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Center for Workforce Information & Analysis
Pennsylvania Department of Labor & Industry
September 2010
 
Executive Summary
 
The U.S. economy is in the midst of the longest period of high joblessness since the Great Depression of the 1930s. The high rate of unemployment has prompted an ongoing debate about the need for public policies that stimulate job creation and more directly assist the unemployed.
 
To help lawmakers and the general public make more informed decisions about job creation policies and assistance for unemployed people, this report provides a comprehensive profile of unemployed Pennsylvanians. The report presents the basic facts on Pennsylvania's unemployed, including their demographic characteristics and educational background, where they live, their work histories, and the industries and occupations of their last job.
  • Most unemployed Pennsylvanians are of prime working age. Fully 92 percent are aged 20 or older and nearly six out of every 10 are aged 25 to 54. Nearly two-thirds (65 percent) of Pennsylvania's long-term unemployed - those unemployed for more than 26 weeks - are aged 25 to 54.
     
  • The demographic characteristics of Pennsylvania's unemployed people reflect both the demographics of the state population and the fact that minority groups have higher rates of unemployment. Three-quarters of Pennsylvania's unemployed people are white compared to a white population share of 83 percent. African-Americans account for 13 percent of unemployed people and 9 percent of the population; Hispanics account for 9 percent of unemployed people and 4 percent of the population.
     
  • The geographic distribution of unemployed people similarly reflects the population distribution of the state, while rural areas and central cities have higher rates of joblessness than most suburban areas. The 22 Pennsylvania counties with unemployment above 10 percent in June 2010 included 20 rural counties and the city of Philadelphia.
     
  • Most people who are unemployed in Pennsylvania have an extensive work history. Of Pennsylvanians unemployed in 2009, roughly half had no previous unemployment claims from 2001 to 2007. Over this same period, 80 percent worked at least five of seven years.
     
  • Many of Pennsylvania's unemployed have significant education. Four out of every 10 unemployed Pennsylvanians - some 233,000 people in the first half of 2010 - have more than a high school education. Eight out of 10 of Pennsylvania's unemployed people - over half a million unemployed people in the first half of 2010 - have at least a high school diploma.
     
  • Occupational data also drive home the significant skills of currently unemployed Pennsylvanians. For example, nearly 39,000 managers and supervisors, roughly 22,000 educators, more than 15,000 engineers, scientists and computer professionals, and 9,500 writers, reporters, actors and related occupations are unemployed.
     
  • A disproportionate share of unemployment comes from occupations that felt the most direct effect of the housing crisis on the construction industry. In both Pennsylvania and nationally, the unemployment rate among blue-collar construction occupations equaled 23 percent in the first six months of 2010.
     
Research on the economic and social costs of unemployment, summarized near the end of this report, shows that unemployment can have devastating effects on individuals and families. Long-term declines in annual earnings for dislocated workers fall in the range of 20 percent. For a worker who was earning $50,000 per year, that's an annual earnings loss of $10,000.
 
In Pennsylvania and the United States, there are currently four to five unemployed people for every job opening.1 The current labor market situation and the cost of unemployment point to the importance of going beyond profiling unemployed Pennsylvanians to implement policies that reduce unemployment and help the jobless. To assist with the development of these policies, Pennsylvania has recently formed a Pennsylvania Task Force on Long-Term Unemployed, as a temporary sub-committee of the state Workforce Investment Board. This report provides a fact-based foundation for the work of the Task Force.
 
Stephen, Erie County
 
Stephen, a Navy veteran who lives in Erie, worked for years as a heavy-equipment operator. But, after traveling the world for the Navy and traveling to find work, Stephen decided to put down roots and make a contribution in his community. Health care appealed to him, and he enrolled in the Mercyhurst Northeast Licensed Practical Nursing Program. Unfortunately, when he graduated in March 2009 there were no jobs available. After a 6-month medical tour in Iraq, he returned to Erie and turned to the PA CareerLink® Erie County for help.
 
"I feel like I have partners there. They call me, encourage me, and keep me motivated in my job search. They give me hope and help me put my best foot forward," says Stephen. He recently interviewed for a full-time job through a referral made by the veteran's coordinator at the PA CareerLink® Erie County. He hopes to be working soon, and plans to continue his nursing education and training.
 
Rising Joblessness in Pennsylvania
 
The number of unemployed people in Pennsylvania from 2005 to 2007 ranged between 275,000 and 312,000 (Figure 1). By the first half of 2010, the number of unemployed Pennsylvanians had roughly doubled, averaging 598,000.
 
Figure 1. The Total Number of Unemployed Workers in Pennsylvania 2000 to 2010 (January to June)
Figure 1. The Total Number of Unemployed Workers in Pennsylvania 2000 to 2010 (January to June)
Source: Local Area Unemployment Statistics data
 
The number of Pennsylvanians unemployed for more than 26 weeks, which economists call the "long-term unemployed," has more than doubled (Figure 2). No more than 65,000 Pennsylvanians were long-term unemployed in the 2004 to 2008 period. By the first half of 2010, this number had increased more than three times, to 232,000.
 
