Many Older Jobseekers are now Long-Term Unemployed

As economists weigh the most likely scenarios for how job-loss trends might continue into 2021, among the data they will consider will be changes in rates of long-term unemployment. Because it is more difficult for people who have been out of work long-term (defined as 27 weeks or longer) to find reemployment, ongoing high levels of long-term unemployment (LTU) can lead to more discouraged jobseekers dropping out of the labor force. Economists will pay particular attention to LTU rates among older workers, who are more likely to be unemployed for extended periods and will have a more challenging time rejoining the labor market if they drop out. When LTU is widespread, as it is now, especially among jobseekers ages 55 and older, the effects on the labor force can be long-lasting and influence economic recovery more broadly.

Data from the Bureau of Labor Statistics (BLS) show that last month 35.1 percent of jobseekers ages 16 to 54 were long-term unemployed, a sharp increase from the 18.9 percent who were unemployed for 27 weeks or longer in February 2020, one month before the pandemic-led downturn began.  The December LTU rate for jobseekers ages 55 and older was even higher, 45.5 percent, up from 19.7 percent in February.

A BLS review of economic research on recent pandemic-related job losses in the United States warns that “as the COVID-19 crisis continues, more employer-employee bonds break, amplifying the economic and societal damage.” At the beginning of the pandemic, and compared to other recessions, the loss of jobs was extraordinarily sudden. Workers who lost their jobs in those early months who have yet to find reemployment have now been out of work more than eight or nine months. As a result, the LTU rate rose sharply in the last few months of 2020 as many of those same workers crossed the LTU threshold.

Those LTU trends are concerning not only for their near-term impact but for their long-term implications. Evidence that some employers were reluctant to hire the long-term unemployed during the Great Recession suggests that LTU status may act as a barrier for some jobseekers in the coming months. For older workers, who are more likely to experience long-term unemployment, this challenge is compounded by age discrimination. New AARP research shows that among workers ages 40 to 65 who reported that they lost a job in 2020, 74 percent said they have been unemployed for more than six months. Even among workers who still are working, anxiety over potential job or income loss is high. More than half of employed workers ages 40-65 (53 percent) said they were concerned about losing their jobs in 2021. Among those workers, 61 percent said age discrimination was a reason they were worried about being let go. 

Hiring will need to ramp up considerably to make up for the historic job losses of 2020. But any such trend is still on hold, as continued high rates of COVID infections have prevented many employers from bringing their workforce numbers back up to pre-pandemic levels. LTU rates will likely remain elevated for the next several months. 

For more jobs data: Find the latest employment data in the AARP Public Policy Institute's (PPI) Employment Data Digest, PPI's monthly review of job trends for those ages 55 and over. Visit the AARP website's work and jobs section for articles on work and unemployment and job search resources.