4 Million Americans are Long-Term Unemployed

August 4, 2014

In a new report on poverty for the American Enterprise Institute, Resident Scholar Michael Strain explains why Americans should be especially concerned about long-term unemployment.

Around 4 million people in the United States are considered long-term unemployed (unemployed for 27 or more weeks).

  • Not only does having so many people out of the labor force for such an extended period of time hurt economic efficiency and productivity, but it means that more people become reliant on government welfare.
  • Significantly, the longer that a person is unemployed, the more difficult it becomes for him to find employment.

Strain offers some solutions that he contends would help the long-term unemployed, including:

  • Relocation vouchers: Unemployment rates vary from place to place, but moving can be a significant expense. Strain suggests providing vouchers to Americans who move, which could make it easier for them to find a new job.
  • Work-sharing: A work-sharing policy works like a prorated unemployment benefit, Strain explains. Firms that have to cut employees' hours can do so, and those employees become eligible for a percentage of unemployment benefits based on the amount of hours cut. The policy would allow firms to cut labor costs as necessary while workers could remain employed.
  • Lowering the minimum wage: Americans without a high school diploma and young workers make up a large percentage of the long-term unemployed. If employers could offer these employees $5 per hour, for example, they would be more likely to hire them than if they were required to pay them the full minimum wage.
  • Improving transportation networks: A person's residence can restrict his mobility. Strain writes that improved transportation systems could increase the number of job opportunities available to the unemployed. He gives the example of buses that run from low-income areas.

Source: Michael R. Strain, "Here's Why Conservatives Should Worry More about Long-Term Unemployment," Poverty in America - and What to Do About It, American Enterprise Institute, page 29, July 31, 2014. 

 

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