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'Forgotten Story' of the Long-Term Unemployed

In the economic recovery, some jobless workers continue to battle stigma, hiring challenges

Alan Krueger, former chairman of the Council of Economic Advisers

Alan Krueger, former chairman of the Council of Economic Advisers, suggests employer tax credits as incentive to hire long-term unemployed job seekers. — Bloomberg/Getty Images

En español | Ofer Sharone, a university sociologist, calls the plight of 3.1 million long-term unemployed Americans who have been shut out from the gains of an improving economy a "forgotten story."

Despite data showing that hiring has picked up and layoffs have slowed, people who have been out of work for more than six months continue to face bleak job prospects. Almost half of jobless workers ages 55 and older are long-term unemployed.

No government policy or program has made a serious dent in these figures. Long-term unemployment has remained elevated in every occupation, industry and age group since the recession ended five years ago.

"When you look at the percentage of the long-term unemployed, we're still at levels not seen since the Great Depression," said Sharone, a professor at the MIT Sloan School of Management, in a telephone interview. He recently cofounded the nonprofit Institute for Career Transitions in Boston, which pairs job counselors with long-term unemployed professionals ages 40 to 65, free of charge.

See also: Offering real help for the long-term unemployed

"As we see more job openings increase, it doesn't correspond to a decrease in long-term unemployment, as you might expect," he said. "The stigma against them creates a trap that requires other kinds of policies and more targeted programs."

These issues were the subject of a recent panel discussion on Capitol Hill, where labor force experts brought renewed attention and ideas on how to address prolonged joblessness, a remaining legacy of the recession.

Economist Heidi Shierholz of the Washington-based Economic Policy Institute said these down-on-their-luck job seekers make up 2.2 percent of the total labor force. That's triple the percentage of people who were in that situation before the 2008 downturn.

See also: Millennials and boomers in the workforce

"These people are facing hard times, and it just keeps getting harder and harder," said panelist Betsey Stevenson, a member of the White House Council of Economic Advisers.

She said the administration plans to monitor and follow up on efforts that President Barack Obama initiated recently. He ordered federal agencies to end any hiring practices that may put long-term job seekers at a disadvantage. He also created a $150 million grant program for organizations that help them find jobs.

Judy Conti, federal advocacy coordinator for the New York-based National Employment Law Project, said a model for the nation is a Connecticut program that rolled out as a pilot project in 10 cities. The Platform to Employment was created by the nonprofit WorkPlace Inc. in Bridgeport. It was funded by private foundations, including AARP.

The five-week program teaches job seekers new skills while they're coached on how to best present themselves and project confidence. Then they're matched with jobs provided by local employers for a trial period, and their wages are paid by the program. A majority of workers are kept on the job permanently, ending their months or years of unemployment, according to program officials.

Conti called on businesses and government to fund more of these kinds of initiatives to get people back to work. At the same time, she acknowledged the barriers to employment job seekers face every day, such as discrimination by hiring officials based on age or the length of time looking for work.

She urged lawmakers to pass two measures to curb discriminatory practices. One was the Protecting Older Workers Against Discrimination Act, which AARP supports, to strengthen protections against age bias. The other bill, the Equal Employment for All Act, would prevent employers from routinely using credit checks to weed out job applicants. That's because people who have been without a steady income for a long period may have compromised their credit, although there's been no evidence to suggest that a poor rating correlates to poor performance on the job, she said.

The panelists also backed suggestions by others, including Princeton University economist Alan Krueger, the president's former chief economic adviser, to provide tax credits to employers as an incentive to hire long-term unemployed job seekers.

"Companies continue to be reluctant to hire the long-term unemployed, or even call them in for interviews," said Krueger, who wasn't a participant on the panel, to AARP in an interview. "I would like to see Congress address the struggles of the long-term unemployed by extending unemployment insurance benefits, by providing a tax credit to hire workers who have exhausted unemployment benefits and by providing more job search assistance to the long-term unemployed."

Perhaps no group has suffered more than older adults who were laid off from a job and are trying to find a new one. In June it took them an average of 48.1 weeks to find work, compared with 35.7 weeks for younger people, according to the latest government figures. When they do get hired, research has shown that their earnings tend to be considerably lower, jeopardizing their economic security now and in retirement.

"A lot of people go back to work part time or take a temporary job that might tide them over, but it's not getting them back to where they were," said Austin Nichols, an economist at the Urban Institute, a Washington-based research organization. Justin Scoville, a program supervisor for the Arapahoe/Douglas Works center in Centennial, Colo., a federal Workforce Investment Act program, knows that all too well. He's currently working with about 1,000 job seekers whose average age is 45.

"It's extremely difficult to find a job if they've been out of work a year or more," he said. "I have a crop of people who are highly qualified — they were in middle and upper management — who lost their jobs in the recession. They find mostly stopgap jobs like at Home Depot as a cashier or a retail job."

Some are even less fortunate.

"Many older job seekers have given up looking for work and have left the labor force," said Sara Rix, a senior strategic policy adviser for the AARP Public Policy Institute. "Others are underemployed. Both developments have potentially devastating implications for their financial security."

Carole Fleck is a senior editor for AARP Bulletin.

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