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Open-ended joblessness is crisis in search of solution

BOSTON – Abe Gorelick has decades of marketing experience, an extensive contact list, an Ivy League undergraduate degree, a master’s in business from the University of Chicago, ideas about how to reach consumers young and old, experience working with businesses from startups to huge financial firms and an upbeat, effervescent way about him. What he does not have – and has not had for the last year – is a full-time job.

Five years since the recession ended, it is a story still shared by millions. Gorelick, 57, of Natick, Mass., lost his position at a large marketing firm in March 2013. As he searched, taking on freelance and consulting work, his family’s finances frayed. He now has three part-time jobs, driving a cab and picking up shifts at Lord & Taylor and Whole Foods.

“I’m not in my basement, unshaven, unshowered, drinking a bottle of Scotch a day,” Gorelick said. “I’m out there working these jobs, meeting people and trying to make something happen. But it is exhausting. It is stressful. It is difficult.”

For people experiencing such long spells without appropriate work, it is a crisis. Often, it is also a conundrum: What should a worker who finds himself out of a job for six months or more do?

“There is this very pressing issue,” said Ofer Sharone, a sociologist at Massachusetts Institute of Technology, “and there is this great gap in knowledge about what to do about it, both for policymakers and these individuals.”

Should long-term jobless workers seek out career counseling? Should they accept far lower salaries? Should politicians revamp training programs? To those questions, and to many others, there are too few answers.

In Washington, the plight of the long-term jobless has largely faded from the policy conversation. At the moment, the federal government offers virtually no help to the 3.8 million Americans who have been out of work for more than six months. The maximum duration of unemployment insurance payments fell from as long as 73 weeks to 26 weeks in most states in January.

Jesse Rothstein, an economist at the University of California, Berkeley, has found that the average worker’s income is halved when he loses his job. When his unemployment insurance ends, his income drops again. At that point, the share of such families falling below the poverty line doubles.

Yet there is increasing evidence that a stronger recovery alone might not significantly aid the country’s long-term jobless. Short-term unemployment has fallen to its prerecession level, but long-term unemployment remains more than twice as high as it was in 2007.

New research by Alan B. Krueger, the former chairman of President Obama’s Council of Economic Advisers, and his co-authors found that only 1 in 10 workers who had been unemployed over an extended period of time in a given month between 2008 and 2012 had returned to full-time work a year later.

In part, that might be because the long-term jobless become discouraged and reduce the intensity of their job searches. But it also appears that employers discriminate against the already out-of-work. Rand Ghayad, a researcher with MIT, performed a study showing that businesses were more likely to call back a working candidate with no relevant experience than a long-term jobless candidate with relevant experience.

This fall, Sharone and some colleagues founded the Institute of Career Transitions to help understand what workers and policymakers should do.

In its inaugural study, the institute is using long-term unemployed workers, including Gorelick, as “guinea pigs,” comparing the outcomes for workers assigned career coaches to the outcomes of those not offered that form of help.

“The idea is that in time, we should be able to say whether that intervention is effective, and we will have a lot of qualitative data about the lives of these workers, as well,” Sharone said.

Intensive career counseling might help the long-term unemployed, Sharone and his colleagues figured. Coaches could help the long-term jobless optimize their résumés, refrain from flagging in their job searches, make new connections and beat common human resources screening techniques. And if career counseling does not reduce the jobless rate, that would be valuable to know, too.

Gorelick, who was his family’s primary breadwinner, has struggled to support his wife and children and cover their mortgage. He has fallen into credit card debt, wiped out his retirement accounts and even contemplated selling his house. “I decided to set my ego aside,” he said.

“Since my unemployment benefits have run out, I’m just trying to make a little money with these part-time jobs. But, for perspective, if I combined my income from all of them, that would still be half of what my weekly unemployment benefits were.”

The White House has long pushed for additional policies to aid the long-term jobless, including renewing emergency unemployment insurance payments.

“This is a key reason no one should feel a steady-as-you-go recovery is good enough to not require more job-creating policies,” said Gene Sperling, the recently departed director of the National Economic Council. “This form of unemployment has its own perverse dynamic, and public policy should be trying to prevent devastating, negative cycles that gain momentum if left alone.”

With a divided Congress stalemated on most legislation, the White House this winter announced an initiative to urge businesses not to discriminate against the long-term jobless. Expanding programs that act as middlemen between employers and the long-term unemployed – like Skills for Chicagoland’s Future – might be a promising avenue as well, Sperling said.

“There are models that work,” he said. “But, god, considering the magnitude of this problem, you worry that it is not enough.”