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Labor Secretary: Long-term Unemployment Keeps Me up at Night

The plodding recovery in the U.S. job market isn’t doing much to help the long-term unemployed. But Labor Secretary Tom Perez says that doesn’t mean we should stop trying.

Last month, I reported on mounting evidence that even a stronger economic recovery wouldn’t create jobs for workers who have been jobless for more than six months. Only about 10 percent of the long-term unemployed find work each month, and even those lucky few mostly end up in temporary, part-time or informal jobs. What’s worse, their luck has barely improved even as the overall economy has gotten stronger.

On Friday, I had the chance to speak with Perez shortly after his agency released its monthly jobs report, which estimated there are still 3.8 million Americans who have been out of work for more than six months, down from 7 million in 2010 but still nearly three times as many as when the recession began in December 2007. Perez called the number “unacceptably high.”

“Long-term unemployment is what really keeps me up the most at night,” Perez said. “We’re making some progress but we continue to be at near-record highs.”

Some of the most troubling research on long-term unemployment comes from a former Obama administration official, Princeton University economist Alan Krueger, who in a paper published last month found that the long-term jobless aren’t doing meaningfully better even in states where the recovery has been stronger.

“An improving economy will help, but it’s not enough,” Krueger told me at the time.

Krueger’s research, and other similar work, has led some experts to conclude that the labor market is better than the 6.7 percent unemployment rate would suggest. In a nutshell, if the long-term unemployed will never work again, then they no longer count when we’re trying to assess the state of the job market, meaning there are effectively fewer unemployed workers than it seems. (This is closely connected to the issue of “potential” that my colleague Andrew Flowers discussed in an earlier story.)

But Perez rejects any suggestion that we should give up on the long-term unemployed, or discount them when assessing the economy. (To be clear, Krueger isn’t suggesting we do so, either.)

“I think that would be horrible for our economy,” Perez said. “Put aside the moral and ethical implications, that would be horrible for the economy to simply kick millions of people to the curb permanently.”

Perez said one clear implication of Krueger’s work is that the government needs to do more to help the long-term unemployed directly and not just wait for the economy to rebound. He pointed to the Labor Department’s newly announced $150 million “Ready to Work” program, which aims to help the long-term unemployed through retraining, counseling and other assistance. And he endorsed expanding programs that provide government subsidies for employers that hire the long-term unemployed — although he acknowledged that such programs are costly.

“The challenge with the program, to be totally transparent, is it’s not cheap,” Perez said. “How do you scale this in the era of austerity?”

Ben Casselman was a senior editor and the chief economics writer for FiveThirtyEight.