Army of Long-Term Jobless Dwindles as Hiring Accelerates

Photographer: Chip Somodevilla/Getty Images

People seeking employment wait in line to enter a job fair on March 28, 2014 in Washington, DC. Close

People seeking employment wait in line to enter a job fair on March 28, 2014 in Washington, DC.

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Photographer: Chip Somodevilla/Getty Images

People seeking employment wait in line to enter a job fair on March 28, 2014 in Washington, DC.

Employers who added 288,000 jobs in June showed they might be taking a more serious look at resumes from the long-term unemployed, who last month accounted for the smallest proportion of U.S. jobless ranks in five years.

Those out of work 27 weeks or longer made up 32.8 percent of unemployed Americans as the overall unemployment rate dropped to an almost six-year low of 6.1 percent, according to Labor Department data released this morning in Washington.

“You’ll see more and more businesses start to hire the longer-term unemployed and that’s going to put some downward pressure on wages as well,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who was among the most accurate forecasters of the drop in unemployment.

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The share of long-term unemployed remains more than twice the historical average of 15.1 percent in data going back to 1948. Other measures of labor market health, including underemployment and participation rates, haven’t returned to pre-recession levels, according to a dashboard of indicators that Federal Reserve Chair Janet Yellen has said she monitors to judge the economic outlook.

Long-term Jobless Share

Long-term Jobless Share

About half of the drop in unemployment in the past year is due to the decline among the long-term jobless. Overall unemployed fell by 2.27 million, which included 1.24 million of those out of work for 27 weeks or longer.

Photographer: Andrew Harrer/Bloomberg

A "Jobs" banner hangs outside the U.S. Chamber of Commerce in Washington, D.C., U.S., on Jan. 8, 2014. Those out of work 27 weeks or longer made up 32.8 percent of unemployed Americans as the overall unemployment rate dropped to an almost six-year low of 6.1 percent, according to Labor Department data released this morning in Washington. Close

A "Jobs" banner hangs outside the U.S. Chamber of Commerce in Washington, D.C., U.S.,... Read More

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Photographer: Andrew Harrer/Bloomberg

A "Jobs" banner hangs outside the U.S. Chamber of Commerce in Washington, D.C., U.S., on Jan. 8, 2014. Those out of work 27 weeks or longer made up 32.8 percent of unemployed Americans as the overall unemployment rate dropped to an almost six-year low of 6.1 percent, according to Labor Department data released this morning in Washington.

That progress includes a drop in the long-term share over the past six months that matches a stretch in 1993 for the biggest decrease since 1962.

Discouraged Workers

While some of those job seekers are back at the office, others might have contributed to the 676,000 who in June reported being too discouraged to look for employment. That level, while still elevated compared with 20 years in the survey, declined last month to its lowest since December 2008.

Further reductions among the 3.1 million long-term unemployed may in the short-term help keep a lid on wage growth, which increased 2 percent in June from a year earlier and matched the average since the recession ended five years ago.

Economists Puzzle Over Labor Force Dropouts

Still, as demand persists, managers in higher-paying industries may find they’ve reached limits of their productivity gains with existing workforces and start adding employees.

“Stronger wage growth is coming. I think it’s going to be uneven,” Sweet said. Employers’ “pickiness about hiring the long-term unemployed will be reduced, because they’re going to have to start paying higher wages to those who were just recently unemployed.”

To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net

To contact the editors responsible for this story: Carlos Torres at ctorres2@bloomberg.net Mark Rohner, Vince Golle

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