Does unemployment hurt you on the job market?

Well, no and yes.

There’s a new paper out by Kory Kroft, Fabian Lange, and Matthew Notowidigdo that does a field experiment on this question.  They sent out resumes with varying levels of employment and unemployment to online job openings in 100 cities and tracked call-back rates.

They found that you’re more likely to get a job if you’ve been recently unemployed than if you’re currently employed, but the longer you’re unemployed, the less likely it is that you’re going to be re-employed any time soon.

Long periods of unemployment on your resume hurt you.  Even if your resume is fantastic otherwise.  Employers assume that if someone hasn’t snapped you up yet, there must be a good reason for that.

On top of that, they suggest that in areas with high unemployment, employers are less likely to hold your current unemployment against you as a sign of bad quality.

What does this mean for you?

Well, it means that you should hit the ground running with any layoff or other job-loss.  If you don’t find full-time work right away, find some way of accounting for your time.  Are you doing part-time consulting work?  Freelancing?

Another important thing to note is that most jobs are found via networks.  This study was only able to look at the effect of cold applications to job postings.  Things may be different if a professional contact can vouch for you.

Have you had any experience either as a job seeker or an employer with unemployment duration and hireability?  Do you think long-term unemployment is a signal of worker productivity?  How do you signal you’re productive?

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18 Responses to “Does unemployment hurt you on the job market?”

  1. Mados Says:

    I have a haphazard resume with many short jobs and periods of unemployment, except I cover the gaps with ‘freelancer’ (not directly a lie – I do freelance projects occasionally).

  2. Mados Says:

    Do you think long-term unemployment is a signal of worker productivity?

    Yes, if I was an employer then I would probably see it as a red flag… A weakness, but one that could maybe be turned around to my company’s advantage. Because I would be aware that it would also be a red flag to other potential employers, and that the potential employee would probably be aware of that. That could put my company in a better than usual position of negotiation if the person was in fact a good worker that had just been unlucky ~ I could get a good or potentially good worked cheaper than the standard labour market price. The fallout would depend on the other variables, like the person’s skills & education, experience, and personal characteristics. – whether it was worth the potentially greater risk.

  3. Debbie M Says:

    I once quit without having another job lined up. Besides job hunting, I started working on a book because it was the most fun (inexpensive) thing I could think of to do that would be a good explanation of why I had gone so long without a job if that ended up happening. Of course, I’d still have to get to an interview on the strength of my resume.

    But it turns out that for the first time in my life (as an adult) I got jobs via networks, and pretty quickly, too, so I don’t know how my plan would have turned out. If a lot of people really like your work, you might actually do better unemployed–once people knew I was available, they started getting the idea that they could have me for themselves. It also helps that my contacts had also been becoming more and more frustrated with my employer and so they had an explanation for my lack of employment other than that there was some hidden thing wrong with me.

    **

    In the past, I’ve always looked for jobs that were in a different field than I was currently working in, and I Iearned that given the choice, people would rather hire someone already doing the exact same job than someone like me. Unless they knew someone was good–then they might want to hire that person for any opening they have, even if the person has no experience at all in that area, because they know the person could learn it and do well. I was always annoyed that they’d rather have a job-hopper than me, and I’d never apply for a job I didn’t think I could already do (even though all my friends do this). Well, as an employer, it’s scary to hire an unknown. Someone can look good on paper and be charming in person, but do they actually do their work? Is their work actually good? Does their post-honeymoon personality make everyone miserable? I know I don’t know how to figure these things out before it’s too late. But anything you can do to allay these fears is probably good.

    • chacha1 Says:

      I’m working with a temp right now who was great in interview, has a solid work history, and is a very nice person … but her retention and comprehension of new information is very weak. You can’t figure that out until the person is on the job, unfortunately.

      • Debbie M Says:

        I know! Scary! Some places try to have tests (typing tests, spelling tests, grammar tests, tech tests, puzzle-solving tests). That could help for some kinds of jobs.

  4. Cloud Says:

    It would be interesting to extend the research to include industry (periods of unemployment are more common in some industries than others) and whether people adjust their attitudes when they know the economy has sucked during the period of unemployment. I recently hired someone who’d been out of work for a year- but I’m in a volatile industry where periods of unemployment are very common and I knew that the time period in which she’d been out of work was a really tough one in our industry. She’d also done all the job searching things right- she sent in a resume with a good cover letter calling out how her experience mapped to my job description and she networked her way to me so she got to talk to me while I was considering resumes. And she’s turned out to be great!

    • nicoleandmaggie Says:

      They actually do explore the unemployment rate question by looking at cities with different unemployment rates. It does seem like there’s some adjustment– you get more of the benefit of the doubt with high unemployment– though we know from other research (Til von Wachter) that if you’re unemployed during a recession you take a much bigger hit than if you lose your job during a boom period. (Presumably because you still spend more time unemployed and never catch up.)

  5. Laura Vanderkam (@lvanderkam) Says:

    I think that last paragraph is key. Since most people do find jobs via their networks, I’m always surprised in these send-in-the-resume-cold studies that they got a high enough response rate to measure anything at all! That Bait & Switch book (Barbara Ehrenreich) book made it pretty clear how low the chances are when you’re sending in your resume to postings with no connection.

    • nicoleandmaggie Says:

      It’s usually about a 5-8% response rate, give or take.