Figure 2. The Long-Term Unemployed in Pennsylvnia 2000 to June 2010
Figure 2. The Long-Term Unemployed in Pennsylvnia 2000 to June 2010
Source: Local Area Unemployment Statistics data and the Current Population Survey
 
Who Are Pennsylvania's Unemployed Workers?
 
This section details the characteristics of people unemployed in Pennsylvania in 2008 through the first half of 2010. This period covers the most severe recession experienced in the United States since the Great Depression.2
 
In broad terms, the characteristics of unemployed in Pennsylvanians reflect the characteristics of the workforce as a whole, although some groups suffer unemployment at higher rates than others. All parts of the workforce have experienced significant unemployment.
 
The Demographics of Unemployed People in Pennsylvania
 
Men accounted for 60 percent of all unemployed Pennsylvanians over the period 2008 through June 2010. Over this period, more than nine out of every 10 Pennsylvania workers unemployed (92 percent) were 20 years or older (Figure 3). More than half of unemployed workers (58 percent) were adults aged 25 to 54.
 
In terms of race and ethnicity, Figure 4 shows that nearly three-quarters of unemployed Pennsylvanians were white non-Hispanic. This compares with the white population share of 83 percent. Minority groups represent 26 percent of people unemployed compared to 17 percent of the population. (Appendix A details in full the demographics of Pennsylvania's unemployed and long-term unemployed populations compared to the employed and overall populations.)
 
Figure 3. The Majority of Unemployed Workers in Pennsylvania Are Adults Age 25 to 54
Figure 4. The Racial and Ethnic Composition of People Unemployed in Pennsylvania
16-19 8%, 20-24 17% ,25-54 58%, 55 and over 17% White, non-Hispanic 74%, Black, non-Hispanic 13%, Hispanic 9%, Other, non-Hispanic 4%
Note: Based on data collected between January 2008 and June 2010
Source: Current Population Survey
Note: Based on data collected between January 2008 and June 2010
Source: Current Population Survey
 
The Education of Unemployed Pennsylvania Residents
 
Figure 5. More than Eight in Ten of
Unemployed People in Pennsylvania
Have at Least a High School Diploma
Less than a high school diploma 17%, High school graduates, no college 44%, Some college (including Associates degree) 24%, Bachelor's degree or higher 15%
Note: Based on data collected between
January 2008 and June 2010
Source: Current Population Survey
Another key characteristic of unemployed workers is their education level. Even in a strong economy in recent decades, less educated workers have sometimes struggled to find family supporting jobs. In today's economy, however, significant unemployment has affected all education levels. As shown in Figure 5, between 2008 and the first half of 2010 nearly four out of 10 unemployed Pennsylvanians had at least some education beyond high school and one out of every seven Pennsylvania unemployed workers had a four-year college degree.
 
In terms of actual numbers of people, by the first half of 2010, 507,000 Pennsylvanians with a high school diploma or more were unemployed. In the first half of 2010, the number of unemployed Pennsylvanians with education beyond high school reached 233,000. Less than one in five unemployed Pennsylvanians during this period did not have a high school diploma (17 percent).
 
The discussion to date profiles the demographics of all unemployed Pennsylvanians - the group profiled in detail in the first column of Appendix A (page 22). Those Pennsylvanians who receive unemployment insurance, profiled in the first column of Appendix B (page 23), have a similar demographic composition to the entire unemployed population, with the following exceptions: the population that receives unemployment benefits is more likely to be white (82 percent versus 74 percent) and have at least a high-school education (89 percent versus 83 percent); and much less likely to be 24 or under. Only 9 percent of unemployment benefit recipients are 24 and under compared to 25 percent of all unemployed workers.
 
Rodney, Lackawanna County
 
Rodney, a computer programmer, has watched his job get shipped overseas more than once. Most recently, a large insurance company - his employer of more than 12 years off and on throughout his career - moved a substantial number of IT jobs to India in November 2009. For Rodney, it was just the latest in a cycle of layoffs, as he has lost his job five times since 2001 when contracts have ended abruptly and IT jobs were outsourced. "It feels like my life is falling apart," he admits. "I'm so demoralized."
 
After each layoff, Rodney turned to PA CareerLink® Lackawanna County to take advantage of resources and additional training. He's willing to take a job outside of IT, and hopes to go to school to learn a new trade, but faces an uphill battle. Rodney is in his sixties, and as a cancer survivor is concerned with retaining medical benefits. He insists, "After these last 10 years of rough luck, I just have to keep trying and assume the pieces will come together."
 
Pennsylvania's Long-Term Unemployed People
 
During a deep and long recession, the lengths of time that people remain unemployed increases. This raises the question of whether the long-term unemployed people in Pennsylvania - defined here as those who are unemployed for more than 26 weeks (six months) - have similar characteristics to the overall unemployed population. The short answer is that they do.
 
