Why are there any long-term unemployed people? Or any unemployed people at all?

Folks:

Today’s New York Times has an article about how long-term unemployed Americans may never work again. And they say that this may be due in part to employers discriminating against people whose resumes say “unemployed” or “big gap”. This raises the question of why there are any such resumes.

I know a lot of people who are not working productively. They call themselves “entrepreneurs” and say that they are pulling together a startup. For about $500 they can even create an LLC so that their resume says “2013-present Big New Idea LLC: Founder and CTO” or whatever. That after a year or two their startup has not succeeded will not be held against them by a potential employer. After all, most startups fail or fizzle.

A friend’s daughter was trying to get her first job. Employers didn’t want to hire her because she had no work experience or references. So I edited her resume to say “Jane Smith Landscaping” [not her real name!], hired her to do some yard work, and put my name and phone number down as a reference. Having planted some daffodil bulbs, she went to her next interview as a self-employed person looking for an indoor job for the winter. She was hired.

Given that almost anyone can find work doing landscaping and call themselves a landscaping contractor, taking care of children and call themselves the founder of a child care center, etc., why are there resumes that say “I am unemployed.” If it is known that employers don’t like to hire the unemployed, why is anyone wearing a label that is essentially self-applied?

15 Comments

  1. TJIC

    March 20, 2014 @ 4:45 pm

    1

    My hunch?

    Because they don’t really want work that badly.

  2. David

    March 20, 2014 @ 5:01 pm

    2

    I don’t know. But perhaps many members of the long-term unemployed have never met an entrepreneur, or know anyone who has set up an LLC? Perhaps the long-term unemployed are mostly applying for low-wage jobs that would consider a “founder” entry in a resume to be a minus, as it suggests the applicant will not stick around? Perhaps many members of the long-term unemployed would be worried about what might happen if they get found out putting misleading information in their resume, given their already poor prospects?

    In short, perhaps the reason that many members of the long-term unemployed are stuck in that position is because, unlike those from more privileged backgrounds, they lack knowledge on how to work the system, or friends who have that knowledge.

  3. Alex

    March 20, 2014 @ 5:23 pm

    3

    Maybe because it feels dishonest, and they don’t want to lie?

    Maybe because they think it will be 100% transparent to any potential employer? I’ve seen resumes that have some variant on “self-employed” or “general consulting” in between jobs and it’s easy enough to translate that into “couldn’t get a job during that time”.

    Or maybe because they aren’t actually sure that appearing to be an entrepreneur is not a negative on your resume. I mean, if you’re looking for somebody to be a steady employee, appearing like somebody who’s going to quit the next time they get an idea for a business is not good. And for a lot of people with chronic unemployment problems, spending $500 to set up an LLC for this purpose would be ridiculous.

    “Almost anyone can find work doing landscaping.” Have you tried that lately? Also, do you hire and provide references to any person who comes knocking to plant daffodils, or only the children of friends?

  4. Alex

    March 20, 2014 @ 5:30 pm

    4

    This also reminds me of what I heard from a couple whom I met at a birding retreat a few weekends ago…one of the presenters was an ex-Navy pilot and retired university professor, and I got to talking to him and his wife and I mentioned that I was also a (low time, PP-ASEL) pilot. They said that their son was an airline pilot now, and that when he was building hours, they had created some kind of corporation, bought a Cirrus, and applied for some kind of grant for teaching classes in remote towns away from major universities. The son built hours flying the father around to his teaching gigs.

  5. philg

    March 20, 2014 @ 9:00 pm

    5

    Alex: Have I tried finding work as a landscaper? No. I have tried to hire people to help with yard work, however, and have discovered that it is necessary to pay approximately 3X minimum wage to get anyone who will show up. Due to the fact that the market-clearing wage is 3X the minimum wage and no skill is required, I infer that it would not be difficult for someone to get a job doing landscaping. Ditto for child care, though it does seem to be possible to hire people for closer to 2X the minimum wage.

    David: Your idea that long-term unemployed people have “never met an entrepreneur” and are not from “privileged backgrounds” is contradicted by the referenced New York Times article, which shows that there is almost no correlation between education level and the probability of being long-term unemployed versus short-term unemployed. It also flies in the face of common sense. How could a person who had been working at minimum wage be able to survive on unemployment benefits, which would presumably pay less than the employed (minimum) wage?

    https://www.fas.org/sgp/crs/misc/R41559.pdf says “unemployed workers at all educational levels were equally likely to have been looking for work for more than 99 weeks”

    So we’re back to the question of “What would someone with a college degree, after reading that employers don’t like to hire the unemployed, not start at least a small business of some sort and put that on his/her resume rather than a big gap?”

  6. Mark

    March 20, 2014 @ 11:01 pm

    6

    Phil,

    If someone receives unemployment benefits, they cannot state that they have a job or own any operating business, as this would bring the UE payments to a halt.

  7. philg

    March 20, 2014 @ 11:03 pm

  8. COD

    March 21, 2014 @ 8:25 am

    8

    In VA you can earn money as self-employed while on unemployment. You just have to report it weekly and it offsets against any unemployment that you might have been due. If your unemployment benefit is $350 and you earn $200 that week – your unemployment check for that week will be $150.

  9. TJIC

    March 21, 2014 @ 9:48 am

    9

    A second thought: forming your own company that is mostly a shell and does very little is a signalling hack: it shows that you’re a member of the clever set, and would make a good employee.

