Coping with Long-term Unemployment

I have been surprised at the persistence of unemployment in this business cycle.  While I certainly have been in the camp of believing that a number of labor issues are structural, rather than cyclical, I still expected a stronger rebound in employment than what we’ve seen.  In particular, the long-term unemployed, workers over age 50, and those just finishing their degrees seem to be the hardest hit as employers remain hesitant to hire or even up their recruiting efforts.  I was talking to my friend Christy who survived an 21-month bout of unemployment, to be hired at a large Fortune 500 firm about any suggestions she has for those facing long-term unemployment. Here’s what she said:

–Re-examine your skillset from the perspective of industries that are more likely to hire — do you have marketing skills, sales skills, HTML skills?  Emphasizing skills rather than past experience is likely to be important.

–Consider re-training to shift into an industry that is hiring – while many people consider going back to school when facing long-term unemployment, a lot opt for an advanced degree in their existing field or an area they really love.  Unfortunately, hiring prospects in many areas, such as fine arts and creative writing, will probably not be robust without other skills.  If you do opt for school, carefully weigh the ability of your new field to efficiently pay off student loans.  Too many people have gotten themselves in a bind due to student loan burdens.  Healthcare related fields have strong prospects and unfortunately people continue to get sick. Christy did not end up going back to school (she already has an MBA), but did switch industries into a healthcare company.

–Explore start-up opportunities – the small business remains an important mainstay of the economy. Do you have friends who are creating a new startup business (or non-profit)?  Is there an area you are passionate about and willing to work as an apprentice or multi-task for?

–Freelance or work temporary assignments — Christy found that continuous rounds of resume redrafting and cold calling was harmful to her mental health.  She began volunteering and taking on some freelance assignments instead and found this to be much more manageable, and it did bring in some income (albeit much less than a full-time job).She also found that freelancing did not seem to harm her ability to be hired when she was called in for interviews.

–Be vigilant with the budget – one problem that Christy and her husband continue to face, even though she has returned to work, is that they did not reduce their budget proactively or seek financial or mortgage advice after she was laid off.  Unfortunately, they burned through a lot of savings and cashed in her previous 401K to pay the monthly bills. Their retirement savings will take several years to build back.

shared at this week’s Carnival of Personal Finance