There are some modest differences between long-term unemployed people in Pennsylvania and all unemployed. (As noted, Appendix A (page 22) compares the characteristics of all unemployed Pennsylvanians and the long-term employed with both the employed and the population.)
  • Adults ages 25 to 54 represent a particularly high share of the long-term unemployed workers in Pennsylvania, 65 percent, nearly two out of every three long-term unemployed.
     
  • White non-Hispanics represent a somewhat lower share of Pennsylvania's long-term unemployed people than they represent of all unemployed people in Pennsylvania (69 percent versus 74 percent).
The longest-term unemployed group for which demographic data exist are individuals who have exhausted their eligibility for extended federal unemployment benefits and have been unemployed for more than 99 weeks. Compared to all those who receive unemployment benefits, those unemployed for more than 99 weeks are more likely to be 55 and older (34 percent versus 21 percent); female (47 percent versus 38 percent); and black (22 percent versus 11 percent).3 (See Appendix B (page 23) for a detailed comparison of the demographics of three groups of unemployed individuals: all those receiving unemployment benefits "unemployment claimants"; claimants unemployed more than 26 weeks; and claimants unemployed 99 weeks or more.
 
Cheryl-Ann, Cumberland County
 
Cumberland County native, Cheryl-Ann, enjoyed her job supervising three departments at a vendor for a major computer company. Then, the recession hit. Due to cost-cutting measures, Cheryl-Ann was one of 33 employees laid off in December 2008.
 
Not one to focus on the negative, Cheryl-Ann decided to look at unemployment as an opportunity to try something new. She went back to school, and in early 2010 graduated as a medical assistant. She was disappointed to find that the market for medical assistants was flooded and most job openings required at least two years of experience.
 
Declaring, "I'm not done yet," Cheryl-Ann continues her job search in the hopes of finding a job that will use her 29 years of experience, mostly in the transportation industry, and her new training.
 
Amanda, Philadelphia County
 
Amanda isn't giving up. Since losing her job as an administrative assistant with a property management firm in late November 2009 due to budget cuts, she has applied for hundreds of jobs. Her search included everything from major corporations, hospitals and universities to mom and pop stores, and even employers who said they will train.
 
In addition to applying for jobs daily and networking, Amanda has sought the help of PA CareerLink® Philadelphia and JEVS Human Services to reenter the workforce. Even with the help of others, the competition for the few jobs available in today's economic climate is fierce. Amanda says she's not ready, nor can she afford to retire, but re-entering the workforce at age 57 has been exceptionally challenging.
 
To those who think unemployed people would rather stay that way than go back to work Amanda says, "I completely disagree. This is an unusually bad time in our economic history, and people need that extra helping hand to get back to work."
 
Unemployment by Industry
 
Unemployment has hit certain industries much harder than others. Table 1 shows the industry distribution of unemployed workers prior to their separation alongside the industry share of employment. The last column shows the ratio of each industry's share of unemployment to its share of employment. This ratio is one if an industry accounts for the same share of unemployment as employment. It is two if an industry accounts for twice as big a share of unemployment as employment.
 
Table 1. The Industry Distribution of Unemployment and Employment in Pennsylvania 2008-2010 (June)*
  Industry Share of Unemployment Industry Share of Long-Term Unemployment** Industry Share of Employment Ratio of Industry Share of Unemployment to Industry Share of Employment
Agriculture, forestry, fishing, and hunting 1% 1% 2% 0.76
Mining 0% 0% 0% 0.69
Construction 14% 12% 6% 2.22
Manufacturing 16% 16% 12% 1.35
Wholesale trade and retail trade 15% 17% 14% 1.04
Transportation and utilities 4% 3% 5% 0.76
Information 2% 3% 2% 0.94
Financial activities 5% 5% 7% 0.74
Professional and business services 12% 15% 9% 1.28
Educational services and health services 12% 10% 25% 0.47
Leisure and hospitality 14% 13% 8% 1.66
Other services 3% 2% 5% 0.68
Public administration 2% 2% 4% 0.55
*These figures show the industry distribution of employment for unemployed workers prior to their job loss.
**Note: Long-term unemployed is defined as a duration of unemployment greater than 26 weeks (six months).
Source: Current Population Survey
 
Anthony, Delaware County
Anthony, a Yeadon resident, has learned the hard way that you're never too old to start over. After losing his job at a major automobile manufacturer after 28 years with the company, Anthony has been unemployed for more than two years. Because jobs in the automobile industry remain scarce, he sought the help of the PA CareerLink® Delaware County at Chester City to pursue the opportunity to go back to school.
 
Anthony recently completed a year-long program to learn the HVAC trade, where he had perfect attendance and made the Dean's List. With new skills to offer the marketplace, he is looking for a fresh start.
 
