A Sign Of The Times - Long Term Unemployment Expanded to 5 Years

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out of work free card
The Bureau of Labor Statistics is figuring out working in America is a disaster.
They have been forced to add new metrics to their current population survey, the ability to collect data for up to 5 years of duration on the long term unemployed. Why do we need more details on duration of unemployment when 2 years in the past has been perfectly fine? Because we now have over 10% of those officially unemployed being so past two years.

Who would have thought we would need statistics on people wanting, needing a job, not being able to find one for half a decade? We do now. From the unemployment report overview, below is the graph of those unemployed (officially), 27 weeks or longer:

 

 

The BLS is reporting 10% of those unemployed have been so 2 years or longer.

 

 

Above is the median time for those unemployed. Notice the dramatic increase over the decade. The median is different from an average, or mean. The median is the half way mark. It means 50% of those unemployed took up to that amount of time to get another job.

 

 

The above is the average length of time, which is different from the median. The average, or arthimetic mean is calculated by:

\text average time=\frac{1}n\sum_{i=1}^nUnemployed(t)_i

Notice the difference between the median and mean. What this implies is there is a large percentage of people who are looking, looking, looking and cannot get any @&*)$@ job! That's why the average is higher, their job hunt is going on so long, it's biasing the average time dramatically upward. What happened to work as a right, a human dignity, as a moral concept, something a good society should always provide to the people? These Americans are not unacceptable, more United States businesses and especially multinational corporations, are unacceptable. Offshore outsourcing jobs, committing age discrimination daily, labor arbitraging workers and even trying to deny them unemployment benefits. It is even worse for those self-employed as temporary workers. Often companies, because they can get away with it, outright stiff them.

Effective with data for January 2011, the Current Population Survey (CPS) will be modified to allow respondents to report longer durations of unemployment. Presently, the CPS accepts unemployment durations of up to 2 years; any response of unemployment duration greater than this is entered as 2 years. Starting with data for January 2011, respondents will be able to report unemployment durations of up to 5 years. This change will likely affect estimates of average (mean) duration of unemployment. The change will not affect the estimate of the number of unemployed persons and will not affect other data series on the duration of unemployment.

There has been an unprecedented rise in the number of persons with very long durations of unemployment during the recent labor market downturn. Nearly 10 percent of unemployed persons had been looking for work for about 2 years or more in the third quarter of 2010. Because of this increase, BLS and the Census Bureau are updating the CPS instrument to accept reported unemployment durations of up to 5 years. This upper bound was selected to allow reporting of considerably longer durations while limiting the effect of erroneous extreme values (outliers).

The new upper bound of 5 years for reported unemployment duration is being phased in over the first 4 months of 2011, as the duration question is only asked of a portion of those unemployed in any given month. (The question is asked of unemployed persons who were not interviewed in the prior month and the newly unemployed. Duration is updated automatically for unemployed respondents who remain unemployed the following month.) By April 2011, all households will have been able to report the new duration upper limit.

We won't be able to zero in on the new duration statistics until next April and lord knows, it will make the headlines when this data is released.

Earlier we showed those who are long term unemployed are responsible, educated and hard working. If you don't believe it, watch the report again. Contrast that report on with this, something we've seen this over and over, employers refusing to hire....the unemployed!

There is one thing that's truly ridiculous and that is using someone's credit score to get a job. Folks, if they could pay their bills out of thin air, they wouldn't be applying for your crappy job. It's seriously ridiculous, if you need a job because you cannot pay your bills, oops, you will get denied a job. This should be made illegal. It's one thing to examine someone's criminal record, quite another to deny someone unemployment on the fact they need....employment.

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Comments

Sad, but the real problem is FIRE

Submitted by on

Not to say that offshoring is not a major factor, but the impact of FIRE remains the largest reason why unemployment is so pernicious.

The reality is that a person over the age of 35 just cannot survive on anywhere close to minimum wage - between health care costs, housing costs, and retirement saving the benefit of working for $10/hour or even $15/hour is simply a net negative.

This is also not taking into account the financial impact of having children.

FIRE affects all of these - the inability of the US to provide a minimum health care safety net is largely due to the health insurance industry.

