actual or perceived) recession with high unemployment; spending on expensive status symbols does not actually seem to be “wasting” either money or the raw materials and labour that go into a product, since the consumer understands that some amount of profit is extracted from the purchase and they are explicitly aware the signalling value of the product makes up some of its cost.

    It then becomes a way of “hoping that their money reaches someone who needs it without selfishly wasting any products”; in other words, a lack of consumption becomes a virtue exactly as described in the detailed explanation of how to fix unemployment, even while a larger amount of consumption is what would actually lead to a reduction of unemployment.

    This train of thought can be described as follows: “Other people are unemployed and suffering. I should therefore work harder in my job to help them.” …(it’s hard to understand thinking that is as illogical as this)… “Since other people can’t afford to purchase products since they’re unemployed, I should avoid purchasing those products too so they don’t feel bad. If I give away all my money by purchasing expensive iPods instead, this money will magically reach people who are unemployed and not selling expensive iPods, because Apple is a nice company and they know what to do with this money since they help kittens and stuff.”

    And, after all, it’s true! The people who own Apple are giving away their money to help kittens! …But people still don’t have jobs.

    ※added bold, yay.

  3. Misaki says:

    (Cross-posting from Mr Jared Bernstein’s blog that had a similar mention of consumer spending)

    I think I might try something different: the motives of consumer behavior. It’s just hard to summarize in a couple of sentences, beyond which it becomes hard to integrate in arguments and people lose interest in reading…

    The essential point is that the economic profession needs to stop encouraging people to act in a way that directly leads to the employment situation becoming worse. Working harder because your company doesn’t want to hire any of the abundant, cheap labour available due to concerns about future demand, and spending one’s income on iPods when one does have a job, are both logical consequences of the average person’s understanding of the economic situation, are both intended to improve the situation, yet in reality do nothing of the sort.

    Changing the way compensation works would remove the perceived congruence of social benefit with nominal personal benefit, and would lead to the conclusion that the choice of working full time or a lesser amount of time is socially neutral, and whether it should be done depends on the specifics of the company and the individual.

    …See, like I said it’s too hard to explain and no one seems able to understand it anyway.

  4. Many people I know who are employed are being required to work such long hours I fear for their health, or even that they might die from a heart attack. Employers are making employees work longer hours rather than hire more people.

  5. They can no longer specify age in ads, so they discriminate in other ways.
    Eg., I have seen IT adds for people with 3-5 years experience, or up to 19 years experience.
    When I sent out my resume with only my last 15 years of experience, and left out the years I graduated from college (B.A. and M.A. in math), I got some calls. the first thing they would ask was what year I graduated. When I tried to put them off, they said they couldn’t process me any further if I didn’t tell them. So I did. Then I never heard from them again. They wouldn’t respond to my e-mails, I couldn’t get them on the phone. This happened 100% of the time.

    • Ted K says:

      I think there are also young people whining “without experience you can’t get a job and without a job you can’t get experience”. bottom line If you can show a way you add value, you get hired. If you add no value, you won’t be hired. When girls turn their head this way or that and grin for a job they call it “self-marketing” or “just highlighting my best attributes”. When that same girl/woman gets over age 40 they call it “age bias” and cry foul. It’s called reality. Try to get over it.

      “Administrative Assistants” often do nothing but menial tasks, attach a much higher utility function to their duties because they are the “gatekeeper”, walking around with their nose in the air as they play games online and take their 40th coffee break. You know what gets chopped off first when times get tough??? The duties which are unnecessary (or easily substituted) to the operation of the entity as a whole. Which gender group does this affect most??? It’s an open-ended question…… fill in answer here __________

      • Myrad says:

        “bottom line If you can show a way you add value, you get hired. If you add no value, you won’t be hired.”

        “If you can show a way….” are the key words. HR gatekeepers are quite adept at making it difficult for job seekers to prove that they can add value to an organization. (Although shooting your fireproof resume into the CEO’s office with a flaming arrow may be a good start.)

      • chriss1519 says:

        i got something you can fill your blank with

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  7. Misaki says:

    it causes the public to believe that if they only spend more money, jobs will be created. One might be lead to assume that even if the amount of work needed to produce the goods one buys isn’t high, the people who receive that money could create jobs depending on their pattern of spending.

    More on this

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