Figure 6 presents the last column of Table 1 in a figure ordered from the industry with the highest ratio (i.e., biggest share of unemployment relative to employment) to lowest ratio. Both Table 1 and Figure 6 show that the construction industry has experienced an especially large amount of unemployment, reflecting the origins of the recent recession in the residential housing sector after the housing bubble burst.
 
Figure 6. A Disproportionate Share of Unemployment in Pennsylvania is in the Construction and Leisure & Hospitality Occupations
Figure 6. A Disproportionate Share of Unemployment in Pennsylvania is in the Construction
and Leisure & Hospitality Occupations
Note: Based on data collected between January 2008 and June 2010
Source: Current Population Survey
 
In addition to construction, other industries experiencing high levels of unemployment relative to their number of jobs include leisure & hospitality (as families and businesses cut back on travel) and manufacturing.
 
The health care and educational services industries have experienced very low shares of unemployment compared to the number of jobs in these sectors.
 
Unemployment by Occupation - Underutilizing Pennsylvanian's Skills
 
Unemployment can also be examined by occupation (Table 2). When you look at broad occupations, the variation of unemployment by occupation tells a story similar to the one for industries: some broad occupations have been hit much harder than others. Not surprisingly, construction occupations account for nearly two and a half times as much unemployment as employment (Figure 7). Professional and managerial occupations, by contrast, account for less than half as much unemployment as employment.
 
Table 2. The Occupational Distribution of Unemployment and Employment in Pennsylvania 2008-2010 (June)*
Occupation Occupation Share of Unemployment Occupation Share of Long-Term Unemployment Occupation Share of Employment Ratio of Occupation Share of Unemployment to Occupation Share of Employment
Management, business, and financial 8% 8% 14% 0.52
Professional and related 10% 12% 22% 0.48
Service 21% 19% 17% 1.20
Sales and related 10% 11% 10% 1.02
Office and administrative support 13% 16% 14% 0.96
Farming, fishing, and forestry 1% 1% 1% 1.54
Construction and extraction 12% 10% 5% 2.44
Installation, maintenance, and repair 3% 4% 4% 0.84
Production 11% 10% 6% 1.77
Transportation and material moving 10% 9% 7% 1.49
Other services 3% 2% 5% 0.68
Public administration 2% 2% 4% 0.55
*These figures show the occupational distribution of employment for unemployed workers prior to their job loss.
Source: Current Population Survey
 
Figure 7. A Disproportionate Share of Unemployment is in Construction and Production Occupations
Figure 7. A Disproportionate Share of Unemployment is in Construction and Production Occupations
Note: Based on data collected between January 2008 and June 2010
Source: Current Population Survey
 
Drilling down into narrower occupations and examining the actual numbers of jobless people by occupation tell another story: enormous numbers of skilled Pennsylvanians cannot use their talents in the current economy. Table 3 illustrates the point. This table shows that almost 193,000 Pennsylvanians were unemployed in a dozen relatively broad occupational clusters. For example, nearly 40,000 managers and supervisors were jobless, 47,400 in skilled trades, 21,800 educators, and between 9,500 and 19,600 in each of the remaining occupational groups.
 
Table 3. Number of Unemployed in Selected Occupation Groups in Pennsylvania 2008 to 2010 (June)
Occupation group Number of unemployed
Managers and Supervisors 38,700
Skilled Trades 47,400
Educators 21,800
Maintenance and Repair Workers and Installers 14,000
Accountants and Finance Professionals 12,100
Engineers, Scientists and Computer Professionals 15,800
Precision Machining, Welders and Technicians 13,800
Nurses and Other Health Professionals 19,600
Writers, Reporters, Actors, Coaches and related workers 9,500
Precision Machining Workers 6,823
Writers, Reporters, and Related 6,313
Note: Occupational groups shown are aggregates of the most detailed occupational codes.
Source: Local Area Unemployment Statistics data and Current Population Survey
 
Where Do Pennsylvania's Unemployed People Live?
 
The geographic distribution of unemployed people similarly reflects the population distribution of the state, although slightly more of the unemployed come from rural areas and cities with the highest rates of unemployment. The 22 Pennsylvania counties with unemployment above 10 percent in June 2010 included 20 rural counties and Philadelphia. (The 22nd county with unemployment over 10 percent was Luzerne, home to the city of Wilkes-Barre.) Overall, the 47 Pennsylvania counties defined as rural by the Center for Rural Pennsylvania accounted for 29 percent of unemployment in the 12 months from July 2009 to June 2010, versus 27 percent of employment.
 
The following three maps show the increase in employment from the end of the last economic expansion (December 2007) to March 2009 and then to June 2010.
 
Figure 8. Unemployment Rises in Pennsylvania Counties, December 2007 to June 2010
Figure 8. Unemployment Rises in Pennsylvania Counties, December 2007 to June 2010
Source: Local Area Unemployment Statistics data
 
The Effect of Unemployment on Veterans, People with Disabilities, Youth and Older Adults
 
Among the groups affected by high unemployment today are veterans. In 2009 and 2010, an estimated 35,000 veterans in Pennsylvania were unemployed. The unemployment rate among veterans was 7.7 percent on average, not far below the overall average state unemployment rate.
 
