Long-term unemployment fell below its pre-pandemic level in July, the US Department of Labor said on Friday. surprisingly strong job gains boosted workers across the economy.
Long-term unemployment is a period of at least six months. Those who have not worked as long are exposed to more financial risk, as they have generally exhausted their eligibility for unemployment benefits and it becomes more difficult to find another job during long periods of unemployment.
The number of long-term unemployed fell by 269,000 in July to 1.07 million people, down from the roughly 1.1 million people in February 2020, according to the Department of Labor’s monthly employment report. work.
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Additionally, 18.9% of all unemployed Americans in July were considered long-term unemployed – a significant reduction from the 22.6% share in June and lower than the 19.1% share before. the pandemic in February 2020, according to the agency.
By comparison, a year ago, in July 2021, more than 39% of all unemployed Americans had been out of work for at least six months.
“Long-term unemployment was a serious concern at the start of the recession,” said Daniel Zhao, chief economist at career site Glassdoor. “We had this experience during the Great Recession where it was very difficult to reintegrate workers into the labor market and find employment again.
The rapid recovery of long-term unemployment from its pandemic-era highs – when 43% of all unemployed were long-term unemployed – is a reminder that a rapid recovery is possible, which can “help to mitigating labor risk-market scars,” Zhao added.
This “scarring” effect refers to the greater difficulty in returning to work after a long period of inactivity. Workers may lose skills and their employment networks may crumble, for example, the longer they are out of work. Research has also shown that even if workers find a new job, they face the negative financial side effects of this long-term unemployment in the form of lower lifetime earnings.
The overall unemployment rate in July fell to its pre-pandemic level of 3.5% – which was the lowest unemployment rate since 1969.
US employers added 528,000 jobs last month, fully recovering the roughly 22 million jobs lost in March and April 2020.
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