America's fastest-growing group: The long-term unemployed

During Reagan’s reign, the marvelous Bruce Hornsby sang:

Standing in line marking time

Waiting for the welfare dime

‘Cause they can’t buy a job

The man in the silk suit hurries by

As he catches the poor old ladies' eyes

Just for fun he says “Get a job”

Welfare has been scaled back since Reagan, and long-term unemployment is exploding:

The number of people who have been unemployed for more than 27 weeks has more than tripled since the recession began, to 4.4 million. The median time people go without a job has increased to more than four months, from slightly more than two months at the outset of the recession in December 2007.

“We have never seen a duration of that magnitude,” Lynn Reaser, vice president for the National Association for Business Economics, said. “There are a lot of ramifications. A lot of these people become discouraged, and they drop out of the work force. It affects their spending, their whole psychological frame of mind.”

…Jeffrey Jones, 40, is feeling the weight of eight months without work. He has not found anything since losing his job as a cook at a senior center in October, and he worries about paying rent and caring for his four children. His blood pressure is up, he said, and some nights he stays up and watches television to distract himself from the worries that keep him from sleeping.

Millions of unemployed Americans today would love nothing more than to “get a job,” but can’t.

America must address its long-term unemployment problem, which grows more dire by the day, esp. as the long-term unemployed burn through their life savings:

“I don’t see any job growth outside of health, education and government spending through the end of the year,” Mr. Silvia of Wachovia said. Some 6.5 million jobs have now been lost since the recession began, and the number of unemployed people has grown to 14.7 million.

As more people hunt futilely for jobs or give up their searches altogether, they burn through their savings, fall behind on bills and mortgages, and eventually add to the strains on already strapped aid programs, from government unemployment insurance to private food pantries.

“There are going to be massive, massive numbers of people who are out of work for long periods of time,” said Andrew Stettner, deputy director for the National Employment Law Project…

Some people give up looking for jobs and join the 800,000 discouraged workers.

Nearly one million “discouraged workers”! That’s a government euphemism for people who have desperately and unsuccessfully sought work for so long that they’ve given up hope and aren’t even bothering to look for work any more.

The government doesn’t count those 800,000 workers as “unemployed” because they’re no longer actively looking for work. If they were counted, the official unemployment rate (which doesn’t take into account millions of under-employed Americans) would already be in the double-digits:

[T]he seasonally adjusted percentage of unemployed workers, including discouraged workers, is 10% for June. That’s up from 9.8% in May. As you can see, those numbers are significantly worse — a half percentage higher than reported unemployment in June.

My solution: A negative income tax. The government would guarantee every American an amount sufficient to cover no-frills, basic living expenses. Taxes on income would reduce the amount of government benefit received by low- and moderate-income Americans.

Sound like a crazy liberal-socialist idea? Jodie Allen writes, “The idea of a negative income tax (NIT) is commonly thought to have originated with economist Milton Friedman, who advocated it in his 1962 book, Capitalism and Freedom.”

A negative income tax would save lives and sustain spending and the economy during recessions. It would prevent the long-term unemployed from becoming depressed and despondent. (Depressed, despondent people are not only far less likely to again become economically productive members of society but are also far more likely to engage in anti-social activities, from wife-beating to crime.)

A negative income tax would provide all Americans fearful of losing their jobs with some peace-of-mind. It would help cushion the devaluation of houses, cars, boats, etc. during periods of heavy unemployment. It would help prevent communities from being torn apart through widespread foreclosures. It would help protect mortgage lenders against foreclosures and the plummeting value of foreclosed houses.

Besides the negative income tax’s many tangible benefits, providing America’s least fortunate a basic living income is the decent, moral thing for our society to do.

Posted by James on Thursday, July 02, 2009