People with disabilities have experienced particularly high unemployment during the recent recession. During 2009 and the first half of 2010, nearly 45,000 Pennsylvanians with disabilities were unemployed and their unemployment rate was 14.8 percent.
 
A third special population affected by unemployment is young workers. Appendix A shows that young workers 16-24 account for 25 percent of unemployment compared to 13 percent of employment. Entering the job market in a period of high unemployment also has significant long-term effects on the earnings of young workers as a group, lowering their earnings for periods of as much as 10 to 15 years.4 What seems to occur is that workers accept a first job for lower wages. This initial wage then influences future earnings, including what individuals earn when they change employers.
 
Another vulnerable group is workers 55 years of age and older. While these workers make up 5 percent of people receiving unemployment insurance benefits, they comprise 13 percent of workers that exhausted their 99 weeks of unemployment insurance benefits (Appendix B). As discussed later in this report, even during the much milder recession of 2001, older workers faced prolonged periods of joblessness.
 
The Work History Of Unemployed Pennsylvanians
 
Pennsylvania's unemployment insurance system is designed to provide people who work most of the time with income support when they temporarily lose a job through no fault of their own. This definition raises an empirical question: what is the actual work history of the people currently unemployed in Pennsylvania?
 
Answering this question requires having information on the work history of currently or recently unemployed people. Pennsylvania has exactly this type of information today because it has merged data on the same individuals from two different programs: the unemployment claims system and records on people's wages back to 2001.
 
The analysis below focuses on people who received at least one unemployment compensation payment in 2009. We look at the work history of these peoples in two different ways.
 
First, we ask whether unemployment recipients in 2009 received unemployment benefits in any previous year from 2001 to 2007. (We eliminate 2008 from this analysis because many people unemployed in 2009 began receiving unemployment compensation in 2008.) Figure 9 shows the results of this analysis. From 2001 to 2007, about half of 2009 unemployed recipients did not have unemployment claims in the previous seven years. Another 20 percent had claims in one year and about 10 percent had claims in two years. Figure 9 also shows that the long-term unemployed in 2009 had slightly fewer prior claims for unemployment (from 2001 to 2007) than the entire population of unemployed.
 
Figure 9. Share of Workers Receiving Unemployment Compensation in 2009 Who Had Zero to Seven Prior Years of UC Claims (2001 to 2007)
Figure 9. Share of Workers Receiving Unemployment Compensation in 2009 Who Had Zero to Seven Prior Years of UC Claims (2001 to 2007)
Source: Pennsylvania unemployment compensation system records
 
A second way to look at the work history of people receiving unemployment benefits in 2009 is to ask what fraction of the time they worked during the 2001 to 2007 period. Figure 10 answers this question based on how many quarters people worked during the 28 quarters from 2001 to 2007. (Worked is defined here as earning at least $800, an amount individuals must earn in at least one quarter to qualify for unemployment compensation.)
 
The chart shows that recipients of unemployment compensation in 2009 worked most of the time from 2001 to 2007. Just over 80 percent of 2009 unemployment compensation recipients worked at least five full years out of seven (20 out of 28 quarters) from 2001 to 2007. On average, recipients of unemployment compensation in 2009 worked six full years out of seven from 2001 to 2007.
 
Figure 10. Most Pennsylvania Workers Receiving Unemployment Compensation in 2009 Worked Steadily Between 2001 and 2007
Figure 10. Most Pennsylvania Workers Receiving Unemployment Compensation in 2009 Worked Steadily Between 2001 and 2007
Source: Pennsylvania unemployment compensation system records
 
Thomas, Schuylkill County
 
Thomas, 55, has always viewed education as a means to an end. When the tannery he worked for closed in 1999, he went back to school and earned an associate degree in accounting. He moved from job to job in his new field until 2007, when he was laid off by a local bank. "At the time, everyone was looking for someone with a four-year degree, so I went back to school again," explains Thomas. In May 2009, he earned his bachelor degree in business finance and accounting. "Now, when I apply for a job there are hundreds of applicants, but, I'm not giving up," he says. "I want to work. I want to use my degree." Thomas is working with PA CareerLink® Schuylkill County on his résumé and interview skills.
 
The Cost Of Job Loss
 
Now that we have a profile of people unemployed in Pennsylvania, this report considers the challenges that jobless workers and their families face. Job loss is a stressful and difficult experience in any period. It is especially difficult in a period of deep unemployment, such as the present.
 
The most obvious costs of job loss are declines in income and benefits. Research shows that these economic losses extend far beyond the immediate period of unemployment, lasting a decade or more. Unemployment also has an effect on the health of workers and on family well-being.
 
