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Is Long-Term Unemployment Not a Big Factor in Hiring?

It’s undeniable that there’s a relationship between New York bankruptcy filings and unemployment. That’s not a bad thing, though. People who have lost their incomes cannot repay their debts, so there’s no reason to attempt the impossible. Indeed, a few months of unemployment make it easier for debtors to show that their current monthly incomes are sufficiently low to qualify for chapter 7. Responsible debtors recognize when it’s unlikely that they’ll find jobs to avoid avoidable defaults and foreclosures.

The ugly issue lurking here, though, is how likely debtors are to find work after prolonged periods of unemployment. The conventional wisdom is that employers discriminate heavily against long-term unemployed workers, as though employment is a sign of workers’ freshness. Better to find jobs quickly, switch jobs opportunistically, work multiple small jobs, or of course, borrow more money to go to school and improve one’s skills than be out of work.

A blog post by the Federal Reserve Bank of New York’s economists finds to the contrary: Employers don’t discriminate against the long-term unemployed. Rather, applicants pursue jobs that employers wouldn’t hire them for nonetheless.

It’s a startlingly counterintuitive finding, and it suggests that workers are better off adapting their job-hunting strategies than demanding employers change their hiring policies. The post’s authors arrive at this conclusion by sifting through Current Population Survey data and separating out two types of workers. The first group would never receive an offer after an interview irrespective of their unemployment, and the second group would be hired if interviewed. The question is what information is revealed in an interview that doesn’t exist on a resume.

The authors conducted two simulations, one in which everyone was interviewed and another in which employers couldn’t screen out applicants by unemployment duration. It’s unclear how these simulations worked, but after comparing the results to the actual labor market they found that unemployment duration didn’t affect hiring much. In other words, employers are screening people fairly because applicants pursue jobs they’d probably not get interviewed for anyway.

Maybe we can blame Internet job sites for making it too easy for people to apply for jobs they aren’t qualified for, but it is true that when there’s high unemployment, there aren’t enough jobs to go around. During the Wall Street crash for certain, it wasn’t any employer’s fault for the backlog of unemployed workers, yet there are still economists out there—hopefully not at the Fed—who believe that unemployment is due to workers’ laziness and unwillingness to give up government benefits. However, the Fed’s post, if true, does indicate that long-term unemployment isn’t wholly employers’ responsibility and more needs to be done to create appropriate opportunities for willing workers.

The NY Fed’s post is here.

The post doesn’t address one group of people: Workers who shift into low-paying occupations that still don’t cover their bills. If you’re in one of these jobs or if you’re unemployed, and defaults or foreclosure is approaching, talking to an experienced New York bankruptcy lawyer can help you with your debts.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

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