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The U.S. job market is flashing signs that it’s ready to take off after the coronavirus pandemic tore it apart more than a year ago. Yet, millions of Americans are still trapped in a cycle of joblessness, with the picture looking even more grim for those who’ve been out of work for more than six months.
Nearly 4.2 million people in April were out of work for 27 weeks or more, a key measure that the Department of Labor and economists use to track “long-term unemployment.” That’s more than 2 in 5 of all jobless workers, and it’s 2.7 times higher than in February 2020, on the eve of the first major U.S. outbreak.
Even worse, more than 1 in 4 workers in April (or 27 percent) have been out of a job for 52 weeks or more, according to supplementary data from the Department of Labor.
“Any way you slice it, long-term joblessness is certainly happening right now,” says AnnElizabeth Konkel, an economist at the Indeed Hiring Lab.
Long-term unemployment matters because it has severe implications for Americans’ lifetime career and financial outcomes, economists and workforce experts say. The longer an individual is out of a job, the more likely they are to lose skills, face discrimination from employers, see lower salaries and wages — or drop out of the labor force entirely. The vicious cycle also takes a toll on jobless workers’ mental health, exacerbated by the likelihood that these individuals may have lost their health insurance when they became unemployed.
“When you lose your job, there’s an affect on your self-esteem,” says Timothy Classen, an economics professor at Loyola University in Chicago who studies the correlation between unemployment and suicide rates. “After six months or a year, there’s a feeling of hopelessness. ‘I’m never going to get employed.’ That’s especially more pronounced for lower-income individuals, where the options are limited because of labor market changes and the demand for skills.”
If you’re facing long-term unemployment, don’t let the discouragement keep you from taking action, both with your finances and your job search. Here’s what you should do in the meantime as you look for a new opportunity.
1. Reduce your expenses as much as possible and get creative with how you approach it
At this point in the pandemic, it might be challenging for Americans to tighten their budgets anymore than they already have. But if you’re still dealing with job loss, you might consider re-evaluating your monthly expenses and income to see if there’s anything non-essential you can still eliminate.
That might also come from working with individual lenders and firms that you regularly pay a bill to, to see if you can arrange some type of forbearance program. It’s always worth a shot to ask, and even if there isn’t a federal-mandated payment pause, a local credit union or bank might be willing to work with you.
You might find that refinancing your mortgage or transferring lingering credit card debt to a balance-transfer card might reduce some of your monthly expenses by shaving hundreds of dollars off of your monthly interest rate payment. Perhaps you can downsize your home and move in with family or take on a part-time job to help get you by. Over the longer-term, moving to a new region where jobs in your industry are more readily available might be worth considering.
“For those still trying to manage their personal finances in the face of reduced income or unemployment, it is important to reduce expenses as much as possible, and to work with creditors including utilities, lenders and landlords or mortgage servicers to get through this difficult time,” says Mark Hamrick, Bankrate senior economic analyst and Washington bureau chief. “For some, even part-time or gig employment might be one solution.”
2. Stay on top of unemployment assistance
The long-term unemployment picture is growing increasingly complicated as firms, mostly among the restaurants and retailers that took that hardest hit from the pandemic, are echoing woes of being unable to find enough qualified workers.
McDonald’s said Thursday it plans to boost its hourly wages for both entry-level workers and managers to help retire and retain workers. Chipotle plans to woo workers with sign-on bonuses for apprentices and managers.
Republican lawmakers see ramped up unemployment benefits as to blame and 16 states are now moving to cut jobless aid, impacting some 1.9 million workers, according to the Washington Post. Treasury Secretary Janet Yellen, however, said a lack of child care and ongoing fear of getting COVID-19 exposure in the workplace could also be keeping potential workers at home.
All of this might make Americans feel guilty about utilizing unemployment insurance (UI). But that jobless aid can be a crucial way to backstop your finances if you’re unemployed, while some studies suggest it can help to reduce that long-term financial scarring. Don’t let the stigma interfere with your interest in applying for aid that’s out there for you.
The UI picture looks uncertain over the coming months, but generally speaking, you should find an extra $300 in your weekly check and those benefits should last through mid-September. If you’ve experienced any delays, follow up with your state unemployment office as soon as possible to determine what the hold up might be.
3. Don’t feel like you have to explain your job gap
One of the reasons why long-term unemployment poses significant challenges when those jobless workers try to seek a new position is because employers don’t always look kindly on a gap in their resume. Some labor market experts, however, are hoping the unprecedented nature of the pandemic and its public health risks will change that perception.
You might feel inclined to explain your job gap, but don’t feel as if that’s necessary, especially as it might pertain to something deeply personal, after nearly 600,000 Americans died of the disease.
