In late February, when Allen Kantorowitz was furloughed from his job as sales and marketing director for a hotel group in Manhattan because of the COVID-19 pandemic, he figured he’d be sidelined for two or three months.
After all, Kantorowitz, 59, has decades of experience in hospitality and tourism, including high-level positions at hotels and convention bureaus in New York City and its suburbs. Even if the lodging industry were decimated, Kantorowitz surely would find a sales managing job in another sector.
Nine months later, the Fort Lee, New Jersey, resident is still fervently job-hunting. And growing increasingly jittery.
“I’m putting more and more pressure on myself to not go more than a year” without work, he says, because of both the effect on his finances and the widening gap on his resume. “At some point, it’s going to get on the scarier side.”
Fraying safety net: From extended jobless benefits to student loan reprieve, COVID-19 relief set to fade at year’s end
Pest nests, dead batteries:Letting your car sit idle during COVID can cause a host of pricey problems
As the health crisis drags on, a growing share of the workers it has idled have been jobless six months or longer, placing them among the ranks of the long-term unemployed. In November, 3.9 million Americans were unemployed for at least 27 weeks, up from 3.6 million in September and the most since November 2013. People in that category made up 37% of the nation’s unemployed.
In February, just before the crisis exploded in the U.S., such extended unemployment stood at a 12-year low of 1.1 million. The November employment report, released early Friday, showed a disappointing 245,000 job gains, much lower than many expectations.
Millions more could become long-term unemployed over the next few weeks or months. COVID-19 cases are hitting new records amid a bleak winter outlook and some states are reinstating business constraints. Unemployment benefits for 12 million Americans are set to expire at the end of the month. And the prospect of Congress breaking a deadlock in the coming weeks by passing another relief package for jobless Americans and struggling businesses remains uncertain.
Historically, the long-term unemployed have a much tougher time finding jobs than those sidelined for shorter spells. Skills erode over time, the theory goes, and extended unemployment may carry a stigma. That means a large group of Americans may have less income and spending power for years, even after the pandemic and its short-term economic effects are over.
Besides the financial fallout for affected households, there’s a broader toll for the economy, whose post-pandemic scars will also include more than 100,000 business closures.
The long-term unemployed are “not working, they’re not spending,” says Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University.
And, he says, “A smaller workforce means a smaller economy” that produces fewer goods and services.
Kantorowitz is still receiving jobless benefits, but the $600 federal bonus in his weekly unemployment checks expired in late July, as it did for millions of other Americans. He put off a car repair, pared back to basic cable service and cut meat and seafood from his grocery list as he clips coupons.
“I’m going to buy things that are on sale rather than what I want,” says Kantorowitz, who has drawn several thousand dollars from his savings to pay the bills. “I’m bleeding money.”
Yet some economists and staffing officials argue this downturn is different, and long-term unemployment won’t be a blemish for workers and an albatross for the economy, as in past recessions.
The pandemic threw more than 20 million people out of a work in an unprecedented wallop last spring. The economy was supposed to bounce back quickly, with business shutdowns in March and April, reducing COVID-19 cases and federal aid keeping companies and jobless workers afloat until restaurants, stores, and other outlets reopened and brought back employees.
The outbreak, however, has been much harder to subdue than believed. About 55% of the 22 million jobs the U.S. lost earlier this year have been recovered but recouping the rest could take a few years, economists say, even with a vaccine expected to be widely available next spring.
Countdown to millionaire status?: New to investing? Here’s an estimate on how long before the stock market makes you a millionaire.
As a result, employers aren’t looking askance at the long-term unemployed or the millions who have dropped out of the job market, especially with many caring for sick relatives or children who are remote-learning from home, says Amy Glaser, senior vice president and staffing firm Adecco.
While big resume gaps traditionally have raised concerns for hiring managers, “Not during the pandemic,” says Paul McDonald, senior executive director at Robert Half staffing. “A lot more employers are taking the candidate’s situation into consideration. These employers are selecting the best candidate for the job regardless if the person was out of work seven months or two to three weeks,” he says.
In fact, a long bout of pandemic-induced unemployment may be a positive for some employers.
“There’s a cachet for giving someone a job opportunity,” says Jim McCoy, senior vice president of talent solutions at ManpowerGroup, a staffing firm.
Tom Bemiller, head of Aureus Group, which owns a chain of three auto body shops in Pennsylvania, says he struggled to find workers before the pandemic, when unemployment was at a 50-year low of 3.5%.
Now, he says, even though sales are down 35% this year, “I’m scouting for talent,” noting he can draw from an ample pool of unemployed auto body specialists.
