The recession that began in the United States in December 2007 and officially ended in June 2009 was one of the deepest and the longest since the Great Depression. In response, Congress enacted legislation to stimulate aggregate demand and provide assistance to unemployed workers and their families. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) temporarily raised spending by increasing funding for a number of programs, creating new programs, and providing tax benefits for individuals, families and businesses. Congress also authorized a federally funded temporary program ( P.L. 110-252 as amended) to provide additional weeks of unemployment benefits to those who exhausted their eligibility under the federal-state Unemployment Compensation (UC) program. Although some in the public policy community are concerned that extending benefits may discourage recipients from looking for work, Congress has extended the program on multiple occasions. It is not unusual for improvement in the labor market, as measured by a declining unemployment rate, to begin some months after the official ending date of a recession. It is also not unusual for the proportion of the labor force unemployed for more than six months (the long-term unemployment rate) to continue rising and peak after a recession ends. What is unusual, however, is that the incidence of long-term unemployment currently is higher than at any time since World War II. The purpose of this report is to assist policymakers who may consider legislation to stimulate job growth, provide additional benefits to unemployed workers, or assist families whose incomes have fallen because of a job loss or reduction in hours worked. The report first compares the prevalence of long-term unemployment across business cycles during the postwar period and offers explanations for its unusually high incidence during the most recent recession. It next analyzes the likelihood of unemployed workers with different demographic, job, and household characteristics experiencing a very long period without paychecks. The report closes with a discussion of long-term unemployment's implications for public policy. The report does not consider the macroeconomic effects of government spending or tax cuts to expand job growth or provide benefits to unemployed workers and families who have experienced a loss of income. The percentage of the labor force without jobs for longer than six months (the long-term unemployment rate)—like the unemployment rate—generally rises as economic activity falls. This countercyclical pattern was evident during the deep recessions of the 1970s and 1980s, when the long-term unemployment rate rose 0.4 percentage points to 0.8% at the end of the 1973-1975 recession and 1.1 percentage points to 2.1% after the 1981-1982 recession. The same pattern was evident during milder recessions, when the long-term unemployment rate rose 0.3 percentage points to 0.8% at the trough of the 1990-1991 and 2001 recessions. As the latest recession unfolded, the long-term unemployment rate increased from 0.9% in December 2007 to 2.9% in June 2009 (the official end of the recession). After the end of the recession, the long-term unemployment rate continued to rise, peaking at 4.4% in May and June of 2010. As of October 2010, the long-term unemployment rate was 4.0%. (See Figure 1 .) Another way to look at the trend in long-term unemployment is to examine the number of long-term unemployed as a share of all unemployed. The long-term unemployed as a share of all unemployed was 29.6% in June 2007, up from 17.3% in December 2007. This measure also continued to rise after the end of the recession, rising to 46.0% in May 2010. In October 2010, 41.8% of unemployed workers had been looking for work for more than 26 weeks. The proportion of unemployed persons out-of-work over 26 weeks has been considerably above the rate recorded during prior downturns and nascent recoveries. (See Figure 2 .) The historically high incidence of long-term unemployment observed starting in mid-2009 coincides with Congress' longer than usual temporary extension of UC benefits beyond the duration afforded by the permanently authorized federal-state UC system and Extended Benefit programs. The temporary UC benefit programs enacted to mitigate the effects of seven prior recessions provided a maximum of 13 to 33 weeks of benefits. After the seven recessions ended, the long-term unemployment rate and share of long-term unemployment ranged from 0.8% to 2.6% and from 13.6% to 25.7%, respectively. The 111 th Congress provided a maximum of 33 weeks of benefits from about November 2008 through October 2009. Both the long-term unemployment rate (3.7%) and the share of long-term unemployment (36.0%) in October 2009 were well outside these ranges. The subsequent extension of benefits to a maximum of 53 weeks starting in November 2009 has been accompanied by a still higher long-term unemployment rate and share of long-term unemployment in early 2010. (See Figure 1 and Figure 2 .) The availability of a maximum of 53 weeks of benefits through the Emergency Unemployment Compensation (EUC) program probably prompted individuals to continue searching for jobs instead of leaving the labor force after exhausting their regular UC benefits. But, the currently low hiring rate of employers makes workers refraining from accepting jobs in order to continue receiving EUC benefits a less plausible explanation for the historically high incidence of long-term unemployment. An analysis by Valletta and Kuang that estimated the difference in duration of unemployment among persons likely to be eligible for UC benefits (i.e., job losers) and those likely to be ineligible (i.e., unemployed job leavers and labor force entrants) concluded that the recent extensions of unemployment benefits contributed little to the historically high level of long-term unemployment. "It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression." Another study concluded that the 53 weeks of temporary unemployment benefits could account for as much as 0.7 to 1.8 percentage points of the increase in the unemployment rate during the recent recession. The authors add, however, that the effect of extended benefits on the unemployment rate is probably at the lower end of these estimates. According to BLS data from the Job Openings and Labor Turnover Survey (JOLTS), from the beginning to the end of the recent recession, the hiring rate fell from 3.6% in December 2007 to 3.0% in June 2009. In September 2010, the rate was 3.2% (the latest month for which data were available for this report). In contrast, the hiring rate during the March-November 2001 recession and ensuing "jobless recovery" exceeded the hiring rate reported during and after the 2007-2009 recession. The hiring rate fell from 4.4% in March 2001 to 3.9% in November 2001, after which it reached a low of 3.5% in March 2003 before gradually trending upward. The industry restructuring that arguably characterized the 2001 recession may have characterized the latest recession as well, and made it more difficult for workers to find new jobs as quickly as they did after earlier recessions. Workers displaced by industries permanently reducing their demand for labor will take longer to become reemployed than workers waiting to be recalled by their employers from temporary layoffs. The period of job search could be especially prolonged when the skills needed for employment in growing industries differ from the skills of workers laid off by restructuring industries and when displaced workers must often lower their wage expectations to obtain new jobs. The so-called jobless recovery from the 2001 recession prompted several economists to analyze whether increased industry restructuring had led comparatively large numbers of unemployed workers to move from downsizing industries to industries increasing their demand for labor. No consensus was reached, however. Groshen and Potter estimated that, according to their measure, many more industries were undergoing restructuring during the 2001 recession and subsequent recovery than during prior business cycles. In contrast, Aaronson, Rissman, and Sullivan estimated that, based on a different measure of labor reallocation across industries, the degree of restructuring during and after the 2001 recession was less than that during earlier periods. Although this second group of researchers did not find evidence that the rate of permanent job loss was atypically elevated following the 2001 recession, they noted that "the unusually high duration of unemployment [in 2002 and 2003] is consistent with [an] increased mismatch" between the skills of displaced workers and the skills being demanded by employers in growing industries. Similarly, Figura and Wascher estimated that workers displaced from industries that were downsizing experienced almost a doubling in the amount of time spent not working (from 19 to 35 weeks) between the 1997-1999 and 2001-2003 periods, while workers displaced from other industries experienced a much smaller increase (from 19 to 28 weeks). The two researchers concluded that while it appears that downsizing industries (e.g., manufacturing, information and data processing services, broadcasting and telecommunications, publishing) were quick to layoff workers in the early 2000s, "it took a considerable amount of time for these resources to be re-employed elsewhere." Rissman's more recent work, covering the period from the first quarter of 1984 to the second quarter of 2009, suggests that the impact of structural realignment on unemployed workers varies by industry. While restructuring in the finance, insurance, and real estate industries resulted in worker displacement, employees from these industries may be "better able to find alternative employment in other sectors of the economy because the skills they possess are more readily transferable to employment in other industries." Alternatively, workers who lose jobs in the construction, manufacturing, and transportation and utilities industries "may be less readily absorbed into other sectors," thereby lengthening the time spent unemployed. Distinguishing cyclical from structural unemployment is more than an academic exercise.