Alarming as the climb in unemployment is, the growing duration of joblessness is more worrying still.
America’s army of long-term unemployed — those without work for six months or more — swelled to 5.4 million, according to today’s figures. This is roughly equal to the combined populations of Los Angeles, San Diego and Sacramento. (For the internationally minded, it is slightly more than the population of Finland.)
More and more workers are exhausting benefits. As of the start of this month around 400,000 stopped receiving assistance. Another 1.3 million will use up their entitlement before the end of the year.
This calls for stronger action from the federal government.
A further extension of jobless benefits is now critical. These have already been stretched out to an unprecedented 79 weeks in some states with high unemployment. Congress should now press ahead with plans for an additional 13 weeks.
In addition to preventing large numbers falling into poverty, this is among the best forms of fiscal stimulus. Money given to the unemployed is almost certain to be spent quickly.
A recent survey for the National Employment Law Project found that 67 percent of unemployed adults had cut back on basics like food and groceries. Almost half had fallen behind with rent payments and a third had been forced to move in with friends or family.
No other form of government spending delivers such an immediate sugar rush to the economy. Unlike the cash for clunkers program, it is not merely stealing consumption from the future.
Still, there is a danger in such a stimulus. Allowing Americans the luxury of being pickier about which job they choose can have costs.
When it comes to unemployment, time matters. Skills atrophy after extended periods without work. Then, when growth picks up, these workers are no longer in a position to fill new jobs.
A slew of academic papers suggest that a quick return to the workforce — even in a humbler capacity — is often a good idea, especially for the young. Research by Tom Mroz at Clemson University showed that a six-month spell of unemployment at the age of 22 reduced wages even a decade later.
So the extra spending on unemployment benefit needs to be combined with much more assistance with job searching and retraining. According to the OECD, U.S. funding for retraining and job searching has risen by less than 20 percent during the crisis.
Failure to do more to retool the long-term unemployed will create lingering problems for the U.S. economy. Extending benefits is an important first step, but it is not enough to ensure that the administration’s stimulus is effective. For the more Americans are permanently dislocated from the workforce, the less robust any recovery will be.
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I am one of those long term unemployed. With degrees in two different subject areas,
- Posted by George AtkinsI have been looking for work for 24 months. Finally found a job at minimum wage and
in an area I know nothing about. Not the only one. This depression has nothing to do with education.
This excellent report by Mr. Swann focuses on the short term. Long term high employment rates require a different approach. Our national personal income levels must fall until our labor becomes more cost competitive in the global marketplace. Our exports must once again match or exceed imports and that can only be done by offering goods and services at more competitive prices.
- Posted by Marvin McConougheyLong-term unemployed is a serious growing problem. These people exhaust their resources and become depressed, angry, and desperate. Who can blame them, especially those with families. The unemployment problem facing our nation is growing into a critical problem with no solution in sight for over 12 months. Somehow these people are going to find one-another and unite to express their outrage and when they do it will make the “tea parties” and town hall outbursts over health care look tame. It’s going to be a cold winter!
- Posted by Bob Ritter[...] Source:http://blogs.reuters.com/columns/ 2009/10/02/the-perils-of-long-term-unemp loyment/ [...]
- Posted by CompareOnlineTrading.net - Blog » Blog Archive » The perils of long-term unemployment1. Mr. Swan, it is time for a National Employment Act similiar to the actions of Franklin Delano Roosevelt’s New Deal. The immediate incorporation and partnerships of situational employers and unions is the first order of business. A national modernization plan of cities will enable the hardcore unemployed to find work opportunities as our own economy evolves into a job creation posture. The New Deal is the simplified model for job creationism.
2. However, more importantly, a National Vocational Education and Job Training Act for 2009 is another project to produce work for the employed. The transformation of a Green Economy will not be realized without rearming and retooling the American Workforce. The Green Economy is a people capitalized investment. The real stimulus package is an investment in your people. If you invest people, they will build a pyramid of prosperity. Amen!!!
Antonio the Sun
- Posted by Antonio Ivan Easterling[...] - Christopher Swan [...]
- Posted by The perils of long term unemployment « The Observations of a Dentist in a MBA ProgramBeing one of the unemployed I am reluctant about getting the feds involved. Many of my associates are also unemployed and are not even looking for work. Their reasoning is why should they take a lesser paying job when with taxes taken out, fuel expenses, childcare expenses etc., they’ll end up with less than just taking the unemployment check? Unemployment is a safety net but has also become an enabling device for many. On the flip side, however, there are very few jobs out there. I know I have applied for over 100 jobs in 6 months with only 1 interview. When you go to the job sites there looks like there are jobs, but 9.9 times out of 10 you never hear a peep (thus those that have stopped looking altogether). So since employers aren’t hiring, unemployment does give a safety net. This economy all comes down to 1 thing - confidence. This is non-existent and until employers start feeling confident this is going to continue and get worse over time.
- Posted by AlibaliLong term unemployment also adds to a black market economy that the government can’t touch in terms of taxation. Canada is a good example. The black market economy includes stolen goods, drugs, smuggling amongst other growth industries…
- Posted by abmThe problem is the government did not tie investment in new business to the loans it gave out to the Banking industry. therefore the banks being the big dragons they’ve become are hording the loot.They are only interested in profit, to the detrement of the many. The Rich and powerful elite, republicans and democrats alike are but a fraction of the population yet hold most (90%) of the wealth. They think they can afford to wait for good times, sit on their big fat wallets and bide their time. Well at least thats what they think. they think through the use of media they can wage a propaganda war from both sides that the masses will buy forever. To paraphrase Nero said ,give them bread and circus’s, well the bread and circus’s will not last forever. What are you gonna a do when the masses come for you and your children. Do you think the military will protect you, as the french aristocrasy was protected during the french revolution. Remember bastille day, or relive it, with your heads in a basket. The bottom of the hour glass is filling fast.
- Posted by CasandraSigned Casandra
[...] Source:http://blogs.reuters.com/columns/ 2009/10/02/the-perils-of-long-term-unemp loyment/ [...]
- Posted by The perils of long-term unemployment « Pkrf1end’s BlogI am one of the long-term unemployed, I was laid off from my quality engineer job in November of 2008, my unemployment benefits ran out a month ago, I send out an average of 13 resumes a week, and over the pass year I have not heard from a single company, not one interview. I believe time is working against me by potential employers wondering why I have been out of work for so long, or maybe i’m getting paranoid, I live in an area that has a high number of jobs in the medical field and at 40 years of age I find myself going back to school and changing careers.
- Posted by Charlie