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A stigma no longer? Companies hire more long-term unemployed as they struggle with worker shortages

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Illustration: Colin Smith/USA TODAY Network, and Getty Images

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Derek Butler figured he would be unemployed for a short spell when he lost his job as marketing director at an event production company in early August 2020.

But as the weeks turned into months, “I had to do some soul-searching,” says Butler, who lives in Marlboro, New Jersey.

He also sent out about 200 resumes and worried he might lose a race against time. His unemployment benefits were likely to run out in the spring.

“I did not want to be in a situation where I had no income,” Butler says.

Eight months later, in late March, Butler finally landed a job as digital content manager for a pharmaceutical company.

“It was the biggest relief,” he says. “It was the first night of real sleep I had in eight months.”

The struggles of many long-term unemployed Americans like Butler may be starting to ease. Last month, the number of people unemployed six months or longer fell by 431,000 – the second-largest decline on record – to 3.8 million, according to the Labor Department’s May jobs report, which came out Friday.

Even with that drop, though, the number remains historically high and has tripled amid the COVID-19 pandemic. Also, the decline represents just one month of data, which can be volatile and is subject to revision. Still, the size of the decrease seems to reflect positive trends: improving fortunes for the chronically jobless and employers’ growing willingness to consider candidates with gaps on their resumes amid widespread worker shortages, economists say.

“As the job market gets tighter, (employers) are going to be less picky,” says Gus Faucher, chief economist of PNC Financial Services Group. “They’re more willing to hire people with blemishes on their record.”

The drop in long-term unemployment, if it continues, would be a welcome development for the recovery from the coronavirus recession. Workers who experience long bouts of unemployment often have a tougher time getting hired because their skills may erode and they face bias from employers. As a result, economists have feared that long-term unemployment could be a legacy of the downturn, upending the lives of those affected and crimping economic growth.

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There's a wild card in the push to return to post-pandemic life: Workers don't want to go back to their old jobs. Layoffs, unemployment benefits and stimulus checks gave many Americans the time and the financial cushion to rethink their careers. (May 18)
Is long-term unemployment different now?

Is long-term unemployment different now?

Yet other economists, as well as staffing officials, have argued that long-term unemployment is different this time. About 22 million Americans lost their jobs in an unprecedented wave a year ago. As a result, companies likely would not view a long spell of joblessness as a blot on a career.

Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University, believes long-term unemployment still carries a stigma, even during the health crisis.

“There’s a bias people have about people who aren’t immediately back at work,” he says. “They think, 'What’s wrong with that person?'”

Many of the long-term unemployed get help at local career centers.
Many of the long-term unemployed get help at local career centers. Eileen Blass, USAT

The stigma, and the concern that the chronically jobless lose skills, is likely less of an issue for the millions of restaurant servers and retail associates who lost jobs in the greatest numbers in spring 2020, Van Horn says. Higher-skilled unemployed workers, he says, stand a better chance of landing positions if they take courses or training to upgrade their qualifications while they’re out of work.

After the Great Recession of 2007-09, the ranks of the long-term unemployed remained elevated for years, representing about one-third of all the jobless as late as 2014. Last month, they accounted for 40.9% of the unemployed, down from 43% in April but more than double the share in February 2020.

Van Horn says he’s optimistic extended unemployment will not be as big an albatross for the economy this time because of the $6 trillion in relief the government has provided households, as well as the savings people have amassed by forgoing travel and other activities over the past year.

“There’s a big jump in demand,” he says. Indeed, Americans this summer are poised to spend their cash just as vaccinations are increasing, COVID-19 cases are falling, and states are allowing businesses to fully reopen. This year, the economy is projected to grow at the fastest pace since 1984 and add as many as 8 million jobs – the most ever.

Worker shortages help the long-term jobless

Worker shortages help the long-term jobless

At the same time, employers can’t find workers to meet the surging demand. A record 44% of small businesses have job openings they can’t fill, according to the latest survey by the National Federation of Independent Business. Some jobless workers prefer to remain on unemployment benefits, which include a $300 federal bonus, some economists and employers say. Others are fearful of contracting the coronavirus or caring for kids who are still distance-learning at home.

The labor shortages appear to be starting to help the long-term unemployed.

“Employers start looking at less traditional spots,” Van Horn says. “They look harder.”

Butler, the marketing director, had just a couple of interviews when he job-hunted from August to November. But then, on the advice of a friend, he shifted tactics and focused more on networking, joining a group and frequenting social media sites. He notched a few dozen interviews and found the job at the pharmaceutical company through a friend.

Butler also took digital media courses, helping him land the position, he says.

“A number of employers commented that they were extremely impressed that I was using time out of work to strengthen my skill set,” he says.

Derek Butler, of Marlboro, New Jersey, who lost his job as marketing director in early August
A number of employers commented that they were extremely impressed that I was using time out of work to strengthen my skill set.

Rishi Khanna, CEO of ISHIR, a Dallas-based software company, says he recently hired a software developer who had been out of work since September.

“Before the pandemic, we would have been very unsure. … We may not be hiring the best person,” Khanna says.

But he says he felt more confident because the candidate had taken three online courses in software development and project management.

“Once we saw he was investing time upgrading his skills we were more comfortable,” he says. “We didn’t hire person X. We hired person X 2.0.”

'I don't even care to ask'

'I don't even care to ask'

Envision Tees, a custom T-shirt printing company in Dubuque, Iowa, is seeing demand rebound strongly as companies begin scheduling trade shows and other corporate events. The CEO of the company, Tom Rauen, says he has been struggling to add five employees to his staff of 34, forcing him to turn down orders.

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President Joe Biden says anyone collecting unemployment who gets offered a suitable job "must take the job or lose their unemployment benefits." (May 10)

Pre-pandemic a long bout of joblessness "was more of a red flag," he says. "Why hasn't this person gotten hired somewhere else?"

And now?

“It doesn’t bother me if (candidates) have been off for six months, a year or two years,” he says. Noting that many people took a break for health reasons or to care for relatives, he adds, "I don’t even care to ask what they did for the last year.” 

Perhaps, he suggests, the hiatus makes them better employees. "Maybe they come back even more recharged." 

Rauen says he recently hired two workers, in production and customer service, who had been out of work for a year.

“I think there may be an adjustment period of getting back into the routine of office life,” he says. “However, I think if the candidate has the skills and values that align with your needs, then prior time off shouldn’t be a factor.”

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