People unemployed for a long time have historically found jobs less easily than those experiencing shorter spells of unemployment, perhaps because their skills erode, they lose relationships within the workforce, or they acquire a stigma that deters firms from hiring them. Loss of skills and lower rates of employment reduce the economy’s overall productive capacity over the longer term.
In the shorter term, because the process of matching the long-term unemployed to jobs typically takes more time, the currently high level of long-term unemployment might in itself be a reason that further progress in reducing the unemployment rate, and thus in achieving a more complete recovery, could be slow.6 A pessimistic view is that a large share of the unemployment we are seeing, particularly the longer-term unemployment, is structural in nature, reflecting factors such as inadequate skills or mismatches between the types of skills that workers have and the skills that employers demand.