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Monday, April 19, 2021

How concerned should Americans be about long-term unemployment?

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With fewer people applying for jobs, fewer workers need to drop out of the labor force in order to qualify as unemployed. But some workers are finding it difficult to find jobs.

The Bureau of Labor Statistics has been tracking labor force participation by its component of employed people and unemployed people since its inception in the early 1940s.

The three-month rolling average of “people not in the labor force” for the recent unemployment insurance (UI) seasonally adjusted series is 5.00 in September, below last month’s 5.09. It’s also below the average of 5.54 from July to September of this year.

However, a Reuters analysis of reported hourly wage growth indicates some downward pressure on wages.

The index for weekly median weekly wages for nonsupervisory employees, which excludes supervisors and executives, fell 0.3 percent in September, a decline that would lower the week-over-week total of the lagging three-month rolling average of people not in the labor force. The dollar value of the decline was $39 billion in the U.S. economy, suggesting that wages fell and discouraged workers dropped out of the labor force.

After averaging about 111,000 from October 2015 to January 2017, weekly wages for nonsupervisory employees have declined by a total of $5 billion to $103.7 billion through the first three months of 2018. It is down nearly 18 percent from its highest peak of $138.3 billion in October 2015.

And while last month’s 4.1 percent unemployment rate is near all-time lows, the long-term unemployed (people without a job for 27 weeks or more) is still at its highest rate on record, at 5.9 percent, according to Labor Department data.

In January 2018, the number of long-term unemployed workers averaged 4.87 million, an increase of more than 100,000 over the number reported in January 2017.

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