Friday, December 20, 2013

Only 1% of Unemployed get Job Interviews

According to a report by the Federal Reserve, only about 10% of people who are currently employed can get a job interview; so what are the odds if one is unemployed? Especially if they have been out of work for 6 months when their State unemployment benefits come to an end? (Extended Federal UI benefits end shortly after Christmas.)

A paper by Rand Ghayad (from the research department of the Federal Reserve Bank of Boston) showed that the long-term unemployed are struggling to find work, no matter how many job openings there are. Using the broader measure of unemployment (the U-6 rate or the U-7 rate) there are about 6 people unemployed for every job opening (and that doesn't include millions of so-called "discouraged workers" who are no longer counted).

According to earlier research by the National Bureau of Economic Research, the chance of being called for a job interview falls by 45% as unemployment lengthens from one to eight months.

According to other research by the Federal Reserve Bank of San Francisco, by the time someone has been out of work for six months, the chance for reemployment drops to 10%.

Last year in a New York Times article called The Human Disaster of Unemployment, economists Dean Baker and Kevin Hassett said that a worker between the ages 50 and 61, and who had been unemployed for 17 months or longer, only had about a 9% chance of ever finding a new job.

A U.S. Government Accountability Office study identified employer reluctance to hire older workers as a key challenge that older workers face in finding reemployment; and that the number of workers age 55 and over who are experiencing long-term unemployment has grown substantially since the recession began.

But all studies show that, the longer one was unemployed, the lower their chances were for ever finding work again.

Now it appears that finding a job for anyone (whether they're older workers or younger workers,) is becoming even more difficult than previous thought --- whether they are currently employed or unemployed.

Below are excerpts from a 29-page study by Rand Ghayad titled The Jobless Trap regarding " job interview request rates".
"Three recent audit studies on nonemployment discrimination report results [that are] consistent with the long-term jobless having significantly lower chances of being invited to job interviews...The rate of decline in interview requests appears to drop sharply after six months of nonemployment...Résumés for employed applicants have a 10.25 percent chance of receiving an interview request...Evidence suggests that discrimination is an important factor to why individuals with long nonemployment spells are doing poorly in the labor market."
So if working people only have a 10.5% chance of a call back for a job interview, then what are the odds for someone who's been unemployed for 6 months? Or what if they've been out of work for one year or longer? What are their odds for being called back for a job interview? And what are the odds for them of actually being hired for a job if they were lucky enough to land a job interview?

Rand Ghayad may have answered those questions for us in an interview he did for the Wall Street Journal: "Once you are long-term unemployed, nobody calls you back."

Conclusion: People with jobs have about a 10% chance of a getting a job interview (but not necessarily hired for that job), whereas someone who has been out of work for 6 months or longer might only have a 1% chance (and any longer, their chances fall, as the odds become even more remote).

And if someone has been unemployed for more than a year (when the Bureau of Labor Statistics stops counting these "discouraged workers"), then the odds are most likely impossible --- and they may never work again (unless that person is a prodigy, such as a 16-year-old genius holding multiple PhDs and is discovered by a company like Microsoft.)

And because the Federal Reserve predicts the labor force participation rate to decline even further in the years ahead, as was noted at Bill Moyers' website, the long-term unemployment trap could get worse than it already is today.

If you lose a job next year, good luck, you will need it --- just ask over 20 million other Americans who have already exhausted all their unemployment benefits, and still remain unemployed and are no longer counted in the "official" unemployment rate.

Below are charts from Rand Ghayad's report
Rand Ghayad study (Boston Fed) Unemployment and  job interview request rates

Bud Meyers' Related Posts:
Discouraged Workers, not Disabled, Shrinking the Labor Force

Long-Term Unemployed Now Desperate

Millions are Middle-Aged and Unemployed -- and Screwed

For High School Grads, the Labor Market is Brutal

Falsely Blaming Baby Boomers for Smaller Labor Force

Finally! A GOP Jobs Plan will Soon be Launched!

Jobs Report: Lipstick on an Economic Pig

3.8 million Unemployed keep another 9.7 million Jobless

High School Drop-Out Debunks Economics Professor
Fed Expects Further Decline in Labor Force
* Here's a news item: "The unemployment rate is 100 percent for the folks huddled over computer terminals at the Salem unemployment office."

* You contact Bud Meyers at his blog.

1 comment:

  1. UPDATE:

    Countering earlier arguments of why the LFPR [Labor Force Participation Rate] has been declining (e.g. an aging population, retirees or those going on Social Security disability), researchers have recently found:

    "The decline in LFPR among prime-age workers [ages 25–54] is a major contributor to the overall decline in LFPR. Prime-age workers fell from 81.6 to 81.0 with similar declines for both men and women. Given that prime-age workers make up more than half of the population, it is not surprising that the drop in the LFPR for these age groups accounts for a substantial fraction of the overall decline."

    http://macroblog.typepad.com/macroblog/2013/12/labor-force-participation-rates-revisited.html

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