Long-term unemployment persists

Leticia Vives thought her rise from teller to senior teller to manager during 23 years at Bank of America had earned her staying power, or at least the experience to find work elsewhere.

Still jobless 18 months after being let go in a downsizing move, Vives is wondering whether she had either.

“I just feel helpless,” said Vives, 44, of Ansonia, Conn. “The more you are unemployed, the more helpless you feel.”

More than five years into the U.S. expansion, 2.9 million Americans are long-term unemployed, meaning they’ve been out of work for 27 weeks or longer. They make up 31.9 percent of all jobless, more than twice the average in records dating to 1948. Vives is among the 2 million who have been off the payrolls for more than a year.

The slow progress in bringing that share down is a sign of lingering weakness in the labor market and a potential limit on the consumer spending that makes up the biggest part of the economy. It’s one reason for Federal Reserve policymakers to be patient in raising interest rates, and has prompted the White House to fund programs aiding that segment of the jobless.

Vives has landed at one of those programs: Platform 2 Employment, or P2E, a Connecticut-based venture that offers five weeks of classes and up to an eight-week paid audition at a prospective employer, with particular focus on helping those unemployed for at least a year.

When P2E finds a job listing that seems a suitable fit for a program participant, it offers to pay the person’s salary for four weeks. If the person is retained, P2E pays half the salary for the next four weeks.

The Department of Labor on Thursday awarded $170 million in “Ready to Work” grants that target the long-term unemployed. P2E is one of the applicants.

Vives started class Sept. 22 in New Haven. The 21 participants attend sessions 10 to 4 Monday through Thursday, focusing on tailoring resumes, building networks and mastering social media such as LinkedIn in a bid to land a job.

Since Bloomberg News visited the program in August 2013, its model has expanded to 10 cities outside Connecticut. Nevada received a $1.8 million federal grant in June to replicate it. The Connecticut legislature allocated $3.6 million to implement the program statewide. And, since President Barack Obama mentioned P2E at a White House event on the long-term unemployed in January, the program’s head is citing the benefit from the bully pulpit.

The program’s expansion and the exposure for long-term jobless are a hard-won victory for Joe Carbone, who began P2E three years ago as the president and chief executive officer of The WorkPlace, a regional workforce development agency. Before this year, he’d seen a “general atmosphere of passivity” on the issue that was “chilling.”

To Carbone, the newfound exposure for long-term unemployment is late but desperately welcome.

“Everything now coming out of Washington is using those words: long-term unemployment,” said Carbone, a former government relations consultant for Textron and Allied Signal Corporations. P2E now aims to raise $6 million a year for the next three years to fund programs in about 25 more cities.

Nevada is working with P2E to replicate the model, which has “a good track record,” said Kim Morigeau, employment security division specialist with the state’s Department of Employment, Training and Rehabilitation. “There are a lot of very dedicated people that know how to work. I just don’t believe they know how to look for work,” particularly “in this new market.”

About 25 participants will start class in Las Vegas before the end of the month, and the agency will start recruiting for a Reno-area class in December.

This year, with the expiration of emergency unemployment benefits in December, jobless Americans are finding one less lifeline as they struggle to re-enter the labor force. That extended aid had jumped from the usual 26 weeks to as many as 99 weeks in some states.

Carbone said he worries that the expiration of benefits, particularly late in the expansion as other economic headlines are improving, further imperils the unemployed and raises the risk that the government will bear a far worse cost burden to support them.

To some, 26 weeks of aid for an active job seeker isn’t sufficient given current labor market realities.

“Many, many years ago when I was laid off before, that was plenty I was able to find a job really quick,” said Les Winograd, who’s enrolled in a P2E class in Bridgeport, Conn., that started Sept. 15. “A lot of the thinking is still way back in the old days” regarding the duration of unemployment benefits.

Winograd, who had worked 18 years for the same employer in the public relations industry before being let go, isn’t alone in saying this time is different. While second-quarter economic growth matched its strongest reading of the recovery and payroll gains are on track for their best year since 1999, the army of long-term unemployed is keeping policymakers, including those at the Fed, on guard.

The median duration of unemployment is 13.3 weeks, down from a record high of 25 weeks in June 2010 while still elevated compared with an average 9.5 weeks in data back to 1948. That’s also above the typical recovery-period duration it was 9.1 weeks for the six-year expansion that ended in December 2007 and 7.7 weeks for the recovery period from April 1992 through February 2001.

The lengthy spells of joblessness are a trouble spot Treasury Secretary Jack Lew witnessed on a September visit to PVJOBS, a jobs-placement center in Los Angeles that works with more than 130 community groups to help find mainly construction jobs for what it calls “at-risk” people, including the “chronically unemployed.”

Those who have been jobless for a shorter period are tending to get hired before the long-term unemployed, Lew said in an interview with Bloomberg News after the visit.

“That’s something we really have to push back on. Once somebody has been out of the workforce for five years, that’s a long time,” Lew said. “It’s not good for the economy, and it’s a tragedy for them.”

On a visit to Winograd’s 26-person Bridgeport class, it’s easy to see how household balance sheets are slammed by a domino effect from unemployment.

Amid exercises meant to train participants in developing career and personal goals and the honing of “sales pitches,” the instructor has asked each attendee to name one current problem.

The litany of responses illustrates a downward spiral from unemployment: I borrowed a friend’s car and got two flat tires. I can’t pay for home repairs that would help save my property value. My husband got laid off, too. I’m still owed payments for contract work from a client gone missing.

“Every day becomes a little bit harder what am I going to supplement that budget with?” said Dora Coriano, a Bridgeport program participant who’s been out of work since August 2013. “Which Paul am I going to borrow from to pay Peter this month?”

Vives says she’s “not going to be unemployed forever.” Statistics, at least, suggest it might be getting harder for women to get re-hired. They make up about 44 percent of the long-term unemployed, up from 35 percent seven years earlier, according to Congressional Budget Office statistics through March. At the same time, Vives’s age group, those ages 25 to 54, accounts for about 59 percent of the long-term jobless improved from 66 percent in March 2007.

In the meantime, the economic recovery still feels different to Vives and her long-term unemployed peers.

“It’s kind of deceiving to me because the American Dream has always been, wow, make money, own your own home, have a good life,” Vives said. “But it hasn’t turned out that way.”

Long-term unemployment persists