4.16: Long-Term Unemployed

The term long-term unemployed describes individuals who continue to be without work for a prolonged period while actively searching for employment. The specific duration used to define this status varies from one country to another. For example, in the United States, the Bureau of Labor Statistics (BLS) defines the long-term unemployed as people who have been actively looking for work for 27 weeks or more, but have not found a job.

Although the BLS focuses on the ongoing spells of unemployment, economic studies often consider completed spells of unemployment.

Long-term unemployment is a serious issue because the longer a person stays unemployed, the harder it becomes to find a job. Their skills may become outdated, and employers may hesitate to hire someone who has been out of work for a long time. This can lead to financial difficulties, mental stress, and reduced confidence.

When someone remains unemployed for a long period of time, financial pressures often grow. Savings may get exhausted, and daily living expenses become harder to manage. People may have to sell their assets in such cases.

The impact can be even more severe when the unemployed person is the only earning member in the household. In such cases, children in the family may face disruptions in schooling

Some individuals may agree to work for lower wages just to return to the labor force.

These effects suggest that long-term unemployment can lead to enduring difficulties in an individual’s life.

The term long-term unemployed refers to people who remain unemployed for extended periods while actively seeking work. It is defined differently across countries. For example, in the United States, the long-term unemployed are those who meet the Current Population Survey definition of unemployed and whose unemployment has lasted for 27 continuous weeks or more. However, in Germany, this duration is defined as 12 months or longer.

The term hysteresis describes prolonged periods of high unemployment in the economy. When people face unemployment for months, this situation can have serious financial, emotional, and intergenerational consequences. Indeed, hysteresis can persist even after the economic conditions improve.

Prolonged unemployment often depletes savings and may lead to emotional stress.

When the unemployed individual is the sole breadwinner and the family does not have substantial savings, children may face serious consequences. Reduced household income may lead to disruptions in schooling in such situations.

Studies show that the longer workers are unemployed, the less likely they are to find work.

Also, many such workers are willing to accept even jobs with lower pay, simply to reenter the workforce.