Did the Long-Term Unemployed Get Jobs Because They Lost Benefits? It's Not Clear.
During April, the number of long-term unemployed dropped nearly eight percent, to about 3.5 million. Does this mean that the end of benefits for the group in December actually spurred them to get jobs? Not necessarily.
.During April, the number of people who'd been out of work for 27 weeks or longer dropped nearly 8 percent, to about 3.5 million. Does this mean that the end of unemployment benefits for the group in December actually spurred them to get jobs? Not necessarily.
The House of Representatives' decision not to renew those benefits has been a key political issue all year. Right before the new year, an estimated 1.3 million Americans who'd been out of work since summer lost unemployment insurance. Democrats called for the measure to be reinstated; Republicans argued that it would spur those people to find new work and that the unemployment rate would drop.
Since January 2008, right before the recession began, here's how the number of long-term unemployed has changed. The number spiked in 2009 and has been slowly tapering since.
And during April the figure dropped 287,000 — meaning a decrease of 908,000 over the course of the past 12 months. The unemployment rate is now 6.3 percent. Were the Republicans right?
When North Carolina ended insurance benefits for the long-term unemployed last summer, the state also saw a drop in its unemployment rate. But analysis from JP Morgan indicated that this wasn't solely because people were suddenly inspired to go find work. Instead, many simply dropped out of the workforce, meaning that they weren't counted among the long-term unemployed — and also that there was a smaller pool of people to use when calculating the unemployment rate.
Here's the last year of national data, comparing the long-term unemployment rate to the participation rate — the percent of the population that is part of the workforce (employed or looking for a job).
This rate saw a big drop in both numbers. Politico's Ben White tweeted that the drop in the number of long-term unemployed is "likely them LEAVING the workforce not getting jobs. Impact of emergency UI expiration." The Washington Post's Ryan McCarthy, however, points out that the participation rate was as low in October and December as it is now.
So there are a few options. One is that the long-term unemployed were forced to look for work with the cancellation of unemployment. Another is that they mostly dropped out of the workforce, and the participation rate stayed steady as other people, energized by an uptick in the economy, began looking for jobs. And the third is that it was a combination and balance of those factors.
The correct answer is probably the third. But you can expect people on Capitol Hill to talk more about the first two, depending on their party identification.