A growing body of careful statistical research documents the cost of job loss. Most estimates of the short-term costs of unemployment come from a special survey (the "Displaced Worker Survey") conducted by the U.S. Department of Labor's Bureau of Labor Statistics every two years since 1984.5 Estimates of the longer-term costs of unemployment come from "longitudinal" databases that follow the same individuals over extended periods of terms. Until recently, long-term estimates of the cost of job loss were available for only a few states (including Pennsylvania in the 1980s). New estimates of the long-term costs of unemployment (by von Wachter and co-authors) rely on a large longitudinal database that includes 1 percent of all workers covered by Social Security from 1957 to 2004.
 
Figure 11. Under Current Law 304,000 Pennsylvania Workers Will Completely Exhaust Their Unemployment Benefits Between September 2010 and April 2011
Sep-10 6,600, Oct-10 15,700, Nov-10 23,000, Dec-10 106,000, Jan-11 178,000, Feb-11 230,000, Mar-11 272,000, Apr-11 304,000
Source: Pennsylvania unemployment compensation system records
 
Under current law, 304,000 Pennsylvania workers will completely exhaust their unemployment benefits between September 2010 and April 2011. Through the end of November 2010, most workers who stop receiving benefits will have exhausted their 99 weeks of unemployment benefits (Figure 11). From December through April the number of workers exhausting unemployment benefits rises rapidly as those workers under current law will no longer be eligible for 99 weeks of unemployment benefits.
 
Loss of Earnings
 
Research on the short-run effect of unemployment reveals that, among workers who had at least three years of tenure in their prior job:6
  • Even workers who regain full-time jobs experience hourly wage cuts of about 15 percent on their next jobs.7
     
  • Annual earnings declines among dislocated workers - which take into account the combined impact of joblessness and reduced pay and/or hours on a subsequent job - reaching as high as 60 percent in the first year of joblessness.
     
  • Unemployed older workers experience even larger wage and earnings reductions than other unemployed workers.
     
  • Since the early 1990s, dislocated workers experience similar declines in wages at all educational levels. In the previous decade many manufacturing workers with less than a college education lost high-wage jobs, and thus experienced larger reductions in earnings than the college-educated unemployed.
Research on the long-term effect of unemployment shows that:
  • Workers displaced in the early 1980s, the only recession in the last three decades comparable to the current one, experienced declines in annual earnings of 20 percent even 15 to 20 years later.8 In dollar terms, for workers experiencing layoffs during 1980-1986, the losses were about $10,000-$13,000 annually both 10 and 20 years after job loss.
     
  • Even workers that move to regions with greater job prospects face similar long-term reductions in earnings.9
Extended Periods of Joblessness
 
As noted, in addition to wage and salary reductions, unemployed workers experience extended periods of joblessness in the short run and, in some cases, in the long run.
  • In labor markets similar to the present (before 1984, 1992, and 2002), about 40 percent of workers displaced in each three-year period were not employed at the end of the period.10
     
  • Less-educated workers experience lower rates of re-employment when dislocated. But even among college-educated workers displaced in the three years during and after the last recession (from 1999 to 2001), more than 30 percent of workers were not re-employed at the end of this period.11
     
  • Among workers aged 55-64 displaced in the three previous years, only 50 percent were re-employed in early 2002 (Farber 2005).
     
  • As with earnings losses, job instability for dislocated workers lasts extended periods - up to 10 years.12
Other Effects of Unemployment
 
Job loss also has a number of other effects:13
  • In the short run, layoffs erode health and increase symptoms of depression.14 Men with high seniority who lost stable jobs in Pennsylvania in the early-to-mid 1980s experienced a doubling of their mortality rates in the first year after a job loss.15
     
  • Workers dislocated from 1979 to 1988 experienced declines in employer-provided health insurance of 16 to 20 percentage points.16 Workers displaced over the 1975-92 period saw their pension coverage drop from 69 to 58 percent.17
     
  • Layoff heightens the incidence of divorce and reduces home ownership.18
     
  • Interesting new research also documents a negative impact on social participation. Workers who experienced displacement between the ages of 35 and 53 were less likely to engage in social activities - such as neighborhood organizations, sport teams, church groups, charitable organizations, and youth groups - than workers the same age who did not experience a job loss. Given the importance of networking and social capital to finding jobs in today's labor market, this decline in social participation may be especially damaging to long-term re-employment prospects.19
Not surprisingly, all of the negative effects of unemployment tend to increase for those who experience long-term unemployment.
 
Looking Forward
 
This report establishes four central points.
 
First, the unemployed population in Pennsylvania reflects both the overall characteristics of the working population in Pennsylvania and the fact that some demographic groups, places, industries and occupations have experienced disproportionate job loss. No group has escaped unscathed.
 
Second, the cost of unemployment is very high, far exceeding in most cases the unemployment compensation that dislocated workers receive.
 
Third, most unemployed workers have an extensive work history, suggesting that they would rather work than stay home and receive benefits. But in an economy with only one job opening for every four or five applicants most unemployed workers cannot find a job.
 
