Nearly 2 million Americans are dealing with long-term unemployment

Employers added 57,000 jobs in June, and the unemployment rate dropped to 4.2%, from 4.3% in May, according to the Bureau of Labor Statistics report released earlier this month. But the BLS report indicated another trend impacting millions of Americans: long-term unemployment.

The current dip in unemployment was mostly due to a decrease in the labor force participation rate—those 16 and older who are working or looking for work—which dropped three-tenths of a percentage point to 61.5%, its lowest level since March 2021.

However, according to the report, 1.9 million Americans are dealing with long-term unemployment—or joblessness for 27 weeks or longer. This accounted for 27.3% of all unemployment in June—an increase of 4% from the same time last year.

Long-term unemployment mostly impacts workers between the ages of 25 and 54. Those in their mid-20s and mid-30s account for the highest number of total unemployed people and also the highest share of long-term unemployment. In June, the average duration of unemployment was 25.5 weeks.
With recent reports of mass layoffs from companies like Meta, Microsoft, Atlassian, Lucid, and others, the number of competitive job seekers may be outpacing the availability of jobs. Many of these workers may have severance packages that cover fewer than the 25.5 weeks it’s taking people on average to find a new position. 

For example, Meta offered laid-off U.S. employees 16 weeks of base pay and two weeks of pay for every continuous year of employment. Block, which laid off 4,000 employees earlier this year, offered those impacted 20 weeks of salary and one additional week for every year of tenure. Packages like these typically feature a healthcare continuation period lasting anywhere from several weeks to months.

Long-term unemployment also takes a toll on people’s mental health. According to an April survey of 5,000 unemployed adults that was conducted by Talker Research, just 23% said they feel consistently motivated, while 31% admitted to stopping their active job hunts. The survey also showed the average unemployed American has been on the job hunt for six months, but 30% have been searching for longer.

Last year, former Federal Reserve chair Jerome Powell said the U.S. economy was in a “low-firing, low-hiring environment,” in which companies reduced the number of active hires and the amount of employees they fire. This structure can push unemployed people into part-time positions.

If the cycle continues, more people will be at risk of losing motivation, straining their mental health and leaving gaps in their résumés. July’s employment situation report will be released on August 7.