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Depression Economics

What happens to people when their unemployment insurance runs out and they still can't find a job?

By Annie LowreyPosted Thursday, Dec. 30, 2010, at 3:31 PM ET

People looking online for employment.If 2008 was the year of the financial crisis, and 2009 the year of the recession, then 2010 was the year of unemployment. The good news is that things are starting to look up, if modestly. The number of workers making initial unemployment claims—a good indicator of where the unemployment rate is heading—fell to its lowest level since July 2008 this week. Employers have started filling more available positions. And economists expect December's unemployment rate, to be released next week, to be lower than last month's.

But none of this changes the fact that, by most yardsticks, 2010 was the worst year for jobs since the Great Depression. The year's average unemployment rate will clock in at about 9.7 percent—higher than last year's 9.3 percent and tied for the highest annual rate since the government started keeping official counts in 1948. For all of 2010, in any given month, about 15 million Americans—the population of New England—were looking for work. And, really, in any given month, more needed work. Underemployment—that's the "official unemployed," plus people in part-time or temporary positions looking for full-time work, plus people discouraged from the labor market and no longer looking—totaled as many as 25 million.

And the recession has not meant just more joblessness. It has also meant longer joblessness. The average length of a spell of unemployment now sits at 30 weeks, after hitting a high of 35 weeks in July. About 6.3 million people, 42 percent of all unemployed Americans, have been out of work for more than six months. And more than 1 million have exhausted their unemployment benefits. They're called 99ers. (The term, coined this year, refers to the maximum weeks of benefits in the states with the highest unemployment rates.) There are about 1.6 million of them, according to the Department of Labor. And they raise the question: What happens when unemployment insurance ends?

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There is no reliable way to measure what happens to 99ers, whether they find work, return to school, remain unemployed, or move on to programs such as disability and welfare. (The Department of Labor does not follow the same individuals longitudinally.) But economists know with a reasonable amount of certainty that their unemployment does not end when their unemployment insurance does.

The Department of Labor has shared data with the New York Times showing that the shorter the duration of unemployment, the more likely a person is to get a new job. People who have been out of work for five weeks have a monthly re-employment rate of about 31 percent. People who have been out of work for a year have a monthly re-employment rate of 8.7 percent. Presumably, people who have been out of work for more than 99 weeks have a re-employment rate somewhat lower than that.

In some states, there are special programs to help keep the 99ers afloat. But for the most part, they are on their own. Government assistance becomes thinner, more brief, and more patchwork—food stamps, assistance with heating costs, welfare for parents with children, temporary aid. For many people receiving unemployment insurance, it is the only thing keeping them above the poverty line. The Economic Policy Institute calculates that unemployment insurance kept 3.3 million people out of poverty in 2009.

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Annie Lowrey reports on economics and business for Slate. Previously, she worked as a staff writer for the Washington Independent and on the editorial staffs of Foreign Policy and The New Yorker. Her e-mail is .
Photograph of people working at computers by Spencer Platt/Getty Images.
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