slate | There had been a fair amount of buzz around the idea that the budget
mini-deal being hashed out between Paul Ryan and Patty Murray might
include some extra money to extend unemployment insurance benefits for
the long-term unemployed. But Republicans didn't like the idea, and
Democrats didn't want to bust up the deal over it, so now folks who've
been jobless for an extended period of time are going to lose their
benefits at the end of the year.
One consequence of this is that the unemployment rate will almost
certainly go down, since some fairly substantial fraction of the
long-term unemployed will just stop looking for a job and drop out of
the labor force. If you're long-term unemployed, then almost by
definition looking for work has not been very successful at getting you
work. What it has gotten you is a UI check. Take away the check, there's
no point in bothering, and so the denominator in the unemployment rate
falls and thus the unemployment rate falls.
The bad news is that the long-term unemployed are screwed.
In effect, 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 time-tested way of re-employing a large
mass of long-term unemployed is to fight a major world war with Germany
and Japan. The circumstances of mobilizing for major armed conflict in
1940–42 proved that when you really want to put people to work, it can be done. So it's always possible that the Senkaku Islands will come to the rescue.
But large-scale armed conflict has a lot of offsetting negative
consequences. What we need are targeted "mobilization" programs that
don't rely on the outbreak of an enormous war. That would take, I think,
two major forms.
One is direct government hiring of the long-term unemployed to do
some kind of public service work. Making this happen would require you
to go outside the standard civil service and federal contracting
frameworks, which obviously neither civil servants nor federal
contractors are going to like. But it has the job-creating punch of a
major war without all the death and destruction. The other is relocation
assistance. The metropolitan areas of Bismarck, Fargo, Grand Forks,
Sioux Falls, Ames, Iowa City, Lincoln (Neb.), Midland, Burlington,
Mankato (Minn.), Logan, Rochester (Minn.), Billings, Dubuque,
Morgantown, Odessa, Rapid City, Omaha, Waterloo (Iowa), Columbia (Mo.),
and St. Cloud all have unemployment rates below 4 percent.
Those are the kind of places where the labor market is tight enough
that discrimination against the long-term unemployed shouldn't be a
major factor. There's work to be done in these towns, and evidently most
people are reluctant to move to small isolated cities in extremely cold
locations (also Midland, which isn't cold). Grant programs to connect
the long-term unemployed with job opportunities on the Plains and offer
financial assistance for relocation could do a lot of good.
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