The recession that began in the United States in December 2007 and officially ended in June 2009 was one of the deepest and the longest since the Great Depression. The report first compares the prevalence of long-term unemployment across business cycles during the postwar period and offers explanations for its unusually high incidence during the most recent recession. The Trend in Long-Term Unemployment

The percentage of the labor force without jobs for longer than six months (the long-term unemployment rate)—like the unemployment rate—generally rises as economic activity falls. As the latest recession unfolded, the long-term unemployment rate increased from 0.9% in December 2007 to 2.9% in June 2009 (the official end of the recession). While restructuring in the finance, insurance, and real estate industries resulted in worker displacement, employees from these industries may be "better able to find alternative employment in other sectors of the economy because the skills they possess are more readily transferable to employment in other industries." This report compares the long-term unemployed at the end of the three most recent recessions (2007-2009, 2001, and 1990-1991). Figure 4 shows that in 2009 and 2001, unemployed women were as likely as unemployed men to be out-of-work for over half a year. In 1991, in contrast, unemployed women were significantly less likely than men to experience long-term joblessness. They were more likely to be without jobs for longer than 26 weeks in 2009, while their risk of long-term unemployment did not differ substantially from that of other educational groups in 2001 and 1991. Occupation

Both in 2009 and 2001, workers displaced from management, business, and financial occupations had a greater probability of being unemployed for more than six months compared to workers laid off from other occupations. Household Characteristics

Unemployment affects both the individuals who are without work and their families. This section compares workers who have been unemployed for 27 weeks or more with all unemployed workers and all employed workers. "All households" include married couples, single-parent households, and single individuals. The data from the CPS supplement have some limitations in analyzing the household characteristics of workers unemployed for more than six months. Since the supplement collects information for the previous year (when a long-term unemployed worker may have been employed), it may not fully capture the household characteristics of workers at the time the survey is conducted. Unemployed workers include both the long-term unemployed and other unemployed persons. Public Assistance and Supplemental Nutrition Assistance

Households that receive public assistance or benefits under the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program) have low incomes. In 2009, only 1.6% of the long-term unemployed received income from public assistance. Figure 12 shows that an estimated 55.2% of the long-term unemployed had health insurance coverage at some time during 2009. Homeownership

Employed workers are more likely than unemployed workers to own their own home. Figure 13 shows that in 2009, 71.0% of employed workers owned their own home, compared to 56.0% of unemployed workers and 57.7% of the long-term unemployed. Firms may also be reluctant to hire the long-term unemployed because they believe the group's skills have atrophied during their lengthy time away from the workplace. In addition, businesses may discriminate against older workers, who are more likely than younger workers to be among the long-term unemployed. Such a program may encourage high-tenure, high-wage workers to accept lower paying jobs in growing industries by compensating them for the difference in wages from their new and old jobs.
The recession that began in the United States in December 2007 and officially ended in June 2009 was one of the deepest and the longest since the Great Depression. One feature that distinguishes the recent recession from its postwar predecessors is the historically high percentage of workers who have been unemployed for more than six months (the long-term unemployed). This report analyzes the trend in long-term unemployment over the postwar period and offers explanations for its unusually high incidence during the most recent postwar recession. It compares the individual, job, and household characteristics of the long-term unemployed during the latest recession (2007-2009) with the long-term unemployed at the end of the two previous recessions (1990-1991 and 2001).
Long-term unemployment varies across individuals based on demographic and job characteristics. In each of the last three recessions, older unemployed workers were more likely than younger workers to have been unemployed for over six months. While an equal share of unemployed men and women were unemployed for over half a year during the last two recessions, unemployed women were less likely than men to have been out of work for 27 or more weeks at the end of the 1990-1991 recession. Unlike the two previous recessions, in 2009, unemployed workers with less than a high school education were more likely than unemployed workers with more education to have been out of work for at least six months. Also, in 2009, workers laid off from the financial activities and information industries were the most likely to have been jobless longer than 26 weeks. Workers displaced from management, business, and financial occupations were most at risk of long-term unemployment during recent recessions.
Unemployment affects both the individuals who are without work and their families. Households of the long-term unemployed have lower earnings and income than other households (where households include married couples, single parents, and single individuals). In 2009, the most recent year for which data are available, the long-term unemployed were more likely than all unemployed workers to live in households with incomes below the official poverty line. They were more likely than other unemployed workers to receive benefits from the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program) or be covered by Medicaid. In 2009, only 1.6% of the long-term unemployed received public assistance.
Slightly over half (55%) of the long-term unemployed had some type of health insurance coverage at some time during 2009, compared to a larger majority (83%) of employed workers. Although a small majority (58%) of the long-term unemployed were homeowners in 2009, they were less likely than employed workers (71%) to own their own homes.
As the economy recovers and employers increase hiring to meet the growing demand for goods and services, many currently unemployed workers will be able to find new jobs. However, finding work may be more difficult for the long-term unemployed if, for example, employers believe that their skills have deteriorated during their lengthy time away from the workplace. The long-term unemployed displaced from industries in which restructuring has occurred may also have a hard time finding new jobs in other industries, especially if the jobs require skills different from those they possess. Policies to encourage employers to hire the long-term unemployed include wage and training subsidies. Offering wage insurance and reemployment bonuses to unemployed workers may encourage them to accept jobs sooner than they otherwise might have.