Duration of Unemployment in U.S. Rises to Record 34.4 Weeks

June 4 (Bloomberg) -- Unemployed Americans are facing the longest wait on record to find work, a sign faster economic growth is needed to reduce the jobless rate from close to a 26- year high.

The average duration of unemployment jumped to 34.4 weeks in May from 33 weeks the prior month and 16.5 weeks in December 2007, when the recession began, a Labor Department report showed today in Washington. The number of unemployed has almost doubled to 15 million since the start of worst slump since the 1930s.

“We need faster growth, because without it, we won’t get the jobs,” said Henry Mo, an economist at Credit Suisse in New York. “We are working in that direction, but it’ll take a very long time to resolve the long-term unemployment problem. The Federal Reserve acknowledges that the labor market will take time to fully recover.”

Private payrolls rose by 41,000 in May, today’s Labor Department report showed, trailing the 180,000 gain forecast by economists. Including government workers, employment rose by 431,000, boosted by a jump in hiring of temporary census workers. The jobless rate fell to 9.7 percent from 9.9 percent as Americans discouraged by the lack of available jobs dropped out of the labor force.

“If that level of private job creation continues, it will not make a substantial dent in the unemployment rate,” Federal Reserve Bank of Atlanta President Dennis Lockhart told reporters today after a speech in Braselton, Georgia. “It is my view we will make progress on unemployment. Perhaps by the end of 2011, we will be below 9 percent.”

Jobs Lost

The economy would need to grow at an annual rate of 3.5 percent for three years to recoup the 8 million jobs that have been lost since the recession began, according to Credit Suisse’s Mo. The economy expanded at a 3 percent annual pace the first quarter, less than originally estimated.

The number of Americans who were out of work for 27 weeks or more rose to 6.76 million in May from 6.72 million in April, today’s report showed. The group reached a record 46 percent of all jobless workers.

“This is a very stubborn job market, and competition is stiff,” Labor Secretary Hilda Solis said in a conference call with reporters today. “It’s the very skilled, very trained worker that’s going to get that job.”

Long-term unemployment may not show a marked improvement until next year, given the pace of private hiring, said Heidi Shierholz, an economist at the Washington-based Economic Policy Institute.

‘Huge’ Backlog

“The hiring just isn’t out there to put the huge backlog of people back to work,” Shierholz said. More jobless benefits, retraining and job-creation programs are needed to reduce unemployment.

Increasing spending on such programs may not be easy with the Federal budget deficit forecast at $1.6 trillion in the fiscal year that started Oct. 1.

“There’s a clear divide between what’s appropriate economically and what’s possible politically,” she said. “The economic case for the government doing more is absolutely clear, but politically, it seems doing anything sizeable is difficult.”

--Editors: Christopher Wellisz, Andrew Barden