Wednesday, March 28, 2012

Key Workforce Challenge: Persistent Unemployment

An average of 188,400 Oregonians were unemployed in 2011, of which 41 percent had been unemployed long term, meaning at least six months. That was down from 2010, but still disturbingly high compared with 2007 when 98,200 were unemployed and just 12 percent were long-term.

Back in 2007, 40 percent of the unemployed had been looking for a job for less than five weeks. This very short-term unemployment exists even when jobs are plentiful, as people enter the labor market, quit jobs, or are laid off. The share unemployed five weeks or less dropped to just 21 percent of the total by 2011, but the number of short-term unemployed was about where it was in 2007 at more than 39,000. That means the level of short-term unemployment is near normal again.

The number of Oregonians who have been unemployed for six months or more grew from an average of 12,100 in 2007 to 61,800 in 2009 when the total number of unemployed was at its highest. There were 78,600 long-term unemployed Oregonians in 2011, six and a half times the number during 2007. Despite the recent improvements in short-term unemployment, long-term unemployment remains a persistent challenge for Oregon's workforce.

One of the challenges of long-term unemployment is that people may not remain engaged in the labor force long enough to find a job. National figures show that 19 percent of people who have been unemployed for 27 weeks or longer will leave the labor force each month without finding a job. That's twice as many as the 10 percent of long-term unemployed who become employed each month.

About the same share (21%) of the short-term unemployed (less than five weeks) will leave the labor force each month without finding a job. However, the short-term unemployed are three times as likely to find a job, with 30 percent finding a job every month. Comparing the odds of becoming employed among the short-term group with the odds of the long-term unemployed becoming employed, according to the Bureau of Labor Statistics, provides evidence that the likelihood of becoming employed decreases the longer one is unemployed.

While persistent unemployment is certainly one of the big challenges facing the workforce, it's not the only one. OED's Research Division has identified eight key workforce challenges. Future issues of Oregon Labor Trends will feature an expanded overview of each challenge. The remaining workforce challenges that will be explored include:
  • Structural changes in some industries
  • Slow employment growth
  • Businesses struggling to find skilled workers
  • Connecting training to jobs
  • Younger workers damaged by recession
  • Aging workers and looming retirements
  • Special challenges faced by rural areas

For more information on the challenge of persistent unemployment in Oregon, you can read the full article or contact its co-authors, Economist Jessica Nelson and State Employment Economist Nick Beleiciks.

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