There seem to be many unique situations developing in our current economic era. You have probably noticed that, every few months, congress has had to extend unemployment coverage for workers who have exceeded the standard 27 months. That seems like a prudent thing to do in a recession. This virtually guarantees that every dollar goes immediately into the economy. I have to admit that I have not been paying sufficient attention to this issue. The number of long-term unemployed (unemployed longer than 27 months) has grown enormously, both as an absolute number, and as a fraction of the total number of the unemployed. This is a situation quite different than has been seen in earlier recessions. The Bureau of Labor Statistics provides copious tables of interesting data. Consider the percentage of the unemployed that are long-term unemployed during the current period.
These long-term unemployed represented 4.5% of the total work force in 04/10, a number that has not yet peaked. Compare this number with the peak fractions of the work force observed during previous recessions.
I believe these numbers indicate that we are entering into a new and unique economic situation. Clearly, keeping benefits flowing to these people is an important and expensive necessity. It is not totally clear from just these numbers what is going on. It would seem that the unemployed reach some sort of tipping point where the longer you are unemployed, the less interested people are in hiring you. If that is the case, I don’t see how the problem becomes self-correcting unless the total unemployment rate heads to low single digits. That is an unlikely occurrence.
So, progressives, what would you do in this situation? I don’t know either, but I promise I will begin to worry about it more than I have been.