The Unemployment Problem – This Time is Different (Part 2 of 2)
July 7, 2011    Disclosures    POSTED IN  Economy

Pop quiz. How long has the average person, who is filing for unemployment, been unemployed? The answer, as of the May Employment Situation Report… 39.7 weeks. Prior to the last recession the average duration of unemployment never exceeded 21.2 weeks (1948-20011).

While the unemployment rate peaked at 10.1% in October 2010, the average duration of unemployment has continued to rise, nearly without fail, for three years.

Average Duration of Unemployment


While the rise in the average duration of unemployment has risen nearly unabated since early 2008, there is a second story that lies just beneath the surface; that of long term unemployment. To report how long an individual has been unemployed, the Bureau of Labor Statistics (BLS) segments the duration of unemployment into four parts. These categories are less than 5 weeks, 5-14 weeks, 15-26 weeks and 27 weeks and over.

Since 1948, the percentage of unemployed individuals who have been unemployed for 27 weeks or more has averaged 14% and never topped 26%. Today it has reached 45%. The implication is that, today individuals are either unable or unwilling to find employment as quickly as they were after other recessions in the United States.

While the 27 weeks and over cohort has remained stubbornly high, all other groupings of duration of unemployment have decreased.

Looking at the chart below (a combination of the four charts from above), it is evident that the United States has a “long-term” unemployment problem. This issue is one that the country has not faced in the post Great Depression era.



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