In two studies, we find that unemployment stigma exists, occurs instantaneously, is difficult to alleviate, and leads to hiring biases against the unemployed. This stigma-based account of the unemployed stands in contrast to economic theories purporting that individuals rationally base their judgments on the skill deterioration the unemployed should experience. Study 1 provides evidence that unemployment stigma exists and can lead to a hiring bias against the unemployed. Furthermore, unemployment rationales indicating whether unemployment was controllable (i.e. Voluntarily Left) or uncontrollable (i.e., Laid-off), a causal dimension that has been found to mitigate negative responses toward stigma in past research did not alleviate unemployment stigma. This may have been the case because of perceivers’ fundamental tendency to overemphasize internal/dispositional explanations for target outcomes. Study 2 supports this reasoning as we found that providing a rationale indicating causal externality (i.e., Employer Bankruptcy), to correct for this attribution bias, alleviated unemployment stigma.