Wonkbook points out that the unexpectedly smooth budget deal now before Congress looks away from what has become a squirm-inducing caste in America:
There’s one big thing left out of the Murray-Ryan budget deal: unemployment insurance.
On December 28, federal jobless benefits expire for 1.3 million workers. These aren’t normal unemployment benefits. These are the extended, emergency benefits meant to help the long-term unemployed.
A little-known fact about the economy is that short-term unemployment — the percentage of the labor force unemployed for five weeks or less — is back down to where it was before the recession. It’s long-term unemployment — which lasts more than 27 weeks — where the crisis lingers.
No one has a very good answer for these workers. They’re often stuck in areas of the country where jobs are scarce. They face a vicious cycle of employment discrimination in which employers don’t want to hire them because they’ve been unemployed for so long, which in turn extends their unemployment and makes it even harder for them to find a job. And now we’re just cutting them loose.
The long-term unemployed do not constitute a visible lobby in Washington, which remains obsessed with reducing the federal deficit, even as it’s declined significantly. So unemployment is unlikely to be a major issue in the 2014 midterm elections, in which the Republicans are hoping to keep their House majority by attacking Obamacare (either it’s not insuring enough people, or it’s costing too much to insure people, whatever works).
Economist Michael Strain, in a Washington Post interview called “Why Conservatives Should Worry More About Long-Term Unemployment,” argues that continued joblessness represents economic inefficiency, as well as the creation of a larger class dependent on government services. And he says that our weak economic recovery is not solving the problem: "Currently we’re at about 4 million people [who are long-term unemployed]. That's about 1 million more than the high in the previous recession, back in the 1980s. And we were up to 6.5 million during the Great Recession at its peak."
Matt Yglesias is more blunt in his post “The Long-Term Unemployed Are Doomed,” pushing back against Sen. Rand Paul’s argument that unemployment benefits are a “disservice” to recipients, apparently because they have a Skinner-like effect of conditioning people not to look for work:
when companies are looking to hire people, they scan through the résumés they get in the mail and their first step is to throw out all the résumés of people who've been unemployed for a long time. This is research based on pretty well-designed experiments that control for other variables beyond long-term unemployment. You should feel free to see that as a vile form of discrimination, or as a sensible business heuristic according to your temperament. The point is that the people who are about to lose UI benefits are not going to be able to find jobs. Not today, not after they lose benefits. In fact, they probably won't be able to find jobs ever.
Mailing unemployment insurance checks to people who aren't so much unemployed as unemployable is obviously not an ideal public policy. But simply doing nothing for them is cruel and insane.
The silver lining, if you can call it that, from people realizing they will never get jobs is that they will drop out of the labor market and thus lower the unemployment rate.
There are some subtleties involved in measuring the unemployable class. In some industries (e.g., journalism), there’s a lot of self-employment and freelance (i.e., no benefits) work. Maybe there’s a distinct class of permanently self-employed or underemployed Americans. Or a class of Americans permanently assigned to the underground economy — running illegal taxis, painting houses for cash only, and doing any work they can find that doesn’t involve human resource departments (or payroll taxes). The upshot could be more economic efficiency and even less socioeconomic mobility than there is now.
Solutions to long-term unemployment do not seem to be on the agenda for 2014. Ygelsias admits that it’s politically unthinkable for the government to directly hire more people to fix our crumbling infrastructure, or do anything else. (Going to war is a traditional way to put people to work, but I think the Tea Party Republicans would rather cede a few blue states to China than put more soldiers on the public payroll.) One small-bore idea is to help people move to places with better employment prospects. Strain suggests this in his Post interview:
I think relocation vouchers are a good idea. If you look at unemployment rates and other labor-market indicators, they really vary a lot from place to place. But moving is expensive. So I think if the government could help out some of these folks to move — just those who want to, certainly not forcing anyone — you can imagine them having an easier time getting a job.
It’s not a terrible idea, even if it goes against the conservative values of loyalty to your family and community. (“Move to North Dakota or starve” isn’t a great slogan for that state’s license plates.) And moving large numbers of the unemployed to areas with a healthy economy raises the issue of providing housing for them — something that residents of these healthy-economy areas will oppose vehemently. Who wants those people to move next door?