Help wanted. But only if you have a job.

Help wanted with a twist: Some firms won't even consider hiring someone who doesn't already have a job. But unemployed can better their job prospects.

By , Correspondent

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    A car drives past an Allstate Insurance Co. office in Lyndhurst, Ohio, in April. Allstate earlier this year posted a help wanted ad online saying job applicants needed to be currently employed, according to a nonprofit group.
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Nearly a year after she lost her job at an IT help desk, Michelle Chesney-Offutt got a call from a job recruiter. "They were very excited about getting me up for an interview," she recalls. But at the end of the chat, the recruiter noticed she'd been out of work for more than six months. The firm would not consider hiring anyone who had been out of work that long.

"I was in shock, because that makes no sense," says the Sandwich, Ill., resident. "I can understand why in times past that would be a good indication of a person's work ethic, but in the current situation" it's not.

Still out of work two years later, Ms. Chesney-Offutt's situation represents the economy's Catch-22 for the unemployed: The longer they're out of work, the harder it is to find a job. Now, some employers have added a twist: They won't even consider hiring someone who doesn't hold a job. As GOP presidential candidates trade jabs about who has created more jobs and President Obama prepares to unveil his new jobs plan, this discrimination threatens to make it harder for the unemployed – even those who have been out of work for only a few weeks – to get their careers back on track.

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Want to work for Allstate Insurance or the University of Phoenix? Better read the fine print. Both companies posted online help wanted ads this year saying that applicants needed to be currently employed, according to the National Employment Law Project, a New York-based nonprofit that studies the labor market and helps the unemployed. In an informal four-week survey of job posts on CareerBuilder.com, Indeed.com, Monster.com, and Craigslist.org last spring, NELP found more than 150 ads that excluded applicants based on their current employment status.

Such ads usually specified that applicants "must be currently employed." But in some cases, as in a Craigslist help wanted ad for a San Francisco law firm posted in July, the message was unmistakable: "Unemployed candidates will not be considered for these particular openings."

"It's a very logical question to ask, 'What was your last job? Why did you leave it?' And if the answer isn't satisfactory ... then obviously you can exclude people," says Judy Conti, a federal advocacy coordinator at NELP. But "you can't just look at a résumé and see that there's a gap and say, 'OK, you're out.' "

The language in the University of Phoenix ad was misleading, says a university spokesman. "While we don't specifically require that individuals be actively employed in order to be considered for employment as an instructor," a university statement says, "we do require that they are actively engaged in their fields of expertise to ensure that their skills and knowledge are relevant and up-to-date."

For the moment, it's legal to screen out the jobless in looking for workers. This summer, a bill was introduced in Congress that would make it illegal to discriminate in hiring based on unemployment or history of unemployment. New Jersey recently made it illegal to post a job ad that excludes unemployed people from applying. (An online Change.org petition urging Monster.com and others to ban such listings has more than 88,000 signatures.)

"You might call this statistical discrimination," says Gary Burtless, a labor economist at the Brookings Institution, a Washington-based think tank. "Discriminating against the long-term unemployed could be in many instances the same kind of irrational discriminating [that women and minorities have faced historically]."

The cards have always been stacked against the long-term unemployed. This year, more than 45 percent of people who have been unemployed less than a month will find work in the following month, according to estimates based on historical data by economists Michael Elsby, Bart Hobijn, and Aysegul Sahin. For those who have been out of work between one and three months, only 30 to 35 percent will find work the following month; after six months, fewer than 25 percent generally do.

There are two reasons for the pattern, Mr. Burtless says. The most qualified workers tend to get snapped up quickly. Also, employers may view long-term unemployment as a sign of a poor work ethic.

The practice is especially detrimental when jobs are scarce. In December 2007, when the Great Recession began, there were two job seekers for every opening, according to the Bureau of Labor Statistics. This year, the ratio is nearly 5 to 1.

Discriminating based on employment status could be particularly harmful for certain groups, such as African-Americans and Hispanics, who are overrepresented among the unemployed. Older Americans are disproportionately affected, too, since they're also overrepresented among the long-term unemployed, says Heidi Shierholz, an economist at the Economic Policy Institute, a liberal research group in Washington.

The unemployed can better their prospects by volunteering in community or church programs, says Jesse Downs, assistant director in Louisiana State University's career services department in Baton Rouge. Chesney-Offutt, for her part, has gone back to school and broadened her job search to include work in customer service and education.

One Framingham, Mass., company offers another option: If the unemployed donate 10 hours a week to the company, it will allow them to state on their résumé that they're currently employed at the company. "As you know its [sic] always easier to find a job when your résumé says you are currently employed," reads the Craigslist post from the company, which has chosen to stay anonymous.

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