    If and when the idea spread so that everyone did it, employers would discount it and/or add a new set of filters. Much as they’ve done with the once-vaunted BA degree.

  10. jay c

    March 21, 2014 @ 7:03 pm

    10

    For SW people between jobs, contributing to an open source project (and actually checking code in) is a great way to show a potential employer that you have initiative and also shows off your coding skills.

    To prevent long-germ unemployment, I like the German system, or the system Germany had when I lived there. I think it is slightly different now. The way it was two years ago, when you are on short-term unemployment (Arbeitslosengeld I) (meaning, your previous employer is paying the bill) the unemployment office will work hard to help you out, and in some cases, even pay your professional fee so your engineering license remains current, for example. However, once you are off your previous employer’s largess and go on to welfare (Hartz IV), they make it so difficult: you have to show up every day and stand in line and fill out forms and explain why you cannot find a job. EVERY DAY. This article by Forbes link describes the German system in more detail and how it is the opposite of what the current administration would like. In summary I think Kruger is right that the government can help the long-term unemployed find a job (particularly the better-educated and older workers mentioned in the article), definitely “assisting unemployed workers to transition to expanding sectors of the economy,” through a German-type system where they are basically compelled to seek employment to escape Hartz IV.

  11. Kryten

    March 21, 2014 @ 10:54 pm

    11

    Phil, how can you have such a “let them eat cake” attitude? I was reading the comments to the article. Untold millions of US jobs offshored in the past 20 years, H1b visa increases, Corporate America sitting on cash and reducing hiring to a bare trickle (down) from 2007-2012. Maybe some people are still basically honest? The long-term unemployed are more eager to work and prove themselves than the employed. But due to some twisted logic, companies would rather “poach” someone from company XYZ so that they can put a feather in their caps. And landscraping? I know of a smart engineer who was laid off and started a landscaping company. He did great work, and was in full compliance, but couldn’t compete with those who didn’t care about taxes, permits or licenses. (The landscaping equivalent of NYC gypsie cabs.) Too much is imported into the US, more tariffs are needed. We’re still the biggest economy in the world, we don’t need recklessly import like we do. The global economy? It was a global economy when they floated the first sailing ships. Some countries win, some lose, some broke even. But most politicians are sitting bandits and don’t care how much human potential goes to waste.

  12. philg

    March 22, 2014 @ 12:10 am

    12

    Kryten: “The long-term unemployed are more eager to work and prove themselves than the employed.” You’re saying that a person who sits at home every day is more eager to work than someone who goes to work every day? That the person who is at home in the evening is more eager to work than the person who babysits for a neighbor in the evening? That it is a lack of import tariffs that prevents a long-term unemployed person from doing work as a daytime nanny or evening babysitter? That it is Corporate America that keeps a long-term unemployed person from earning money clearing snow in the New England winter?

    I guess all of that is possible… but why do employers have to pay more than minimum wage for workers who are essentially unskilled? Wouldn’t those jobs be filled immediately by the “eager to work” but unemployed?

  13. Gary Drescher

    March 22, 2014 @ 11:11 am

    13

    Philip: Even if your suggested ploy is effective, it merely gives a misleadingly-advertised unemployed person an advantage over other unemployed persons. It does not add to the number of jobs available, which is less than the number of jobs sought. So just as many people end up unemployed.

    philg: “David: Your idea that long-term unemployed people have ‘never met an entrepreneur’ and are not from ‘privileged backgrounds’ is contradicted by the referenced New York Times article, which shows that there is almost no correlation between education level and the probability of being long-term unemployed versus short-term unemployed.”

    There’s no contradiction between David’s notion and the NYT claim. While education may not be correlated with the length of unemployment once unemployed, it is certainly correlated with being unemployed in the first place. So non-privileged people, who already predominate in the population as a whole, predominate even more among the long-term (and short-term) unemployed.

    philg: “How could a person who had been working at minimum wage be able to survive on unemployment benefits, which would presumably pay less than the employed (minimum) wage?”

    The same way they survive when the unemployment benefits run out and there’s still no job for them: some combination of friends and family, other government safety-net programs, and private charity.

  14. philg

    March 22, 2014 @ 5:24 pm

    14

    Gary: I don’t think it is misleading for me to put down “Philip’s Child Care” on my resume if I am in fact doing some work as a babysitter/nanny. Similarly if I have some customers for snow shoveling I could put down “Snow Removal by Philip” on my resume. A lot of people who have jobs engage in a far larger degree of inflation.

    Another way of looking at this is “Why would a person who hasn’t had a full-time job for a year not take a part-time job babysitting, snow shoveling, or gardening?”

  15. Fabien

    March 26, 2014 @ 8:26 am

    15

    You’re right that there are ways to look employed even when you aren’t really. I’d say that those who don’t use those tricks aren’t bright enough, “bright” meaning here a mix of formal / social intelligence, motivation, basic education etc.

    And that’s why it makes sense to shun the visibly unemployed when looking for someone to hire: they’ve singled themselves out as people lacking basic practical sense, which is needed in almost every jobs, including so-called “unqualified” ones.

    In all match-making processes–it’s even clearer for dating than for employment–there are untold social codes, and whether you understood and respect them is your very first aptitude test. I believe that we have such tests, calibrated to have a sizeable proportion of the population failing them, on purpose, not by accident.

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