Fourth, many unemployed workers possess significant skills as well as an extensive work history. This is evident in the fact that only about one in six unemployed workers has less than a high school diploma or GED and in the fact that 40 percent of unemployed workers have education beyond a high school diploma. It is also evident in the occupational diversity of the unemployed, and the large-scale joblessness among engineers and writers, actors and managers, accountants and even nurses.
 
The significant education levels of many unemployed workers and their extensive work history provide an opportunity and also a challenge. It is a waste of valuable resources for workers with such significant skills to remain idle and unable to find jobs for extended periods of time. As a result, beyond profiling the unemployed, the critical tasks are to reduce unemployment and to explore creative ways to help the jobless. To assist with the development of policies to combat unemployment and reduce its costs, Pennsylvania has recently formed a Pennsylvania Task Force on Long-Term Unemployed. The present report provides a fact-based foundation for the work of the Task Force and underscores the importance of the group's mission.
 
Carla, Allegheny County
 
In October 2009, Carla lost her human resources job due to a merger of two large financial institutions in Pittsburgh. Ironically, the job she lost was to attract talent to the company - help other people get jobs. Now, Carla is working with the PA CareerLink® Pittsburgh/Allegheny County to pursue a project management certification in order to increase her skills and better position herself in the job market.
 
While working, Carla was most proud of her work in diversity sourcing where her fluency in the Portuguese and Spanish languages aided her greatly. She is looking to combine her knowledge of other languages with her 20 years of work experience to find a job that challenges her and opens her up to new opportunities.
 
APPENDIX A
 
Characteristics of the Unemployed in Pennsylvania 2008-2010 (June)
  Unemployed Long-Term Unemployed Employed Population
Gender        
Male 60% 61% 52% 48%
Female 40% 39% 48% 52%
Race        
Black, non-Hispanic 13% 16% 8% 9%
Hispanic 9% 10% 4% 4%
Other, non-Hispanic 4% 5% 3% 4%
White, non-Hispanic 74% 69% 85% 83%
Age        
16-19 8% 4% 4% 7%
20-24 17% 13% 9% 9%
25-34 22% 22% 20% 15%
35-44 19% 22% 21% 17%
45-54 18% 21% 25% 20%
55-64 13% 15% 16% 15%
65 and over 4% 4% 5% 18%
Education        
Less than a high school diploma 17% 17% 8% 15%
High school graduates, no college 44% 47% 37% 40%
Some college, no degree 17% 15% 14% 14%
Associate degree 7% 6% 10% 8%
Bachelor's degree or higher 15% 15% 31% 24%
Marital Status        
Married Spouse Present 37% 38% 57% 51%
Marital Status Other 17% 17% 14% 19%
Never Married 46% 44% 29% 30%
Note: Long-term unemployed is defined as duration of unemployment greater than 6 months.
Source: Current Population Survey
 
APPENDIX B
 
Characteristics of All Unemployment Insurance Claimants, Unemployment Insurance Claimants Unemployed for More Than 26 Weeks and Those Exhausting Their 99 Weeks of Benefits
  All Unemployment Insurance Benefit Recipients 2008-June 2010 Unemployment Insurance Recipient That Have Been Unemployed for more than 26 weeks 2008-2009 Those exhausting their 99 weeks of benefits January to June 2010
Gender      
Male 62% 58% 53%
Female 38% 42% 47%
Race      
Black, non-Hispanic 11% 16% 22%
Hispanic 5% 6% 5%
Other, non-Hispanic 2% 2% 2%
White, non-Hispanic 82% 77% 72%
Age      
16-19 1% 1% 0%
20-24 8% 9% 3%
25-34 22% 23% 17%
35-44 23% 22% 21%
45-54 25% 24% 26%
55-64 16% 16% 21%
65 and older 5% 5% 13%
Education      
Less than High School Diploma 11% 12% 14%
High School Diploma 59% 55% 56%
Some College 17% 18% 17%
Bachelor's Degree or more 13% 16% 13%
Industry      
Natural Resources and Mining 1% 1% 0%
Construction 16% 12% 9%
Manufacturing 22% 17% 17%
Wholesale and Retail Trade 13% 16% 17%
Transportation and Utilities 6% 5% 4%
Information and Financial Activities 6% 8% 10%
Professional & Business Services 14% 16% 17%
Education and Health Services 10% 14% 13%
Leisure and Hospitality 9% 7% 6%
Other Services 2% 3% 3%
Public Administration 1% 2% 1%
Family Status      
0 dependents 66% 70% 65%
1 dependent 17% 15% 19%
2 or more dependents 17% 15% 17%
Source: Pennsylvania unemployment compensation system record
 
Commonwealth of Pennsylvania
 
Robert G. Garraty, Ph.D. Deputy Secretary for Workforce Development
Department of Labor & Industry
 
Sue Mukherjee, Director
Center for Workforce Information & Analysis
 
For more information, call the Center for Workforce Information & Analysis
at (717) 787-3266 or visit www.paworkforce.state.pa.us
 
This report was prepared by the Center for Workforce Information & Analysis with the
assistance of the Keystone Research Center.
 
