Thursday, February 14, 2013

Unemployed > 6 months and out of luck

Recently two Northeastern University economists (Rand Ghayad and William Dickens) sent out 4800 fictitious resumes to companies in 50 metropolitan areas.  The resumes varied in two important respects: whether the applicant had industry experience and how long the applicant had been out of work.  It was not much of a surprise that those with experience in the same industry had greater odds of being contacted than those with experience in a different industry. 

The key result related to time unemployed: applicants who had been out of work more than 6 months had virtually no chance of being called for an interview.  The long term unemployed represent about 38 percent of the total unemployment pool, which makes this a significant social problem. 

Why do employers lack interest in the long term unemployed?  Some economists think employers are using long term unemployment a signal of the applicant's capability; in other words, if you were any good, somebody else would have hired you by now.  Others think it is simple prejudice and argue that such discrimination should be illegal (the President's American Jobs Act included such a provision but it was not approved by Congress).  For more information see this article from Bloomberg Businessweek and this press release from Northeastern. 

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