South By North Strategies, Ltd.

Gary Burtless of The Brookings Institution explains the dynamics of long-term unemployment in the United States.

The pace of exit from unemployment is sensitive to the business cycle – finding a job is, of course, easier in a boom than in a bust. At the end of the prosperous 1990s, more than one-third of the unemployed in a given month had found work one month later. Jobfinding success fell sharply in the 2001 recession, reaching a low point in early 2003 before recovering during the economic expansion that ended in 2007. The 2008-9 recession brought another plunge in the rate of worker exit from unemployment. The monthly job-finding rate of the unemployed was 28 percent in 2007; by the second half of 2009 it had fallen to just 16 percent. That is, at the nadir of the recession, less than one in six unemployed workers was successful in finding a job within a month.
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Though jobless workers were less successful in finding jobs in the 2008-9 recession, they were also less likely to give up their search by dropping out of the work force altogether. The predictable result: average unemployment durations lengthened. Even though the job-finding rate slowly improved after the worst of the recession passed, at the beginning of 2012 it was still one-third lower than the average between 1990 and 2007.
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The obvious reason jobless workers were less successful in finding jobs after 2007 is that employers had fewer vacancies to fill: the job-opening rate fell more than 40 percent from 2007 to 2009….