Here's a dispiriting stat: A record-high 6.55 million workers in the U.S. have been unemployed for 27 weeks or more. Here's another one: The government's broad measure of unemployment - the one that accounts for people who have stopped looking or who can't find full-time jobs - was 16.9 percent in March, up a tick from the previous month. In other words, the long-term unemployed remains a big problem for the economy, perhaps the biggest one. The WSJ's Phil Izzo explains the different measurements:
The 9.7% unemployment rate (officially called the U-3 rate) is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks. The "actively looking for work" definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things.
The U-6 figure includes everyone in the official rate plus "marginally attached workers" -- those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that's all they could find.
Economists have been looking for the U-3 and U-6 rates to narrow, but it hasn't been happening. Dan Greenhaus of Miller Tabak sums up the problem:
"There is concern surrounding the skillset of these individuals and the longer they are out of the workforce, the further their skills erode. However, this action shouldn't be entirely surprising given the fallout in the construction, manufacturing, housing and financial sectors. Indeed, nearly 52% of people are classified as "not on temporary layoff." That is to say, more than half the unemployed are not getting their jobs back."
Where exactly are those folks supposed to find a job? The short answer is no one knows.
*Some interesting points made earlier in the week by Atlanta Fed President Dennis Lockhart (h/t Calculated Risk)
There are two key types of match inefficiency. One is geographic mismatch. In 2008, the percentage of individuals living in a county or state different than the previous year was the lowest recorded in more than 50 years of data. People may be reluctant to relocate for a new job if the value of their house has declined. In addition, many who would like to move are under water in their mortgage or can't sell their homes. The second inefficiency is skills mismatch. In simple terms, the skills people have don't match the jobs available. Coming out of this recession there may be a more or less permanent change in the composition of jobs.