Housing prices have unquestionably been driven unrealistically high by mortgage lending as well as real estate industry lobbying for subsidies - even excluding the quasi-governmental entities like Fannie and Freddie.

Retirement savings in turn have been plundered again and again via financial industry driven shenanigans - both outright fraud such as various securitized paper as well as indirect fraud via entire industries 'pumping and dumping' ranging from the Y2K internet bubble to ETFs to the modern high frequency trading.

Unfortunately it is quite apparent that the banksters are in charge - the average person doesn't even know how and why he is getting the shaft.

FIRE means financial indendence, early retirement

Submitted by on

I'm not sure what that has to do with the unemployment rate, unless there is another mnemonic I"m unaware of. You might define acronyms so people know what you mean.

But the health insurance lobby putting a strange hold on Americans as well as business, the economy is no doubt and there is also no doubt retirement has been plundered, with the last meager amount, Social Security, clearly the next target.

But I would have to say the #1 financial security issue is a job in America that is under attack.

I've got a running tally on jobs offshore outsourced since 2008 and right now I've got 2.7 million. Companies don't release these numbers so it takes a lot of digging and my running tally maybe way off, but that's over 20% of the jobs lost, we need about 10.5 million to get to "normal" (cough, cough) unemployment rates.

I blame these businesses. They are sitting on massive amounts of cash at the moment too and we need some sort of corporate law reform which requires corporations to employ Americans. Things like tying their tax rate, their executive bonuses, even the overall profits of a corporation , to the health, well-being and welfare of the employees.

That too, a culture of business ethics and work, has been destroyed. It's so bad, something like 83% of people working as 1099-misc, or contract/freelance, have been denied payment. Literally these companies believe they do not have to pay people at all for their labor.

Globalization has really hurt this, we see in tech, companies believe they do not have to pay for even design. I've seen horrific things like online sites which cause workers to "bid" globally for "tasks" and literally they are paying maybe a quarter an hour, 10¢ an hour for skilled labor.

Very Good Saying!

Submitted by on

I've been telling neocons and teagaggers this for sometime, "These Americans are not unacceptable, more United States businesses and especially multinational corporations, are unacceptable." They believe that corporations can, and should be allowed to do pretty much anything they want, even when I point out that the constitution states this "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;" No where does the constitution give any powers to corporations, businesses, or even mom and pop shops. Maybe the ones yelling the loudest should read this very important document!

Mydiscontent

Unemployment

I like how you bolded "officially." There are millions who are not working who are simply not obtaining unemployment benefits. This is a great article and I hope that it educates many.

median

Submitted by on

The median is that point at which half the population, or half the sample of the population, lies below that point, and half lie above that point. So you description of the median graph is incorrect. At the median, half of the unemployed took less than or equal to that amount of time to find a job, and half of the population or sample took a greater or equal amount of time to find a job.
So you lost me before you got to the fancy Riemann Summation after your graphs.

what is 50% to you?

Submitted by on

50% is half. 50/100 = 1/2. Also, this is not a population sample set, it is those being counted as unemployed. The median means half of this sample set, is an assumed even distribution or uniform distribution of unemployed people. The variable is time, the distribution is the unemployed person, weighted evenly, i.e. uniform. The graph means that the duration where 50%, or when half of those unemployed found another job (or were not counted), has increased over time. The median, a singular data point defined by the variable w.r.t. the sample set, does not imply that all elements of the sample set's variable occurred at the median. That's part of the definition of term median.

Actually I did simplify the description for this particular distribution, but the description is correct. If you can't handle a summation symbol, I doubt the probability distribution functions are going to go over real well in a blog post.

The point of the post is not summation symbols or someone not understanding Statistics 101, never mind 501, the point is more and more people cannot get another @&*)$ job to the point of needing to document that fact for half a decade and this is a crisis and a crime.

median

Submitted by on

Your 3rd sentence contradicted your 2nd sentence, and it's x bar(x with a bar over it), not x. I think you understand what you are trying to say, your just didn't do a very good job of explaining it. I'll stick with my comment.

