On Friday, we learned that the U.S. unemployment rate had dropped to 9.4%. An initial reaction to the news might have been celebration: it is the lowest rate the U.S. has seen since May 2009. But if you dug into the numbers, you quickly saw that the big decline didn't occur because of hiring. Instead, more workers quit looking for jobs, taking them out of the workforce and no longer counting them as unemployed. This implies two things about the nature of the unemployment problem: many Americans are having trouble finding a job for an extended period, and they're temporarily giving up.
In fact, the data demonstrates these trends quite clearly. The following chart shows how unemployment duration has changed since 2004. It provides the percentages of unemployed Americans who have been out-of-work for 27 weeks or more and for 26 weeks or fewer:
This is an extremely disturbing chart. The long-term unemployment percentage continues to hover around its high of around 45.6% hit last spring. It began to decline a little in the fall, but ticked back up to 44.3% in December.
This data looks even scarier when you consider the current long-term jobless numbers in a historical context. Since 1948, the highest portion of unemployed who were jobless for more than 26 weeks was 26.0%, hit back in 1983. Compare that to the current level of 44.3%. And back then, the group of long-term unemployed consisted of just 2.9 million Americans. Now it's 6.4 million.