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The Wall Street Journal: Job Search Stretches Past a Year for Millions

July 25, 2011

By Sara Murray and Phil Izzo

More than one in three of the unemployed workers in several of the largest U.S. states have been out of a job for more than a full year.

Across the country, long periods of unemployment have been more prevalent recently than during previous recoveries going back to the 1940s.

During 2010, long-term unemployment was disproportionately a problem in New Jersey, Georgia, Michigan, South Carolina, North Carolina, Illinois and Florida, according to Labor Department data expected to be released later this month.

Nationally, 30% of the unemployed, or 4.4 million job seekers, were out of work for more than a year in June 2011, up from 29% of the unemployed in June 2010.

"I don't want us to say this is the new normal and move on," said Betsey Stevenson, the Labor Department's chief economist. "It really is going to take a concentrated effort of employers to give people a chance who haven't worked in a while."

In Rhode Island, nearly 31% of the unemployed have been out of work for a year or more. Rhonda Taylor is one of them.

The 42-year-old, who lives in North Providence, R.I., with her husband and three children, was laid off from a $60,000-a-year information-technology post in April 2008 and hasn't worked since. Her unemployment benefits ran out in March 2010. The family's $28,000 in savings, which had been earmarked for retirement and a downpayment on a home, are now gone. Ms. Taylor's husband, who stayed home to care for the children when she was working, doesn't have a job, either.

"Neither one of us can find a job, even a part-time one," Ms. Taylor said. "That's all we need, a minimum wage part-time job in order for us to maintain a roof over our head."

The family receives disability benefits for one child, but doesn't have enough income to cover their $750-a-month rent. "You juggle it for a while and then when there's nothing left to sell off, there's no juggling anymore," Ms. Taylor said. She says she expects the family to be homeless in a month.

Nearly all the states with large shares of long-term unemployed also had jobless rates higher than the 9.6% national average in 2010.

New Jersey was an outlier: The Garden State posted a below-average 9.4% unemployment rate last year. However, a higher fraction of unemployed residents there—37.1%—had been out of work for at least a year compared with any other state. New Jersey, which notched the second-highest per capita income in the country last year, offered higher-than-average unemployment benefits, an average of $394.46 a week at the end of 2010, compared with $296.28 nationwide.

Most other states with large shares of long-term unemployed residents offered jobless benefits below the national average. With federal aid, several states offer unemployment benefits for up to 99 weeks.

Older Americans who are out of work, particularly the highly educated, tend to have the longest stretches of unemployment. That may be one factor in New Jersey and Florida, both of which have older-than-average populations.

Elevated long-term unemployment is likely to be a persistent problem. Americans who are who aresidelined for protracted periods often see their skills depreciate. The longer they are out of work, the harder it is for them to find jobs. Some end up dropping out of the labor market altogether and, in those cases, they rarely re-enter the work force. For the government, that translates into a permanent productivity loss and higher expenses if jobless workers turn to Social Security disability for income.

"What we don't want is all the people who didn't get a seat in the last few rounds to leave the game," Ms. Stevenson said. "It really would be bad for our economy, it would be bad for our country, it would be bad for our society."

Among the 50 states, Nevada had the highest unemployment rate last year, 14.9%. But its long-term unemployment problem was less severe, with 29% of the jobless out of work for a year. In North Dakota, which had the lowest unemployment rate in the country at 3.9% in 2010, just 7.1% of unemployed residents were out of work for at least a year. North Dakota offered an average amount of $316.51 a week in unemployment benefits last year, more generous than the national average.

Meanwhile, there are few signs the labor market is improving. New claims for jobless benefits rose by 10,000 last week to a seasonally adjusted 418,000, the Labor Department said Thursday. The four-week average, monitored because it smooths volatility in the data, fell by 2,750 to 421,250. Claims are still hovering above the 400,000 level that, economists say, indicates employers are adding enough jobs to bring down the unemployment rate.