Joblessness Low, but Lasts Longer ; for American Workers, the Risk of Layoffs Is Down from Previous Recessions, but the Risk of Staying Jobless Is Up

Article excerpt

By most measures, America's downturn looks unusually mild.

Unemployment remains low compared to the previous two recessions. Economic restructuring looks less severe. Today's jobless dotcom, telecom, and service-sector employees are younger, better-educated, and more employable than the laid-off factory workers of the 1980s.

So why are so many of them worried?

Because this recession is turning out to have its own peculiarities. It's hitting younger workers harder than older workers. It blends with the uncertainties caused by last September's terrorist attacks. And, while the risks of being laid off have fallen from previous recessions, the risks of staying unemployed after a layoff are rising.

As the nation nears the Labor Day weekend and, perhaps, an economic recovery, workers seem unusually jittery.

Consider Randy, a jobless Detroit resident. Ever since returning to Motor City two years ago, he has struggled to find a well-paying job. Never mind that he has a master's degree in sociology or that he's worked in a car dealership and a book bindery. When his 15- year-old car broke down late last month and he couldn't get to his job, his supervisor told him his position had been eliminated.

"I've pretty much resigned myself that I'm not going to get a decent job," says Randy, who withheld his last name.

This trend of higher long-term joblessness contradicts conventional wisdom.

Normally, the higher unemployment goes, the more time the average worker spends unemployed. That's what happened during the late 1960s and 1970s. By November 1982, when unemployment hit a postwar high of 10.8 percent, the average jobless stint reached 20 weeks - eight weeks longer than during the recession of the early '70s.

In the 1990s, that relationship began to break down. In a joint study last year, economists Katharine Abraham and Robert Shimer found that unemployment fell to levels of the 1960s, yet the jobless stint remained 50 percent longer. The biggest change: a huge jump in workers unemployed six months or more.

"Unemployment may not be that high, but those who are losing their jobs are paying a high price," says Jeffrey Wenger, economist with the Economic Policy Institute, a liberal think tank in Washington.

Mr. Wenger says that, as of June, 1 in 5 jobless workers had gone without work for at least six months. While other recessions have seen higher levels, none of the past four has reached such levels so quickly. This comes even at a time when many economists believe the nation is no longer in a recession. …