Monday, January 23, 2012

The Ugly Problem of the Long Term Unemployed – One of the Most Significant Problems in the U. S. Economy is Not Getting the Policy Prescription It Needs

A National Dilemma is Turning Into a National Tragedy

Here’s a radical statement that will shock people.  “A high unemployment rate is not necessarily a serious economic problem”.  Really, that is true under some circumstances.   What are the circumstances?  If unemployment is high but the length of time of unemployment is very low, that is not a serious economic problem.

If, for example the unemployment rate were 15% but 99% of the people who were unemployed found jobs in 5 weeks or less, then the high unemployment rate would not be a severe hardship.  The lives of the unemployed were be disrupted for only a short period of time, and the economic consequences would be slight. 

On the other hand, if the unemployment rate were 8%, but 90% of those who were unemployed stayed unemployed, then the economy would have a series problem.  For the U.S. this could mean 12 to 15 million men and women who were of working age, who wanted to work, who were capable or working, who were looking for work and who were unable to find a job.  This would be a national tragedy.  The lives of these men and women would be in the process of slow destruction, and the community and the nation would have to support them.

[LONGTERM_p1]This second scenario is what is playing out in many cities and towns across America.  This chart shows what has happened, and why the Great Recession of 2008- ? is one of the worst in terms of its impact on Americans.  People, particularly those in the late working years who become unemployed are remaining unemployed.

The government said that in December 3.9 million nationwide had been out of work for at least a year and were still looking. Federal Reserve Chairman Ben Bernanke has called this "a national crisis."

Some will eventually find jobs, though long spells of unemployment are likely to scar them for years. Workers who were jobless for six months or more in the late 1990s and early 2000s in Connecticut and eventually found work earned 60% less than those who were unemployed for three months or less, economists Kenneth Couch of the University of Connecticut and Dana Placzek of the state labor department found.

Some will never find jobs again. Their ties to the job market will wither. The splotches of unemployment on their applications will make them unattractive to potential employers. Workers who had been unemployed for less than five weeks in 2010 had a 34% chance of finding a job the following month, according to Labor Department data. Those out more than six months had only a 10% chance.

The natural picture of this problem is the inner city, or the small rural town.  The actual picture is that the problem is happening in wealthy suburbs, in the case of this story, a wealthy suburb of Atlanta.

Roswell is a pre-Civil War cotton mill town that grew into a wealthy bedroom community of Atlanta as the metro area prospered. More than half the city's 88,000 residents have four-year college degrees. But Roswell sits in a region with an unusually severe case of long-term unemployment: About 40% of the unemployed in the Atlanta metro area in 2010, the most recent local data available, were out of work for a year or more versus the national average of 29%.

Imagine what something like this does to a community.  Then take that imaginary picture and make it much worse to get it real.

Local governments in the arc of wealthy suburbs north of Atlanta don't have the infrastructure to deal with thousands of middle-class residents who have been out of work for six months or more. They never had the need before.


As job losses became more prevalent, the 6,700-member Roswell United Methodist Church reacted, offering a support group for the unemployed. The twice-a-month events drew nearly 350 last year, up from fewer than 100 in better times. In late November, Ms. Bronner went for the first time—and was amazed by the number of others who were there.


In November 2010, the church launched the seminar for couples dealing with the tension that unemployment can cause—particularly as it continues for long periods. The church considered doing so earlier but there wasn't interest.

Geoff Wiggins, 58, who runs the seminar with his wife, usually opens sessions like this: "How many times have you had this discussion? The working spouse comes in at the end of the day and says 'How was your day?' And the unemployed person says, 'I'm out of work, how do you think my day went?'" The goal is to help couples communicate better as they struggle with income insecurity and battered self-worth. "What breaks my heart," Mr. Wiggins says, "is how many people aren't getting help."

On the political side Mr. Obama doesn’t have a whole lot of plans to address this issue.  Maybe Mitt Romney will be better, after all he has been a part of the long term unemployed ever since he left the Governorship of Massachusetts in 2006.  And everyone knows that Mr. Romney is suffering just like the people of Roswell, Georgia who have been unemployed for a long time.

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