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Lockheed Martin Corp. (LMT) and Walgreen Co. (WAG) are among businesses trying to fulfill the promise by tweaking screening practices to ensure people who’ve been unemployed the longest have a fair shot at landing a job. Frontier Communications Corp. (FTR) has found that its workforce is more loyal and productive after focusing less on gaps in work histories when looking for new staff.
“It was not easy to get my hiring managers to break away from the habit of viewing the top five or six resumes for an open position,” said Jim Oddo, senior vice
president of human resources and talent at Stamford, Connecticut-based Frontier, a regional telephone company that was among the firms signing on to President Barack Obama’s push to give the long-term unemployed a longer look.
Oddo’s team now interviews more candidates by video, which helps assess skills that are invisible on paper. “How could I look at a resume and determine if somebody is optimistic?” he said. Frontier has hired 250 long-term jobless this year through the third quarter, and “turnover has certainly gone down over the course of the year and productivity has gone up,” he said.
The share of jobless who have been out of work for 27 weeks or longer
Yellen Concern
The White House initiative aimed to find jobs for some of the 3.88 million Americans out of work for 27 weeks or more as of December 2013, which at 37.7 percent of total unemployed represented more than twice the average in data back to 1948. Federal Reserve Chair Janet Yellen has been among policy makers who worry that the inability to make a significant dent in their number will cause job skills to atrophy, hurt efficiency and strain families.“The longer people are out of work, their skill set erodes, the workforce participation rate goes down, and then you have overall productivity going down,” said Sharon Stark, fixed income strategist at DA Davison & Co. in St. Petersburg, Florida. “That’s not a good trend.”
The January pledge was followed by a renewed White House push in October that included $170 million in Labor Department grants to 23 organizations targeting programs to aid the long-term unemployed.
“Culture shift doesn’t occur overnight, but culture shift starts with engaging people and increasing public awareness,” Labor Department Secretary Tom Perez said in a Nov. 7 telephone interview.
Breakdown on Drop in Unemployment
Wasted Talent
“Companies recognize that there’s a lot of good talent on the sideline and they had overlooked some talent because they’d allowed this recent issue of the fact they had a hole in their resume to trump everything else,” Perez said.The administration’s October initiative also included a memorandum from the Office of Personnel Management detailing how to attract more long-term unemployed Americans to openings in the federal government.
The White House initiative included a handbook by New York-based accounting and financial-consulting firm Deloitte LLP that among other things instructed employers to refine automated tracking systems -- the software that could make or break an applicant’s chances based on whether they’ve included certain words or phrases on resumes.
It advised prospective employers to omit questions about dates of current employment or details on latest job responsibilities. It also counseled against seeking permission to contact the most-recent employer, which would sometimes automatically disqualify applicants if not granted.
Highlighting Bias
“I’m very glad to see this spotlight on the automated tracking issue,” said Ofer Sharone, a career development professor at the Massachusetts Institute of Technology in Cambridge. “These automated ways to fill resumes systematically bias against people who are long-term unemployed, regardless of their actual qualifications.”Sean O’Loughlin, 37, of Gardnerville, Nevada, initially believed his experience would lead to quick success in finding a new job. He had worked at a ski resort in California for 16 years before being let go when the company was acquired.
It took a year and a half for him to secure full-time work. He started at Frontier in March as a sales and service technician.
“You have some bad luck and, through no fault of your own, you’re not working,” said O’Loughlin. “It was eye-opening.”
After drawing down savings, he paid the bills by taking on temporary part-time work at a restaurant and a construction company. He eventually sold his car and bought a cheaper one to get extra cash.
“I didn’t think it would take that long,” he said. “It was a struggle.”
Bloomberg Survey
From Nov. 14 through Dec. 1, Bloomberg News surveyed 25 of the 330 companies that signed the Obama pledge in January about their hiring practices regarding long-term unemployed. Ten responded and provided details.Munich-based Siemens AG (SIE), which has more than 50,000 employees in the U.S., said it now includes a line in its job postings that “encourages qualified long-term unemployed individuals to apply.” Cincinnati-based Procter & Gamble Co. (PG) tells applicants they will not be judged on their unemployment status.
The pledge prompted Bethesda, Maryland-based Lockheed Martin to begin tallying how many hires had been out of work for 27 weeks or longer. So far this year, 917 long-term unemployed candidates found jobs out of about 6,400 new hires in the U.S., the government’s top defense supplier said.
Difficult to Track
Tracking long-term unemployed hires at the bigger companies can prove elusive because of the sheer scale of staff additions, said Brooke Buchanan, senior director for corporate communications at Wal-Mart Stores Inc. (WMT)“Obviously opportunities at Wal-Mart are endless, but in terms of a specific number I just don’t have it,” she said.
The Bentonville, Arkansas-based retailer doesn’t discriminate based on an applicant’s employment status because “sometimes we don’t have enough people to fill the jobs that we already have,” Buchanan said.
Deerfield, Illinois-based Walgreen is partnering with Skills for Chicagoland’s Future, which targets training the long-term unemployed to find full-time work. The group has helped more than 1,200 job seekers secure employment since its start in September 2012, according to spokeswoman Amanda Luther.
Moot Point
Some of the signatories to the pledge are in parts of the country seeing such strong growth that any concern about hiring the long-term unemployed is a moot point.“It is the employers in this area that desperately need people, and the manpower just is not here,” said Fran Carruth, office manager for Tall City Electric Inc. in Midland, Texas. The company is having difficulty finding the five electricians it needs to supplement the nine already on staff, she said, adding that it’s the tightest job market for that field she’s seen in her 18 years at the company.
Labor Department figures show some of these efforts may be starting to pay off. While the total number of unemployed people has declined by 19 percent in the 12 months through October, the ranks of those jobless for 27 weeks or more has dropped by 28 percent to 2.92 million. That compares with a 14 percent decrease among those out of work less than six months.
The long-term jobless now account for 32 percent of total unemployed workers.
And research by economists at JPMorgan Chase & Co. suggests the improvement isn’t because the long-term unemployed are growing increasingly discouraged and dropping out of the workforce, making them ineligible to be counted as jobless.
Drop-Outs
Workforce “drop-out” rates aren’t much different between the short- and long-term unemployed, and have remained fairly steady this year among both groups, according to JPMorgan Chase’s Robert Mellman, who’s based in New York.The plight of those out of work for long periods is a particular concern for Fed Chair Yellen, who addressed the topic in a 2004 paper with her Nobel Prize-winning husband, George Akerlof.
“Policy makers should be compelled to take action given the serious costs of long-term unemployment when overall unemployment is already high,” they wrote then.
While an improving economy now will help bring them back into the workforce, “it is conceivable that there is some permanent damage there to them, to their own well-being, their family’s well-being, and the economy’s potential,” Yellen said in a press conference following the central bank’s June meeting.
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