The long-term unemployment rate fell in January. It continued its downward trend from the peak of the pandemic, which had stalled in recent months.
According to U.S. Department of Labor data, the number of Americans without work for more than six months has fallen by 317,000 in December to approximately 1.7million in January dataIssued Friday.
Long-term unemployment accounted for 25% of all Americans without jobs in January. That’s down from 31.7% one month ago.
The monthly decrease of 5.8 percent points (or 5.8%) in unemployment is the greatest since March 2021, when long term joblessness started a gradual decline. The percentage had remained at around 32% for the past three months, but it was down to just 3.8% in January.
Daniel Zhao (a senior economist from Glassdoor) said, “What have we seen in the last year? A steady stream of workers into the labor market and employment.”
His statement was “Long-term unemployed is an indication of that.” Workers who have been out of work for longer periods will see more opportunity as the recovery progresses.
Financial risks
For households, long periods of unemployment can pose severe financial risks. The U.S. can be impacted by a large share of unemployed workers over long term.
In addition to a reduced income stream, unemployment makes it more difficult for people to get a job. Your chances of earning less in the future also rise.
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It is possible for skills to become rusty, and relationships with the workforce such as old networks or industry contacts may be lost. Employers are less likely to consider resumes that show a large gap in employment history.
Ineligible for unemployment benefits are those who have been unemployed for a long time. The federal program that provided benefits for such workers during the pandemic era ended its payments on Labor Day, although it was still in effect in some states.
Omicron surprise
The result of this was a decline in long-term unemployment unexpectedly strongThe January jobs report will be released Friday.
Last month, the U.S. added 467,000 new jobs. The Labor Department also revised its job-growth estimates for November and December much higher — there were a combined 709,000 more jobs added those two months than initially thought.
Numerous economists predicted that the showing would be much lower due to an increase in Covid-19 cases from December, fueled by highly contagious Omicron variant.
Some businesses were forced to temporarily close due to high daily casesloads. Staff shortages caused by illness led to lower customer demand and resulted in increased staffing costs.
Zhao declared that “job growth can be plowed forward even in the face pandemic headwinds.”
The labor market is still not back to the pre-crisis level. Although the overall number of unemployed long-term fell by around 2,000,000 people in 2021 their numbers are still approximately 570,000 higher than they were in February 2020.
The U.S. remains 3 million millions jobs below its prepandemic level.
Zhao stated that “I believe we are on the right track for a strong jobs market recovery.” But we are not yet at the end of this journey.
