Down and Out: Measuring Long-term Hardship in the Labor Market

The official concept of “long-term unemployment,” while useful, is incomplete and, in some cases, even potentially misleading. As tracked by government statistics, the long-term unemployed are only a relatively small part of the population facing extended, sometimes permanent, spells without work. This report proposes rethinking our understanding of long-term unemployment in two ways. First, we encourage shifting from a narrow focus on long-term unemployment toward a broader concept of “long-term hardship” in the labor market. Many workers or potential workers who do not fit the official definition of long-term unemployment – including “discouraged” and “marginally attached” workers and those involuntarily working part-time jobs – face long-term hardship in the labor market, but are not captured in the standard measure of long-term unemployment. Second, we suggest complementing the standard measure of long-term unemployment, which reports the share of the unemployed who have been out of work for 6 months or more, with an alternative measure, which reports the share of the total labor force that has been unemployed for 6 months or more. This alternative measure avoids some counter-intuitive properties of the standard statistic and is better for making comparisons across demographic groups.