One closely watched aspect of the economy is the relationship between the percent of open jobs and the unemployment rate. Last year, Catherine Rampell wrote an excellent explainer on this, but in short: If there are many unfilled jobs, there tend to be few unemployed — and vice-versa. When plotted on a graph, this relationship is called the Beveridge Curve:
Since the end of the recession in 2009, employers have reported higher and higher rates of unfilled jobs, but there remains more unemployment than we might expect. Visually, this amounts to a rightward shift in the Beveridge curve. In May, the last month for which job openings data is available, preliminary numbers show that the percentage of open jobs was higher than it was when the recession started in December 2007, yet unemployment is still 1.3 points higher now than it was in 2007.
Some blame this phenomenon on slow hiring. Employers have been reluctant to fill open jobs, perhaps because of uncertainty in the economy, or because they are not finding the skills they need.
But Alan Krueger and his colleagues at Princeton have pointed out that it’s mostly the long-term unemployed who account for the lingering high unemployment rates. When we only look at the short-term unemployed, there’s no shift in the Beveridge curve at all:
Another way to interpret that chart is this: The short-term unemployed are snatching up all the jobs. This leaves those who have been out of work for a long time still waiting in the unemployment pool, where they make up a large fraction of job-seekers.
Their prospects aren’t pretty. When Kreuger and his colleagues looked at people who were were long-term unemployed in 2008-2012, they found that after 15 months, only 11 percent had full-time jobs. The majority were either unemployed or had given up looking for jobs. About a quarter were intermittently employed or employed part-time. Here’s a visualization of those results:
Eventually, the authors predict that the Beveridge curve will shift back to normal, but at the expense of the long-term unemployed. The unemployment rate will decrease, not necessarily because more jobs are available, but because more and more of the long-term unemployed will simply give up on finding a job. Given the stacked odds that they face, this would be no surprise.
More from The Washington Post and Wonkblog:
The long-term unemployed might be finally getting jobs – Matt O’Brien
The long-term unemployed struggle to find — and — keep jobs – Ylan Q. Mui