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Long-Term Jobless Left Out of the Recovery

Wall Street Journal (09/03/13) Ben Casselman

More than four years after the recession officially ended, 11.5 million Americans are unemployed, many of them for years, with millions more having abandoned their job searches. A growing body of economic research suggests that the longer they remain on the sidelines, the less likely they will be to work again, and for many, it may already be too late.

The share of the population that is working or looking for work—a measure known as the participation rate—stands near a three-decade low. The rate was falling even before the recession, partly because of the aging of the baby-boom generation, but economists disagree about how much of the more recent decline is tied to the weak economy. “People have found other things, maybe staying at home, taking care of family,” says Willem Van Zandweghe, an economist at the Federal Reserve Bank of Kansas City. “You need to see a much stronger economy before they consider coming back.” For economists, the key question is how many of the labor-force dropouts will return when the economy eventually rebounds more strongly. A permanently smaller work force would mean it takes fewer jobs than in the past to bring down unemployment, but it also means the economy’s underlying growth rate has slowed.