Obama’s Crusade to Help the Long-Term Unemployed: Will It Work?

A rural telephone company called Frontier Communications has intentionally hired more than 250 long-term unemployed since January. KPMG, the behemoth auditing and tax advisory services firm, reached out to hire 300 others who have been desperately seeking employment for months. Comcast has a new employment recruitment policy that assures that at least 10 percent of their new trainees have come from the ranks of the long-term unemployed.

The administration cited these and other corporate efforts to recruit from the vast pool of long-term unemployed Americans earlier this week in touting the success of President Obama’s “call to action” to private employers and community leaders to alter their hiring practices.

The plight of the roughly three million long-term unemployed who have been out of work for 27 consecutive weeks or more is troubling – with ample evidence of high rates of related depression, alcoholism, economic hardship, and/or divorce.

President Obama deserves credit for addressing an employment crisis that Jeffrey Zients, director of the National Economic Council, recently called the most “heart-wrenching” and troubling shortcoming of the economic recovery.

“These are very talented people with good relevant experience who can’t get their foot in the door for an interview,” Zients told a gathering of well-heeled business executives in Washington.

A key solution, he insisted repeatedly, was for business leaders to shed their biases against people who have been out of work for many months or years and find ways to recruit and train them. But studies show that those biases are deeply ingrained in the business world and not easy to root out.

The president and his aides have no real leverage to change corporate employment practices other than through the power of persuasion.

Indeed, the centerpiece of Obama’s initiative — unveiled at a White House summit in January — has been to jawbone several hundred business and community leaders and government officials to adopt a new set of “best practices” that make a virtue out of hiring the long-term unemployed –even those with big gaps in their resumes and rusty skillsets.  

On Wednesday, Vice President Joe Biden and Labor Secretary Tom Perez met at the White House with many of the 300 business and government leaders who signed onto the program and urged them to step up their efforts to give the long-term unemployed a “fair shot” at a job.

At the same event, Perez announced 23 Labor Department grants totaling $170 million to fund programs in 20 states and Puerto Rico to support the training and hiring of long-term unemployed people. The grants will go to partnerships between local governments, businesses, and nonprofits.

Perez told reporters in a conference call before the gathering that these business leaders showed a “willingness to expand their talent pool, recognizing it was the right thing to do for people who have been down with their luck, but also it was the smart thing to do for employers,” according to the Huffington Post.

As proof that the president’s initiative was beginning to pay dividends, the White House noted that since December, the long-term unemployment rate has fallen from 2.5 percent to 1.9 percent of the entire workforce. The number of long-term unemployed who have been out of work for more than six months has fallen by 900,000, to the current 2.95 million.

But those figures understate the extent of the problem.

Zients, director of the National Economic Council, told a group of Washington business leaders that while the unemployment rate for the short-term unemployed has returned to pre-recessionary levels at 5.9 percent, the rate for those who have been out of work longer than 27 weeks is twice the normal level.

Even while long-term unemployment is shrinking as a percentage of the workforce as a whole, it continues to constitute a major percentage of the roughly three million people out of work. The Bureau of Labor Statistics estimates that long-term jobless workers account for 35.3 percent of the unemployed population in the United States. 

Many of these people are “Baby Boomers” in their late 50s and 60s who have seen their work skills atrophy and their prospects rapidly diminish, or younger millennials and Next-Gens who have struggled to find anything more than low paying, part-time jobs.

Despite a strengthening economy, job prospects for the long-term unemployed have been slow to improve. In late March, a panel of economists from Princeton University released a study “that found that only11 percent of the long-term unemployed job seekers in any given month were able to find full-time work one year later,” according to HR Magazine, a publication of the Society for Human Resource Management.  

The study found that “skill erosion that accompanies long-term unemployment could induce employers to discriminate against the long-term unemployed.

Dan Ryan, principal at Ryan Search & Consulting in Franklin, Tennessee said in an interview Thursday that many of the long-term unemployed simply don’t know the latest techniques for job hunting and networking, and can’t keep up with younger competitors in the work place. “For many of the long-term unemployed, the rules of engagement have changed, and they don’t have the tools to compete.”

For all the hoopla around the president’s initiative, even some staunch supporters of this effort say it’s too soon to gauge how successful it will be. “To my mind this is the perfect use of the bully pulpit by the White House and their ability to raise awareness of this issue” with the public and hiring managers, said Nancy Hammer, a senior  policy official of the Society for Human Resource Management, a global human resources professional organization.

But what about the practical impact? “I think it really remains to be seen,” she replied. “It’s still relatively early on, but frankly just to get this conversation into the public and into workplaces I think is an achievement.”

Ryan and other employment specialists argue that with the unemployment rate dropping and employers no longer able to be as choosy as they were before, much of the problem of long-term unemployment will take care of itself.

“The less intervention we have at the federal level the better off we are,” he told The Fiscal Times. “The problem is systemic and legislative fiat won’t work.

“The initiative launched by the White House is raising awareness, but I don’t think it will move the needle much and significantly increase hiring,” Ryan said. “It’s going to take much more effort than that.”