For all the focus on Obamacare and deficits and debt, the biggest immediate problem facing America right now, one with immense long-term implications, is that of chronic unemployment.
Those unemployed for six months or more have been far higher in number and proportion of all those unemployed than at any time since the Great Depression. From the time we hit bottom after the economic collapse in the fall of 2008, long-term unemployment has been at or over 40 percent of all those unemployed.
We also know that long-term unemployment now is deadly; an ingenious study done by economist Rand Ghayad, who sent fake resumes to employers with job openings and found that better-qualified and experienced applicants who had been out of work for more than six months were much less likely to be called for interviews than less-experienced individuals who had only recently lost their jobs. And this group—those looking for work for many months and unable to find it—are now screwed coming and going; they are the ones losing access to unemployment benefits.
We know that people out of work for a long time rarely achieve earnings that equal what they had before they lost their jobs; we also know that younger people at the early stages of their careers are particularly damaged if they get bumped off the first rung or two of their career ladders; they suffer higher rates of depression, drug and alcohol abuse, and other problems later in life, and underachieve significantly in their earnings. And we know that the phenomenon has been unusual for the United States; it is far more common in many countries in Europe, where stifling regulations provide major disincentives for companies or others to hire people, because it is very difficult to fire or reassign them when tough times come. But this time is different here at home.
Much more has to be done, and the real innovations have to get buy-in from Congress. The good news is that there are good ideas out there that have been proposed or endorsed by well-credentialed conservatives. And Obama raised a set of objectives that should—if the president embraces some of the ideas and if Republicans want to do anything other than repeal Obamacare—find coalitions to make a jobs package.
Here is what Obama said Tuesday night:
So tonight, I've asked Vice President Biden to lead an across-the-board reform of America's training programs to make sure they have one mission: Train Americans with the skills employers need, and match them to good jobs that need to be filled right now.
That means more on-the-job training, and more apprenticeships that set a young worker on an upward trajectory for life. It means connecting companies to community colleges that can help design training to fill their specific needs. And if Congress wants to help, you can concentrate funding on proven programs that connect more ready-to-work Americans with ready-to-be-filled jobs. I'm also convinced we can help Americans return to the workforce faster by reforming unemployment insurance so that it's more effective in today's economy.
On the idea of apprenticeships, we have a broader plan in robustly red South Carolina. That is a program that enables young people (and others) to combine education with apprenticeship, to learn trades and develop technical expertise and skills, through partnerships with the state, its schools, and companies and industries. Combined with more and better vocational education, this can mean trained people able to take high-value jobs where we currently have gaps because of a lack of training.
Of course, apprenticeships should not be like unpaid internships; they should carry a wage, subsidized if necessary, and tied to both work and training.
The best list of conservative ideas on dealing with long-term unemployment comes from my American Enterprise Institute colleague Michael Strain, in an acclaimed piece in National Affairs. Strain understands the stakes with the number and proportion of long-term unemployed, and he offers a set of proposals that could easily be embraced by the president and Democrats, even as they fit within the GOP's wheelhouse. One small one, in line with the SOTU, is to reform the unemployment-insurance system, providing a modest cash bonus for people when they get jobs and go off unemployment, and providing lump-sum payments monthly instead of weekly, giving financial incentives for individuals to start jobs at the beginning of new pay periods instead of waiting for the weekly UI check.