The Federal Reserve recently cut its benchmark rate by a quarter point.
The central bank isn’t sanguine about inflationary pressures, but the risk of rising unemployment has become too great to ignore.
“For me, the more likely risk is a rapid further weakening of the labor market,” wrote Neel Kashkari, head of the Federal Reserve Bank of Minneapolis, in a thoughtful recent essay. “We know from past economic cycles that when labor markets weaken, they can weaken quickly and non-linearly.”
Among the worrisome trends in the job market is the rise in the number of long-term unemployed. The official definition of long-term unemployed is those looking for work for six months and longer. In August, the long-term unemployed reached a post-pandemic high of more than 1.9 million.
Among jobseekers age 16 to 54, 25.4% count as long-term unemployed. In the 55 and older group, the figure is 23.2%. Older unemployed workers typically dominate the category (think age discrimination). Perhaps the combination of federal layoffs, federal cuts in spending, tariff-driven uncertainty and automation has had a disproportionate impact on younger workers.
Scholarly research and experience confirm that the longer you’re out of work, the harder it becomes to get a job. The job-finding rate can decline by some 50% within eight months of unemployment. Other studies find the long-term unemployed are up to 45% less likely to receive interview invitations compared to recently unemployed or currently employed with similar qualifications. Employers look unfavorably at the long-term unemployed for a variety of reasons, but no matter what, being without work for months takes a financial and mental toll.
There are no easy answers. Most important is to stay in touch with former colleagues, acquaintances, extended family members and others in your network. Old-fashioned networking is still how most people find jobs, yet surveys show many unemployed people hesitate to tap their network. Professionals should develop their presence on job platforms like LinkedIn.
Other moves include developing a side hustle or self-employment gig that brings in an income and keeps job skills current. The same goes for landing an internship or project work. Volunteering pays, too. The returns from volunteering are intangible, but volunteering also expands your network.