X

Submitted by on

I'm referring to the random variable X, which in this case applies to the unemployed person sample set duration of TIME, or length of t of being counted as unemployed before dropping out or finding a job. The median, defined at \tilde{x} otherwise notated as \mu_{1/2}(x).

In terms of "x w/ bar over it", uh, I can put \text bullshit cow = \text ass*\text jack as variables in an equation and it's valid. An equation is not the same as some nomenclature for a symbol implying an average.

uniform distribution is with the people, the unemployed, I'm saying they are all equal, no assumptions are being made in their distribution and only random variable X, that being TIME is being considered.

Just for you,

\int_{-\infty}^m dF(x)dx \geq \frac{1}2 and \int_m^{\infty} dF(x)dx \geq \frac{1}2

For a normal distribution, the probability density function (f(x) = dF(x) absolute continuous distribution function, oops F(X) is the cumulative distribution function where m is the median) becomes;

f(x) = \frac{1}{\sqrt{2\pi\sigma^2}}\; e^{ -\frac{(x-\mu)^2}{2\sigma^2} }

which is a Gaussian distribution.

the Median is usually denoted \mu and for normal distributions, the mean equals the median and the correct mathematical symbols are:

X \sim\ \mathcal{N}(\mu,\,\sigma^2)

Here we do not have that kind of distribution going on. It's a "fat tail", the mean or average does not equal the median.

Frankly, I do not expect most people to understand what I'm saying in this comment or even the previous one, because one is only going to see this (odds on) if they take an advanced class in probability ad statistics and remembered it and even used it. That said, I really don't expect to be questioned repeatedly when the above post is correct, from the layman terminology to the equations. It is showing that like wages, due to the super rich and now the long term unemployed, the median is diverging from the average and on top of things, we have more and more people who through no fault of their own can't find a frigging job and it's showing up in these two statistical measurements. Q.E.D.

median

Submitted by on

Well there! I guess I must have had that coming. I am not disagreeing with your point regarding the difference between the mean and the median, or the significance thereof of the skewed distribution. The point I made was trying to make was with respect to jargon, terminology, and mathematical symbolism. These things ARE important, and do make a difference, especially in these times of the blogoshere, with so many self-proclaimed experts prattling on about matters in which they actually have no expertise, and are not qualified to discuss, let alone teach.
The fact remains that you are absolutely correct. We do have a problem, a huge problem, which most likely will only be addressed when it materially affects the people who are causing the problem. When or if that happens is way beyond my ability to speculate upon.
Even worse, as you have already pointed out, the data collected by the Department of labor is limited at best, missing a huge number of former participants in the labor force who are, for all intents and purposes, thrown overboard.
So the real question remains: What do we do about it? I had entertained expectations that the Obama administration might have moved the country in a positive direction in solving this dilemma, but with the recent gathering of Wall Street fat cats into the inner circle of Obama advisors, and especially the departure of Paul Volcker from that group, those hopes are dimmed, if not gone. I can only hope that he knows what he is doing, and truly has the interests of the people who are hurting in his heart, as opposed to pandering to the new pharaos.
Glad to see you clarified your original presentation. I'm giving you a thumbs up on your last reply. Thanks for the food for thought. These truly are desperate times.
Steve

SC, sign up for an acccount!

Submitted by on

You are surely right you do have every idiot and their brother writing up nonsense on economic statistics. Even some Academics!

Just because this site is a layman's economics blog, doesn't mean it's nonsense. One of the rules is no economic fiction and it's so easy to make a mistake, hopefully if they are made, someone is out there pointing them out.

Just yesterday I made some typos and I low balled the real number of jobs we need instead of really calculating them out.

On the mathematics of things, we know people's eyes glaze over when even a number if written, they really glaze over on any mathematical concept....

Trying to translate those to layman's concepts, to pound home the fact the data is showing the U.S. is in huge trouble...is a goal.

Any multimedia, graphs, jokes, text, whatever is useful to that goal.

What I've been doing periodically is taking very boiled down equations and putting all sorts of other things, from text to graphs and even funny cartoons, videos....
to try to illustrate the underlying concept. Some better than others...