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Back to Work

Long-term unemployment is a serious problem. Liberals don’t have an answer. Conservatives can do better.

Dec 16, 2013, Vol. 19, No. 14 • By MICHAEL R. STRAIN
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There are 4.1 million long-term unemployed workers in the United States today. That is staggering. Happily, the number is down from its post-war high of 6.7 million, reached in April 2010. Prior to the Great Recession, the postwar high was just 2.9 million, in June 1983. A stunning 36 percent of the total unemployed are long-term unemployed. The previous high was 10 percentage points lower, also in June 1983.

These millions of workers are suffering​—​financially, emotionally, spiritually. Some of them may never work again, and may be forced to subsist on welfare, increasing the rolls and expense of those programs. Society is also suffering: A large pool of willing and able workers are idle; our already segmented society is even more segmented; our country is less dynamic, vibrant, and thriving.

It is easy to see why the Democrats on the House Ways and Means Committee​—​and liberals generally​—​want to continue funding extended UI benefits for the long-term unemployed. And, if for no other reason than the limited time before EUC expires, extending the program is the prudent course. But conservatives should want to do more than the left has suggested. To throw money at the problem and be done with it is not the answer. The long-term unemployed need help to get back on their feet, to earn their own success, to flourish.

One thing conservatives might push for is relocation assistance​—​to help the long-term unemployed move from a bad local labor market to a good one. The job market varies widely across cities and states. Instead of continuing to cut UI checks to a New Jersey worker who has been unemployed for eight months, why not cut him a check to help him move to North Dakota, where he has a much better chance at getting a job?

As mentioned above, the evidence suggests that many long-term unemployed workers are “scarred”​—​their lengthy spell out of the workforce is making it difficult for them because firms view workers who have been unemployed for so long as risky hires. Why not reduce the risk associated with the hire by lowering the minimum wage for long-term unemployed workers? A firm may not want to take a $7.25-per-hour risk on a long-term unemployed worker, but might be willing to take a $4 risk. If we lower the minimum wage for the long-term unemployed, then we’ll need to supplement their earnings with an expanded Earned Income Tax Credit or some other government-funded wage subsidy.

To help make sure that we aren’t adding any new workers to the rolls of the long-term unemployed, states without worksharing UI programs​—​about half of them at the moment​—​should start them. Under worksharing, a worker who has his hours reduced by his employer in response to a temporary lull in demand can receive a prorated UI benefit. This makes it easier for firms to reduce employees’ hours by, say, 20 percent, rather than laying off 20 percent of their workforce. Government shouldn’t tilt the scales towards layoffs by prohibiting workers who have their hours reduced from receiving prorated UI benefits.

These ideas hardly exhaust the policy approaches conservatives should consider. To most effectively help the long-term unemployed, though, the U.S. economy will need to return to a state of broad-based, steady growth. Conservatives certainly should continue to oppose harebrained (see Clunkers, Cash for), cronyist, and inefficient spending. But there are projects the federal government could assist that would advance conservative goals.

Helping the long-term unemployed get back to work is one such goal. As is increasing economic mobility to further the conservative vision of a fluid, dynamic society, characterized by energy, filled with citizens working to realize their ambitions. One way to advance these goals would be to improve transportation networks within cities and their outlying areas in order to shorten commute times from low-income neighborhoods to employment centers.

Recent research from economists at Harvard and the University of California, Berkeley, suggests that socioeconomic segregation within cities and their outlying areas plays an even greater role in limiting the ability of low-income Americans to rise than was previously thought. Many low-income Americans face commute times measured in hours, not minutes. Public policy can shorten the distance between working-class neighborhoods and employment centers by shortening commute times for low-income workers.

In its cheapest incarnation, this would involve extra buses that run nonstop from low-income neighborhoods to employment centers, both in city centers and in suburbs. And of course, more money for better roads, bridges, and tunnels would shorten commute times for everyone, including the working poor.

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