Why is Chronic Joblessness on the Rise?

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The quip “don’t quit your day job” isn’t the insult it used to be. In this economy, it’s the key to staying afloat.

Not only is joblessness on the rise again, according to Friday’s jobs numbers, which showed May unemployment ticked up to 9.1%. But the longer you’re out of work, the harder it is to get back in. Roughly 45% of unemployed Americans have been jobless for more than six months, a higher percentage than during the Great Depression. And nearly one-third have been out of work for a year or more. Those scary prospects have driven a lot of employees to hunker down in existing jobs for longer than they normally would, which partly explains why unemployment is staying so high.

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Worker mobility, which greases the wheels of hiring, dropped off sharply last year. And although it’s starting to creep back up, the number of job seekers who successfully relocate for new positions is still historically low, according to research firm Challenger, Gray, & Christmas. Fewer than 10% of job searchers relocated for a new position in this year’s first quarter, a nearly 50% drop from mid-2009. “What’s unique in this job cycle is hires and fires are very low, and fewer people are quitting jobs,” says Jeffrey Cleveland, senior economist at investment firm Payden & Rygel.

Taking jobs in other cities is harder in a dreary housing market, which keeps more people tied to their homes. But falling worker mobility is also a longer-term trend, which this recession simply made worse. According to a recent Fed paper, worker migration has been declining since the 1980s, with only limited ties to the housing market and recessions.

The causes for slower worker movement aren’t easy to trace, but the effects are becoming clear. Stodgy mobility keeps workers from freeing up jobs, improving their skills, and trying new things. Those are especially important to fixing today’s unemployment problem, since more and more employers are finding job candidates don’t have the right skills to match what they have on offer. Employers also think less of job candidates’ skills the longer they stay out of work. “Being out of work a year or two represents a big decline in marketability,” says New York-based financial planner Anthony Canale, who runs a new program with the Financial Planning Association to help job seekers find jobs.

Those without permanent jobs also have fewer temporary options to fall back on. At this point in the recovery, businesses would typically be easing back into full-time hiring by creating more short-term gigs. But over the past few months, even the number of temporary jobs created has been heading downhill, which adds more workers to the ranks of the chronically unemployed. The consequences can mean lower earning power for years to come, especially for young people. A recent study by Rutgers University found more than 30% of recent college grads between 2006 and 2010 hadn’t landed a job within six months of finishing school. And a study by Yale economist Lisa Kahn found college grads who enter the workforce in a weak economy spend years earning less than those who enter the workforce during boom years. (More on Time.com: See a special report on the future of work)

What’s worse, there aren’t many solutions on offer. Corporations say they aren’t budging on hiring without more clarity on financial regulation, the strength of the global recovery, and the shakeout on healthcare. Meanwhile, Austan Goolsbee, outgoing head of the White House Council of Economic Advisers, has suggested that jolting the recovery is no longer the White House’s job: “We’ve got to rely on government policies that are trying to leverage the private sector and give incentives to the private sector to be doing the growth.” President Obama suggested this week he would consider more stimulus, but Congress’s recent austerity kick makes passing more fiscal measures a long shot. There’s also talk of the Fed launching another round of quantitative easing (QE3). But while another bond-buying binge might boost stock prices for a while, it’s hard to envision that spurring job growth.

“The truth is, there aren’t many short-term fixes. The real answers to the jobs problem will take more time,” says University of Chicago economist Raghuram Rajan. And that means chronic unemployment may continue to rise.

So what can the jobless do to stay fresh in the job-hunting game? “Volunteering, courses, workshops, things that show you’re continuing to grow,” Canale says. Not only do these activities build skills; they offer a chance to network and get new ideas. “Sometimes just by connecting the dots in seminars, we’re able to get people a job interview,” he says.

Workshops and seminars can also be a bridge into different industries. A lot of firms are using the recession to make big strategic shifts they should have made years ago. And as those firms take new directions, successful job hunting requires workers to move with them and consider new fields. Switching sectors can be a tough and costly process, but Canale says there are a lot of ways to pick up training for free. Many pubic libraries, for instance, offer free seminars on things like basic investing and computer science.

These aren’t just lessons for the jobless. Rising chronic unemployment means even workers who feel comfortably employed should be better prepared for worst-case scenarios. The most important step while you have a job is to increase household savings, says Canale. Personal savings rates in the U.S. have been creeping up (up to nearly 5% on average from a measly 2% pre-crisis), but in a recent study by the National Bureau of Economic Research, roughly one quarter of Americans said they couldn’t come up with $2,000 in 30 days.

The hardest part of boosting savings can be figuring out where to start. “It’s never about what you make. It’s always about what you spend, and the average person has no idea what that is,” says Canale, who recommends devoting one month to tracking household expenses to tally the bare bones of what you regularly owe. “Only once you know your household expenses can you start to eliminate and make lifestyle choices.” Another important step is regularly evaluating your skills to make sure you’ve still got what employers need. “It’s an extremely hard thing to do, but I have to re-tool myself every 6 months,” says Rajan.

The good news is high chronic joblessness won’t last forever. As incomes and wages in emerging markets continue to rise, global companies focused abroad will gradually turn back to investing in U.S. jobs. In the meantime, keeping your spot in the job market may come down to investing more in yourself. (More on Time.com: See a special report on how to know when the economy is turning up)