“This recession was felt through every part of the economy and some people’s lives were simply turned upside, whether that was on the childcare front or where people were working,” Konkel says. “It hit every sector, so I would certainly hope that a hiring manager would take that into consideration if they’re looking at a resume that has gaps in it.”
4. Think about how much income you need to sustain your lifestyle
Americans’ lifetime earnings are impacted by a long bout of unemployment, with many workers feeling desperate to take the first job that might be available to them, even if it means taking a significant pay cut from what they were used to paying.
Once you evaluate your budget, you might be able to get a good grasp on your survival number — that is, the amount of money you have to have coming in every month to cover essential expenses, such as food, your car payment or your mortgage payment. That might help you get a better idea of whether an opportunity that comes your way is worth taking — or worth passing up.
“I would encourage job seekers to continue applying, continue looking, but to have a real conversation with themselves about budget: What do they need, what is their minimum in terms of compensation or pay,” Konkel says. “Even in the best of times, it’s a very frustrating process to job hunt, and in a lot of situations we don’t want to take something and realize, ‘Oh, actually, that’s totally not going to work with your life if you cannot pay the rent with that job.’”
Individuals, however, might not feel comfortable about passing up on any opportunity if they need more income coming in. In those instances, switching to a better job once the opportunity presents itself, especially if the pay isn’t what you deserve when considering your experience, industry and location.
Your salary “goes beyond just what you do day-to-day, but it affects your income, your lifetime earnings,” Konkel says. “It can have huge impacts on where somebody lives, if they can pay their mortgage or rent. That is a particularly heartbreaking aspect, and one that’s left out of the debate when people say they’re hiring, but it’s not in the field that one could be in, or it’s a tremendously huge cut in terms of compensation.”
5. Seek out job-training opportunities
Whether you’re unemployed still or taking on a temporary opportunity to receive income, don’t underestimate the value of developing new skills and brushing up on the ones you’ve already developed. That could come by taking on a new project or temporary position or even utilizing online courses or classes that might help set you apart from other job applicants.
But that might be frustrating, particularly as lower-income individuals and less-educated workers have endured the brunt of coronavirus-induced job losses. They might not have the wherewithal to afford new training and might feel more resigned to taking on a position with less compensation than before, Classen says.
“Job training is easy to suggest that’s what should be done, just go get new skills, but when you’re [age] 50, you’re not going to be learning programming to compete with a 23 year old,” Classen says. “To be entrepreneurial, that takes energy, and a lot of people have been drained of energy because of the repeated economic challenges they’re facing.”
For those reasons, a federal government jobs program might be the best answer, he says. President Joe Biden has floated more than $4 trillion in infrastructure spending with the intention of creating millions of good-paying jobs, though it faces a steep uphill battle in Congress, with lawmakers already hesitant about spending too much on the crisis as debts and deficits balloon.
6. Leverage your professional network
Positions might not always be advertised online, meaning it might be worth reaching back out to individuals or colleagues whom you knew at previous positions. They could help you find a position that might be more tailored to your skills and compensation level.
7. Don’t be afraid to ask for help
But given that one of the most prominent individual tolls of long-term unemployment is a hit to one’s mental health, Americans shouldn’t give themselves grief for utilizing any kind of service or relief program that’s available to them — whether it’s at the federal level or in your local community.
“As we saw a boom in demand for assistance from food banks and other charities, there’s no harm in seeking assistance, particularly given that this has been one of the most dramatic and sudden economic downturns in our history,” Hamrick says.
Loyola’s Classen hopes the widespread nature of the pandemic might help to reduce that stigma, limiting the mental health toll of long-term unemployment.
“This idea that, as a collective, we all got hit with the pandemic at the same time, so you feel more connected to people around you,” Classen says. “There is something about the fact that we all went through it.”
The U.S. economy lost nearly 15 percent of all jobs in just a three-month span when the coronavirus outbreak swept the U.S., according to the Department of Labor. The jobs recovery is shaping up to take much longer, with just 64 percent of the 22.2 million job losses currently recovered.
All of that means circumstances out of Americans’ control might be what’s keeping them out of work. The U.S. economy has a long way to go before it fully recovers, even with economic growth projected to grow by the fastest pace in four decades.
“You’re going to see a boom in the economy and very low unemployment rates, but there will be some areas of the economy that are in transition for a number of years,” says Joe Bruseulas, chief economist at RSM. “That damage is going to be profound inside leisure and hospitality, within brick and mortar retailers, eating and drinking establishments. They are really going to bear the brunt of the adjustments; these are individuals who are likely to not get all of their jobs back. That’s all going to happen simultaneously with the biggest American boom since the ‘80s, and it may be lost to that boom.”
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