[jsfg_cinti] Discouraging News for the Long-Term Unemployed

Discouraging News for the
Long-Term Unemployed
by John Rossheim
Monster Senior Contributing Writer

Summary
*As unemployment declined in January, thousands gave up looking.
*Many will soon lose their unemployment insurance benefits.
*Unemployment will likely increase before a genuine jobs recovery.

Many of the headlines on February 1 appeared to hold promise for the
jobless: The US unemployment rate dropped by 0.2 percent in January 2002, to
5.6 percent. But the very first clause of the Bureau of Labor Statistics
report bore bad news on the complimentary statistic: "Employment continued
to decline in January." Indeed, the employment rate plummeted by 0.4
percent, to 62.6 percent, its lowest level since August 1994.

How can this be? How can the numbers of both employed and unemployed
Americans decline simultaneously? The answer is dispiriting: Faced with the
continuing deterioration of demand for their skills, large numbers of job
seekers simply stopped seeking jobs.

In the Twilight Zone

By Labor Department standards, workers who have given up are neither
employed nor unemployed, since they don't qualify for unemployment if
they're not actively looking for work. These dispossessed souls, who say
that they want to work, have entered a twilight zone where they are labeled
as "discouraged workers" or "marginally attached" to the labor force, in
government parlance.

How have 1.5 million Americans ended up in this unenviable state? "A lot of
people have just given up for a few weeks," hoping their prospects will
improve in the intermediate term, says Heather Boushey, a labor economist
with the Economic Policy Institute, a Washington, DC, think tank.

For many jobless professionals, especially men, "after they run through
their network, the optimism runs out," and they give up for a while, says
Dorothea Braginsky, a professor of psychology at Fairfield University in
Fairfield, Connecticut.

Where to Turn? 

Many who have at least temporarily given up the job search decide that
further education may help them out of their quandary. "A lot of those
workers are deciding to go back to school," says Anthony Chan, chief
economist at Banc One Investment Advisors in Columbus, Ohio. "You're seeing
college enrollments pick up, and some people with bachelor's degrees are
going directly to graduate school" rather than braving a labor market
glutted with recent grads.

Of course, many discouraged workers lack the flexibility or financial
resources to go back to school. "Some people will just depend on spousal
income" to pull them through the jobs recession, says Braginsky. For these
workers, the first half of 2002 may be a demoralizing waiting game.

For those who have long been jobless but are still looking, the future is
equally unwelcoming. "Long-term unemployment is up, and exhaustions of
unemployment insurance benefits are rising," says Rick McHugh, a staff
attorney with the National Employment Law Project in Dexter, Michigan.
"Congress has passed benefit extensions in every recession beginning with
the 1970s, and we are way past due on getting extensions of benefits in this
recession." 

Prospects for Jobs Recovery

Unfortunately, when discouraged workers do summon the will to resume the job
search, they will help prolong the dearth of jobs by increasing the
oversupply of labor. "These people will eventually come back into the labor
force, which will make the unemployment rate go up," Boushey says.

On the bright side, Chan believes that the US recession has already ended
and the economy actually began to expand in January. But because hiring lags
behind economic recovery, "the bad news is that unemployment will go higher,
peaking at 6 or 6.25 percent," Chan says. "What you see here is a labor
market that likely will continue to deteriorate over the next several
months."

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