Unemployment is bad for employment 2

By Paul Walker 16/04/2013


I have made the point that the longer you are unemployment the less likely it is that you will become employed before but more evidence confirming it comes from this article in the Washington Post:

Here’s one big reason why America’s unemployment crisis may be here to stay. Thanks to the lasting effects of the recession, there are currently 4.7 million workers who have been out of work for at least 27 weeks. And new research suggests that employers will almost never consider hiring them.

Matthew O’Brien reports on a striking recent experiment by Rand Ghayad of Northeastern University. He sent out 4,800 fake resumes at random for 600 job openings. And what he found is that employers would rather call back someone with no relevant experience who’s only been out of work for a few months than someone with more relevant experience who’s been out of work for longer than six months.

In other words, it doesn’t matter how much experience you have. It doesn’t matter why you lost your previous job — it could have been bad luck. If you’ve been out of work for more than six months, you’re essentially unemployable. Many companies won’t even consider you for a job.

One obvious question this raises is, Are companies irrationally discriminating against the long-term unemployed or do they have good reasons for screening out these applicants? The Washington Post article writes,

Privately, many employers worry that someone who’s been out of work for six months “may have outdated skills, or may be a short-timer who is desperate enough to take any work now but will leave when something better comes along.”

One worry with this is that the current cyclical unemployment problems could become structural and very long-lasting.