What to Do About Long-Term Unemployment?

I agree with Kevin Drum when he says that "Mass, long-term unemployment is one of the most corrosive things any country can go through". But then he follows with "The fact that we're basically doing nothing about it is not just disgraceful, it's genuinely dangerous." This sounds great. But what, precisely, are we supposed to do?

You see the same thing in every recession for the last twenty years, at least: as jobs get scarcer, employers get pickier about filling their positions. Programmer jobs that once demanded anyone with a pulse and a C++ manual now require that you also have at least three years of experience designing websites for a fast food multinational, speak fluent Tajik, and be proficient in hacky sack. So just as employees are flooding the market from industries that need to permanently downsize, it becomes harder to transition into a new industry or job description.

The result: long term unemployment. What is the government supposed to do about that? Let's do some math: by generous estimates from non-White House sources, the $787 billion stimulus has created (or saved!) something under 2 million jobs. Currently, there are 11-12 million people unemployed. Soaking up half that would require three more huge stimuluses, even if you assume that returns are linear and do not diminish with more money spent. Yet even then, we would not guarantee that we helped the long term unemployed; we might just as easily boost employment for people who aren't finding it particularly hard to get a new job.

Roosevelt could make some actual inroads into the plight of the worst off by the simple expedient of hiring them. But this was before public sector unions got powerful, and the government wrapped itself in yards and acres of procedural red tape surrounding federal hiring, and public works projects. It was also in an era when public works involved considerably more raw human muscle power, and a larger percentage of the workforce was employed in relatively undifferentiated manual labor.

The sad fact is that there's not much to be done for the long term unemployed, other than the obvious step of making sure that they don't miss any meals. Government retraining programs have a dismal record. So do tax credits for hiring workers, which are notoriously easy to game. Stimulus is a blunt tool. And the government can't hire the workers itself. What's left? Threatening employers at gunpoint?

The answer is, nothing. We can, and should, ease the pain of those who lose jobs. But the government can't find you a job any more than it can find you a spouse or a hobby. The process of matching individuals to employers can only be done by individuals.

(Image: bobster855/flickr)

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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