Why unemployment stretches are getting shorter
NEW YORK (CNNMoney) — The average time Americans spent unemployed dropped a record 2.8 weeks in January ... but hold the applause.
The reason is likely because many people ran out of unemployment benefits so they stopped looking for work, experts said.
"People are getting frustrated and are giving up," said Adam Hersh, economist with the Center for American Progress.
The average duration of unemployment was 35.3 weeks in January, down from 38.1 weeks in December and 40.2 weeks a year earlier, according to the latest monthly jobs report from the Bureau of Labor Statistics.
There are other indications that the ranks of the long-term unemployed are thinning. The median duration of employment, which is less affected by those who've been out of work for many months or years, was 16 weeks in January, down from 18 weeks in December.
And the number of people out of work for at least six months fell to 38.1%, down a percentage point from the previous month. December was the first month this figure fell below 40% since the end of 2009.
The cause of the big drop likely stems from the fact that federal extended jobless benefits were curtailed in several states in January because their unemployment rates improved, said Claire McKenna, policy analyst at the National Employment Law Project. To receive unemployment checks, the jobless must look for work, which keeps them in the labor force. And since there was no notable uptick in employment, it's not likely that the majority of them got jobs.
Unemployment benefits last up to 73 weeks, but their duration in each state depends on its jobless rate. Residents in Georgia, Mississippi and South Carolina, for instance, are getting 10 fewer weeks of checks as of January because of the improving rate. Five other states also saw the duration of the benefits shrink in January.
Once they are no longer eligible for benefits, many may stop applying for jobs because they don't see any opportunities, McKenna said. So they are no longer considered unemployed under the Bureau of Labor Statistics criteria, leading to an improvement in the average duration of unemployment.
This phenomenon is one reason to maintain -- or even lengthen -- federal extended benefits, which have been in place since mid-2008, labor advocates said.
One school of thought believes that extended benefits keep the unemployment rate high because they discourage people from accepting offers. But the fact that the long-term unemployed are likely just dropping out of the labor force shows that they still need support, said Dean Baker, co-director of the Center for Economic and Policy Research.
"The benefits are not holding them back from taking jobs," Baker said. "You take away their benefits and now they aren't working. They have to struggle to get by."
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