      Remember that these resume studies are looking at specific populations of people without networks– folks who are neediest and who we might care about from a social perspective. They’re almost always entry-level jobs that post advertisements. It’s not representative of the full population, but it’s representative of an important marginalized population.

  6. Louise Says:

    I disagree. I’ve been an employer and also had long periods out of the workforce – I’ve never had trouble getting work – I think a lot is in the attitude the person has, I don’t see it as a bad thing so I don’t try and cover it up. As an employer I hire people based on what their current skills are and if they can do the job, periods out of the workforce are not bad – theres more to life than our resumes.

  7. chacha1 Says:

    Based on my recent and ongoing experience with a couple of temps at my office, and thus purely anecdotally, I think that if someone in my field (legal support) has been unemployed for 2+ years (and here defining “unemployed” as “has not landed a full-time permanent position though may be working temp assignments”), there is generally a DAMN good reason. Based on previous experience as a manager, I’ll cop to looking for fresh grads to train for a job.

    And based on my 23+ years in this industry, people who are desirable employees do get snapped up very quickly. It’s an industry with a lot of mobility and instability (law firms change shape All.The.Time.) but the good people are rarely without a situation for more than 4 months. That’s the longest I’ve ever been “unemployed” and it was directly following the 2008 crash.

    Incidentally, current skills are, in this industry, absolutely indispensable. And a broad range of skills is also desirable. If someone has only worked in real-estate law, that is the only kind of job they are likely to get. My experience is all in patent law, and that’s the main reason I didn’t get any good interviews for 4 months – all of the patent firms were on a hiring freeze while their tech clients tried to figure out how much they could afford to invest in R&D.

    • Rosa Says:

      what about people who didn’t *want* to be fulltime, or didn’t like any of the fulltime available?

      I love temping, partly because it’s one of the few ways employees can really look over lots of employers – I’d rather temp for a few weeks or a month at a time until I find the job I really like (and that meets my schedule flexibility/location criteria). Working as a temp and as a fulltimer in places that also hire seasonal temps, I meet lots of people who temp by choice – a seasonal employee at my last employer spent the rest of the year working on a cattle ranch, another only worked during the school year so she could spend summers traveling with her kids, and another spent winters in ski country. Those folks are among the most productive I’ve ever worked with.

      • chacha1 Says:

        I know there are some people who “temp by choice.” Not so much in our field; employers tend to try out employees (and vice versa) in “temp to hire” assignments. If someone is temping for a year, two years, or more … it’s generally because after a few weeks on the job it becomes clear that they have deficits. There are skills involved for the different areas of law that are not readily transferable and not as easy to learn quickly as you might think. (Secretarial, that’s just typing, right? NO.)

        In our field, even a temp position is still a full-time position, requiring daily attendance for the full day and probably overtime. It’s not a good choice for people who really want schedule flexibility, and employers really do shy away from people with too much temp time on the resume because it denotes (fairly or unfairly) instability.

      • Rosa Says:

        The by choice folks wouldn’t stay for years anyway, mostly – I can’t imagine anyone working 40/40+ for an entire year who didn’t really want to be full time (unless they were remarkably susceptible to emotional appeals. I’ve left a lot of jobs where the managers were wailing “But we NEED YOU”. Sorry, dude – if you really needed me you’d be offering me money, not whining.)

        I’ve been lucky to find jobs that saw my “instability” as a bonus. Lots of companies are full of chaos, either because of big growth or having just gone public or whatever, and they value people who enjoy change.

  8. First Gen American Says:

    This is true in my field (engineering). I had a friend who narrowed his job search by choice (he was geographically restricted in an area with not a lot of engineering) and the longer he was on the market, the tougher it was to get an interview. It’s great when headhunters call, but it’s really annoying when they want me to post for a job that’s exactly the same as the one I’m doing now. Why the heck would I entertain that unless I hate my manager or it’s for a lot more money (and it usually isn’t).

  9. Revanche Says:

    Hm. I give you anecdata:
    I interviewed a pretty decent candidate who had deliberately taken a gap year to travel and someone on my panel specifically wanted me to hire that person because he “did cool things. Look!” I didn’t have an issue one way or the other in that case, he was off doing interesting things instead of being employed, fine. Showed that he could set and accomplish goals, in a way. The final determination was that he simply lacked the skills we were looking for and exaggerated the relevant ones. It made me think he would drown in the job required because he didn’t understand the difference between X and X-squared levels of responsibility.
    In another case, interviewing a candidate with a gap on his resume, I asked what he had been doing in that time period while we were getting to know each other. “Redecorating. Oh, I have been doing nothing to improve myself professionally.” Well. Ok then. That just made me question his judgment.

    I think that worker productivity is demonstrated by their actual work productivity and not how long they’d been out of work, in a bad economy. In a good economy, I consider the possibility that there was an issue with the candidate but I still look at their work history and references, look at how well they communicate (without BS), and consider how sensible they seem. It’s not going to be the thing that knocks someone off my “To call” list.

  10. Carnival of Personal Finance - Beach Day Edition « Planting Our PenniesPlanting Our Pennies Says:

    […] from Grumpy Rumblings presents Does unemployment hurt you on the job market?, and says, “Ever wonder if it’s true that employers prefer to hire currently employed […]

  11. Carnival of Personal Finance #416 Says:

    […] Grumpy Rumblings: Does unemployment hurt you on the job market? […]


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