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Long Term Unemployment

As California’s largest law firm representing employees only, we take a great interest in how long our clients take to get back to work. It affects their recovery; in many cases the trial, arbitration or mediation takes place before we know with certainty how much longer our clients are likely to be out of work. (In some cases, such as sexual assault, battery, or physical injuries such as might be the subject of a workman’s compensation claim, an employee is out of work simply because their emotional injuries prevent them from even looking for a new job. This is particularly true in cases of Post Traumatic Stress Disorder (PTSD) or major depressive disorder. (MDD).)

Long term unemployment — defined as out of work more than six months–is finally below 40% of the job-seeking public. The Department of Labor estimates that 4.8 million Americans have been looking for more than six months. That’s down from 6.5 million in 2010, so we are making good progress on that front. A fear of the Federal Reserve (as expressed by Chairman Ben Bernake) was that the US might end up with a permanent population of “structurally” unemployed, meaning permanently unemployed. What these new numbers prove is that the long-term unemployed can get back to work. The average unemployed client has been looking for work for 38 weeks, which is less than the 41 weeks we saw in January of 2011.

If there’s a downside to any of this, it’s that new jobs are paying less than the older ones employees are replacing. For each year out of work, the Institute for Employment Research found that replacement wages are 11% lower.

The best reasoning why long term unemployment is down and continuing to drop is based on the overall recovery of the economy (unemployment is now down to 7.8%); the resurgence of the housing and construction markets; and, the reduction in emergency unemployment benefits. Recall that Congress extended benefits to as long as 99 weeks. Today, those benefits end at a maximum of 73 weeks. Faced with not receiving unemployment,  a number of job seekers have opted for lower-paying jobs rather than sitting home receiving nothing.

We represent California-based employees in discrimination, wrongful termination, retaliation, harassment, breach of contract and wage/hour class actions. This blog should be considered educational in nature only and not legal advise, which can only be given by an attorney in your jurisdiction familiar with the facts of your case.