Bemiller recently hired two technicians and an estimator who have been out of work more than six months, including one who was slow to search for a new job because of child-care duties and another who preferred to receive jobless benefits until his $600 weekly bonus ran out.
“I’m very excited about it,” he says. “I got a really, really top-level technician.”
Bemiller says technicians’ skills don’t atrophy in six or nine months. Plus, he says, “In a normal world, a long stretch of unemployment is a red flag for me. In 2020, I’m going to talk to you. I want to hear your individual story. If I believe you’re going to work hard for me,” a long bout on the sidelines isn’t a drawback.
Others even say they welcome it.
“We almost find it as an advantage,” says Will Caldwell, CEO of SnapnHD, which generates reports on housing flood risks for real estate and mortgage firms.
Job candidates looking to switch to his La Jolla, California-based company are often wedded to the customer relationship software they used at their previous jobs, he says. Those who are unemployed “are going to be more open to learning our processes,” he says.
And if they’ve been out of work more than six months? “I’m going to get someone with more hunger who wants to work,” he says.
Caldwell plans to nearly double his staff of 20 over the next year to keep pace with revenue that has climbed 45% this year.
Despite employers’ goodwill, some economists believe the long-term unemployed will likely face the same old employer biases as the pandemic grinds on and their jobless stints lengthen.
With unemployment at 6.9% and more people vying for fewer jobs, companies “become very picky,” Van Horn of Rutgers says. “It’s supply and demand.”
If a long-term unemployed candidate is competing against others who are working or have been jobless for shorter periods, some firms may assume “they’re not good workers or they got turned down at other places,” Van Horn says. “I think the stigma will be there.” Plus, he says, “Skills actually do atrophy.”
Some industries are changing for the long haul, and chronically jobless workers may not have the qualifications to match, says Harry Holzer, an economist and senior fellow at the Brookings Institution. Many laid-off retail workers, for example, may lack the skills for jobs that have become more heavily skewed toward e-commerce, he says.
Some data supports this skeptical view. In October, people out of work less than five weeks found jobs at more than twice the rate of those unemployed six months or longer, according to figures from Moody’s Analytics and the Labor Department. Some of the disparity can be traced to furloughed workers who were quickly recalled by reopening businesses. But even among permanently laid-off workers, the short-term unemployed found jobs at twice the rate of their long-term jobless counterparts, the data shows.
“We’re all hoping this (downturn) will be different,” says Till von Wachter, an economist at the University of California Los Angeles. “I don’t think the past tells us there will be a different outcome.”
Switching it up: Changing careers during COVID-19: Here’s how one millennial went from violist to medical technician
The struggles of the long-term unemployed could depend partly on their occupation, von Wachter says. He doesn’t believe restaurant servers are grappling with skill erosion or a stigma in the eyes of prospective employers, but higher-skilled white-collar workers are more likely to face those challenges.
Kantorowitz has applied to dozens of jobs each week and notched a steady stream of interviews, including multiple rounds. But with few jobs available at hotels, he has been forced to hunt for sales positions in other fields, such as at a wine company, a bakery, and a senior home. In the end, he believes he’s just falling short because he lacks experience in those areas.
Is his widening unemployment spell a turnoff for some companies?
No hiring manager has said as much, but, “It’s something that keeps me up at night,” says Kantorowitz, who thinks he also may be facing some age discrimination. That’s why he tells himself, “Just find yourself a seat” in the market by taking a job outside his specialty.
Kantorowitz also has taken a slew of webinars in an effort to stay current.
Katty Douraghy, president of Artisan Creative, a recruiting firm for digital, creative and marketing jobs, says long-term unemployed workers aren’t at a disadvantage as long as they keep their skills updated, with designers learning the latest tools.
That’s precisely what Joe Campos, 42, who lost his job as an art director for Mattel in May, has been doing, along with coming up with new designs for consumer product companies and adding them to his portfolio. He’s not yet worried about the length of his unemployment but will grow more anxious if it extends past January.
“I don’t want to make a desperate move and take a bad job,” he says. But he’s willing to take a junior-level creative job at lower pay to quickly get back in the game.
The outlook for the long-term unemployed may soon brighten. If a vaccine is widely distributed by spring, the economy could bounce back more swiftly than expected, and chronically jobless workers who have been furloughed could be recalled while those permanently laid off suddenly find a plethora of open jobs, Holzer says.
During this crisis, “The onus of long-term (unemployment) will be more apparent when the duration…increases further,” to a year and beyond, says Moody’s economist Sophia Koropeckyj, adding that “skill erosion has not really set in.”
Asked if he’s encouraged by the prospect of a more vibrant job market, Kantorowitz says, “Are we talking March, June or September?” noting that his jobless benefits will expire in late spring.