Checking in on the Unemployment by Duration Numbers, Fall 2011 Edition

Looks like there is going to be a debate on whether or not to extend unemployment insurance.  Time to start sharpening the weapons for the ideological and numbers-based part of these arguments.

One key argument you hear is that unemployment is really just about the long-term unemployed.  The market is split into a healthy, normal labor market of people who have only been unemployed a short period of time and a pool of long-term unemployed who are unproductive and disconnected to the point where traditional monetary and fiscal stimulus won’t help them.  This is behind much of the “zero marginal product” arguments on the structural unemployment discussion.  If this is the case, the argument for extending unemployment insurance is going to be a different one than if the labor market is weak overall.

Last month, Joe Weisenthal examined a Fed Governor speech by Daniel K. Tarullo delivered at Columbia which mentioned this debate.  Tarullo noted (Joe’s bold):

Some have also pointed to the high level of long-term unemployment as evidence that mismatch is a major factor keeping the unemployment rate high. The claim is that those without the skills sought by employers will take longer, on average, to find new employment. However, the data do not back this claim, at least to date. If high unemployment durations were the result of mismatch, the probability of finding a new job should have declined proportionately more for the long-term unemployed than for the recently unemployed. In fact, reemployment probabilities during the recession fell by similar amounts for all durations of unemployment and have edged up by similar increments in the recovery. Again, this pattern is more consistent with weak aggregate demand being the most important cause of high unemployment.

Weisenthal noted that “Unfortunately, in the footnotes to Tarullo’s speech he doesn’t offer a citation for this fact, so we had to go hunting, and found this post by Mike Konczal  on the exact question…”

Yup.  I addressed this argument in May of this year in that post.  One of the graphs I put together in that post, which shows what Tarullo is referencing, is this one:

The difficultly of finding a job has increase for all duration groups, for both the short-term unemployed than for the long-term unemployed, and has stayed that way post-Great Recession.  There are big drops in the probability of finding a job for those who have been unemployed for less than 15 weeks.  We did a follow-up to that post looking at the data in other ways here.

This reminds me of two things.  First, more of an aside, I should be writing some of these blog posts as white papers and pdfs and respectable type stuff so respectable types can cite them.  Second, this data ended in April of this year.  How has it evolved since then?  We were able to get updated data through August from the kind folks at the Bureau of Labor Statistics.  Has the chance of getting a job increased for the short-term unemployed, while gotten worse for the long-term unemployed?

No.  From the latest data we can see that there’s been no increase in the bifurcation of the labor market.  It is still a weak market across the board, even for those who are recently unemployed.

This data is not seasonally adjusted.  To double check we aren’t catching seasonal variations, let’s take the average of January to August for the past three years as well as the total of 2000-2007:

Like most economic indicators, the economy was in free-fall throughout 2009, recovered a bit in 2010 and has stayed virtually the same in 2011.  There’s a long way to go, and extending unemployment insurance is part of the way to get us there.

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9 Responses to Checking in on the Unemployment by Duration Numbers, Fall 2011 Edition

  1. Sebastian says:

    It is a shame of what is going on in the US lately.

    I think everybody should see this video by Robert Kiyosaki.

  2. Sebastian says:

    Actully I wanted to leave my first comment on this article: Occupy Campuses and Violent Police Responses Taking Place Across Countries, Time

  3. Judging from labor income statistics, government transfers (see chart) is largely what has been driving robust consumer spending. Now that the transfer tap is about to be turned off, it’s not clear what will replace transfers as the driver of continued spending, especially, in light of tepid hiring (leading to subdued wage growth) and a stalled stock market (hitting household net worth).

    ADS Analytics

  4. Pingback: Eight Things We Can Say About Extending Unemployment Insurance. | Rortybomb

  5. Ted K says:

    Mike, you didn’t really want to be cited by Tarullo anyway did you???

    If it helps you progress Mike, by all means write some white papers. But I like the blog format myself, and would feel a little sad if your writing became “premium content”.

    One thing that kills me is, a lot of “liberal” writers who supposedly write and “take up the cause” for the poor, often make their writings inaccessible to low-income people. In a free market economy writers have that “right” to make a profit, and I don’t begrudge them that. But how are the poor masses to grasp what is going on if they have to pay $26 plus for a break down when it’s tough enough to fill their gas tank??? Yves Smith is not a 100% bad person, but when her book came out it was $30. Does she honestly think that people going underwater on their mortgage, lost their job, etc have the money to plunk down $30 for a single book?? And by the way, I don’t buy the “My publisher forced the book price on me” excuse. Which I know is the excuse Yves would yank out from her “nether regions”. Nomi Prins recent fiction (which is just as educational in some aspects as many non-fiction books on the crisis) book wastes just as many trees and is $11. I got James Kwak and Simon Johnson’s book brand spanking new less than a month after its release date for $14.

    Who is the target audience for these books??? Wealthy northeastern liberals who are already aware of these things, or the redneck in Oklahoma who isn’t aware or conscious of how much he’s screwed on an ARMS mortgage??? “Singing to the choir” might sell a lot of books (at $30 a pop), but it doesn’t change voting habits or consumer habits.

  6. Pingback: In the News | The Left-Behinds: long-term unemployed, no job ahead | What’s in an inexisting plan for them ? « Skillsinfo's Blog

  7. Pingback: Unemployment insurance exhaustees | The Big Picture « Skillsinfo's Blog

  8. Pingback: Looking For Signs Of Bifurcation | South By North Strategies, Ltd.

  9. Pingback: Thriving in Unemployment | Frugal Living Joe

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