One of the most puzzling aspects of the current economic expansion is the persistence of long-term unemployment. After all, payroll employment has now surpassed its pre-recession peak.
Layoffs are down to pre-recession levels and the number of job openings is steadily rising. But as pointed out by Moody’s Analytics, not all is well, with the number of people out of work for extended periods remaining at levels rarely observed during the post-World War II period. What’s interesting is that short-term unemployment is now back to normal levels -- it’s only long-term unemployment that remains stubbornly high. The number of people out of work for less than half a year has fallen back into a range observed during earlier postwar business cycles.
But the number of those out of work longer than half a year remains historically high at 3.5 million. Long-term unemployed workers account for 35 percent of all the unemployed. Nearly three quarters of those out of work for more than half a year have been out of work for more than a full year, a historically high share. Long-term unemployment appears to be particularly acute among those aged 25 to 34, perhaps because many companies cut junior positions when the economy soured several years ago.