Canada's sticky challenge of long-term unemployment

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For Kara Morgan, long-term unemployment has meant financial strain, discouragement and months of struggle to get a toehold in the labour market.

Her spell of unemployment began in 2011, after more than a decade's experience in project management, analyst and executive admin roles. A lack of professional networks and unfamiliarity with social media were hurdles, while she senses that being out of work for more than six months "raises red flags" among employers. A single parent, she has had to liquidate her retirement savings – $100,000 in pensions and RRSPs – to make ends meet.

"It's really devastating because you really don't know the why … you don't know why you're not getting jobs," says Ms. Morgan, who lives west of Toronto.

She's not alone. The number of people out of work for half a year or longer was 272,300 last year, nearly twice as many as six years earlier. Those out of work for a year or longer numbered 96,400 last year – more than double 2007 levels, according to Statistics Canada data.

Longer bouts of unemployment are a problem for several reasons. The financial hit that occurs when one is without work for months on end means the person is faced with little spending, eroded savings and greater odds of falling into low-income status. Skills atrophy and networks unravel. More broadly, it spells lost productivity for a swath of the working-age population. Research shows that the longer one is out of work, the tougher it is to re-enter the labour market.

The long-term unemployed "are this group that is isolated from the labour market," said Kory Kroft, assistant professor of economics at the University of Toronto, who has co-authored several studies on the issue.

"A lot of this is from anemic job growth, the recession and discrimination against the long-term unemployed."

In a recent field experiment, Mr. Kroft and his colleagues submitted more than 12,000 fictitious résumés to 3,000 employers in the U.S. Each resume had varying lengths of jobless spells. They found that the chance of getting a callback from an employer falls significantly with longer stretches of unemployment, with much of the decline in the first eight months.

The long-term unemployed are "an unlucky subset of the unemployed," a Brookings paper in March said. Even in good economic times, they are "often on the margins of the labour market, with diminished employment prospects and relatively high labour force withdrawal rates."

Older people generally have longer spells of unemployment than younger workers, according to a labour market assessment published by Employment and Social Development Canada last week. Men tend to be out of work for longer than women. By province, Ontario, British Columbia and Manitoba have seen the biggest increases in the duration of unemployment compared with pre-recession levels.

Labour mobility could alleviate the problem: For example, Regina's jobless rate is 3.7 per cent while Peterborough, Ont.'s is 11.2 per cent. Yet, 55 per cent of Canadians are not interested in moving for job opportunities, regardless of incentives, a survey conducted for Canadian Employee Relocation Council released last week showed.

Policies should be geared to getting the unemployed more swiftly back into the labour market by, for example, shortening retraining programs.

A key cause of long-term joblessness is a lack of strong job creation, Mr. Kroft says. Last year's job growth in Canada was the slowest since 2009. A skills mismatch in the job market may also be playing a role.

In Toronto, Christopher Lamb has sent out hundreds of job applications since last fall but finds his age, health and lack of current computer skills are barriers. The 61-year-old has worked in middle management, museums and most recently in retail. He's considering retraining, though it's tough to know which field is hiring. He's making ends meet now "with difficulty" and his jobless benefits will soon run out.

He spends hours crafting cover letters and résumés, and has learned to play down work experience to hide his age, but often hears nothing back. "It's discouraging. When nothing happens, you think, 'why do I bother?'"

Ms. Morgan has felt similar frustrations. "I see a pattern of older individuals that aren't working, people that have been in one company for a long time and all of a sudden, they aren't needed any more."

Statistics Canada will release its labour force survey on Friday. Economists expect that about 20,000 jobs were created in April, with the unemployment rate staying at 6.9 per cent.

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Long-term unemployment - By the numbers

• 20.3% - Share of people without work for 27 weeks or longer last year as a percentage of total unemployed
• 13.2% - Share of people without work for 27 weeks or longer as a percentage of total in 2007
• 272,300 - Number of people without work for six months or longer last year
• 142,300 - Number of people without work for six months or longer in 2007
• 88,600 - Number of people out of work for one year or longer in March, nearly double March, 2007 levels
• 21.1 - Average unemployment duration in weeks last year compared with 15.5 weeks in 2007 (for workers over the age of 55, the average climbed to 30 weeks last year)