The End of the ‘Layoff’

Photograph by Stephen Wilkes

Nobody’s coming back to run this machine.

The persistent tragedy of long-term unemployment is one of the signal features of the post-2008 economic malaise (not quite recession anymore, not quite recovery, post-depressionary slump could work). Those who’ve lost jobs now have stayed out of work for much longer than in previous recessions. Right now 37.5 percent of the unemployed have been jobless for 27 weeks or more. That number has gone as high as 45 percent; in previous recessions, the long-term unemployed have never been more than a quarter of the jobless. Dylan Matthews of the Washington Post has a striking chart.

Matthews and others point out that long-term unemployment is a terrible, grinding wheel from which there is no obvious jumping-off point. The longer you are unemployed, the harder it is to find a job. One of the explanations bruited for the degree of long-term unemployment is the increase in the stigma of unemployment, leaving a large group of people falling deeper into the morass of “you-don’t-have-a-job-so-we-won’t-hire-you.”

There’s truth to that, but it’s worth noting that it has always been much harder for the long-term unemployed to find jobs. You can get some excellent numbers on this from the work of economist Randy Ilg at the Bureau of Labor Statistics. By TMN‘s back-of-the-envelope calculations, your chances of finding a job fall by half if you’ve been unemployed for 27 weeks; that has been broadly true for years, though recently it’s gotten a little worse. It has always been true that, sadly, 27+ weekers are less likely to find a job than to leave the labor force altogether than find a job.

It’s worth adding another data point to the long-term unemployment discussion, and it’s the decline of “layoffs.” The word layoff became a key part of the national economic vocabulary in the late 1970s and early 1980s, as factories shut down and workers were essentially told not to come in. It’s still used frequently in the business press, but now when you read “layoff” it’s most frequently a euphemism for workforce-cut. When Blackberry or Merck  cut workers there’s no commitment to bring them back (and by the way, credit Bloomberg’s Drew Armstrong with avoiding the word and telling it like it is).

You can see the diminishing role of genuine layoffs–ones that may just be temporary–over the decades in the chart above. At one time close to one quarter of the unemployed were on layoff and expecting to be called back to work. Now, in a post-union environment, that idea of layoff is rarely applicable.

Where once companies had formal commitments to bring back union workers, now they’d frequently rather avoid rehiring workers, especially at lower pay. Worst off may be the folks who’ve worked longest for one employer. Decades ago, with years of seniority under their belts, they would have been the first to be hired back from layoffs. Now they may well be the those thrust deepest into the hole, with the fewest tools to climb out.

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