A store advertises a Help Wanted sign in Annapolis, Maryland on May 12, 2021.

JIM WATSON | AFP | Getty Images

Long-term unemployment fell for the second straight month in May, an encouraging departure from recent highs fueled by the economic carnage of the Covid pandemic.

Economists classify long-term unemployment as a period of unemployment that exceeds six months.

It is a particularly financially risky time for households, and it is usually more difficult to find a new job.

The number of long-term unemployed fell by 431,000 to 3.8 million people in May – that’s 40.9% of all unemployed according to the Bureau of Labor Statistics. That is a decrease of 43% in April and 43.4% in March.

The March share had flirted with the all-time high of 45.5% in April 2010 after the Great Recession.

“It’s an encouraging sign that long-term unemployment is falling,” said Daniel Zhao, chief economist at Glassdoor, a job and recruiting website. “It will always be a difficult number to move.”

The number of one-year unemployed also fell in May by around 31,000 to around 2.6 million. They made up almost 30% of all unemployed. (These numbers do not include seasonal adjustment.)

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However, the decline may not be solely due to job growth – some long-term unemployed may have left the job market, according to Nick Bunker, an economist with Job Site Indeed.

“Did this decline have a good reason as opposed to a bad reason?” said Bunker.

The data for this assessment are not yet available, he said.

Scar effects

Often times, those who have been inactive for long periods of time have the hardest time getting news jobs, Zhao said. This could be due to factors like loss of skills or loss of connections with networks and employers, he said.

It is also a period when household income can drop significantly. Their future income potential generally falls, and the likelihood of losing a job (if they find one) increases, according to labor economists.

According to the Bureau of Labor Statistics, 2.6 million more long-term unemployed remain from pre-pandemic levels.

“You generally see permanent economic scars,” Zhao said of the long-term unemployed.

Unemployed people can usually only receive state unemployment benefits for up to six months. (However, some states offer less.)

The federal legislature has extended the service period three times through pandemic relief laws and expanded the group of employees entitled to unemployment benefits. The long-term unemployed are now entitled to help until September 6th.

However, in June or July two dozen states are cutting their benefits and claiming that extended benefits are being claimed, leading to a labor shortage. Critics say temporary factors of the pandemic era, such as persistent health risks and childcare challenges, are more to blame.

“It’s a group of workers who are obviously having a hard time right now, and it’s a large part of the unemployed,” Bunker said. “When employers hire people from that pool, the chances of other unemployed workers getting jobs are pretty good.”