1 According to the 2010 "Job Openings and Labor Turnover Survey conducted by the U.S. Department of Bureau of Labor Statistics," there were five job seekers for every job opening in the United States in July 2010. To estimate a figure for Pennsylvania, the "Center for Workforce Information & Analysis" used Pennsylvania's share of northeast U.S. Employment to generate a Pennsylvania job openings figure from jolts data for the northeast census region. Using this job openings figure and the number of unemployed in Pennsylvania, it is determined that there were 4.2 unemployed workers for every job opening in Pennsylvania.
 
2 The most recent recession began in December 2007 according to the National Bureau of Economic Research (NBER). NBER business cycle dates are found online at http://www.nber.org/cycles.html. Within Pennsylvania, measured in terms of the percentage of jobs lost, the latest recession has been somewhat shallower than the deep recession that hit Pennsylvania in the early 1980s. The most recent recession was also less severe than in the rest of the country.
 
3 The comparison group used here is not all unemployed workers (the group profiled in the first column of Appendix A) but rather all recipients of unemployment insurance (the group profiled in the first column of Appendix B).
 
4 Philip Oreopoulos, Marianne Page, and Ann Huff Stevens, "The Intergenerational Effects of Worker Displacement." Journal of Labor Economics, 26(3): 455-483, 2008; Till von Wachter. "Long-term Unemployment: Causes, Consequences and Solutions," testimony before the Joint Economic Committee of U.S. Congress, April 2010, p 3.
 
5 Displaced workers are defined by BLS as persons 20 years of age and older who lost or left jobs because their plant or company closed or moved, there was insufficient work or their position or shift was abolished.
 
6 These four bullets are based on Henry S. Farber, "What Do We Know about Job Loss in the United States? Evidence from the Displaced Workers Survey, 1984-2004." Working Paper #498, Princeton University Industrial Relations Section, January 2005.
 
7 Henry S. Farber, "What Do We Know About Job Loss in the United States?" 2005, p. 24, finds that full-time job losers who found new full-time jobs earn 13 percent less on their new jobs than their old jobs and 17 percent less than they would have earned if they had not been displaced.
 
8 Till von Wachter, Jae Song and Joyce Manchester. "Long-term Earnings Losses due to Mass-Layoffs During the 1982 Recession: An Analysis Using Longitudinal Administrative Data from 1974 to 2004." Mimeo, Columbia University. 2009. These earnings losses are comparable to the 25 percent declines found six years after job loss in a classic study of Pennsylvania workers laid off during the late 1970s and early 1980s. (See Louis Jacobson, Robert Lalonde, and Daniel Sullivan. "Earnings Losses of Displaced Workers." American Economic Review, 83(4). 1993, p. 697.) Similar costs of displacement three to five years after displacement were also found among a sample of California workers displaced between 1989 and 1994. (See Robert Schoeni and Michael Dardia. "Estimates of Earnings Losses of Displaced Workers Using California Administrative Data." PSC Research Report No. 03-543. 2003.)
 
9 Till von Wachter. "Long-Term Unemployment: Causes, Consequences, and Solutions," April 2010, p 3.
 
10 Henry S. Farber, "What Do We Know About Job Loss in the United States?" 2005, p. 8, Figure 5.
 
11 Henry S. Farber, "What Do We Know About Job Loss in the United States?" 2005. p. 10, Figure 6.
 
12 Ann Huff Stevens, "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses." Journal of Labor Economics, 15(1, Part 1): 165-188, 1997; and Till von Wachter, Song and Manchester, "Long-term Earnings Losses due to Mass-Layoffs During the 1982 Recession," 2009.
 
13 Till von Wachter "Testimony before the Joint Economic Committee" 2010.
 
14 Sarah A. Burgard, Jennie E. Brand, and James S. House, "Toward a Better Estimation of the Effect of Job Loss and Health." Journal of Health and Social Behavior, 48(4): 369 - 384, 2007.
 
15 Daniel Sullivan and Till von Wachter, "Job Displacement and Mortality: An Analysis Using Administrative Data," Quarterly Journal of Economics 124 (August): 1265-1306 , 2009.
 
16 Craig A. Olson, The Impact of Permanent Job Loss on Health Insurance Benefits. Working Paper # 305, Industrial Relations Section, Princeton University, July 1992.
 
17 Jennie E. Brand, "The Effects of Job Displacement on Job Quality. Findings from the Wisconsin Longitudinal Study." Research in Social Stratification and Mobility. 24, 2004, p. 293,
 
18 Till von Wachter "Testimony before the Joint Economic Committee," April 2010.
 
19 Jennie E. Brand and Sarah A. Burgard. "Effects of Job Displacement on Social Participation: Findings Over the Life Course of a Cohort of Joiners," Population Studies Center Research Report 07-623, University of Michigan Institute for Social Research, May 2007.
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