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The United States is facing the predicament of high long-term unemployment, and neither political party is addressing this problem head-on. Until it is dealt with effectively there is little chance of ramping up U.S. economic growth to 4% annually. Monday’s Wall Street Journal reported on a survey of economists who “expect the economy to grow at such a subdued pace this year that unemployment will barely budge.” Specifically, they think the jobless rate, which stood at 8.1% in April, will end this year at 7.9%. In response, political candidates of all stripes blather endlessly about how they stand foursquare in favor of “job creation.” That is important, no question, but even a rising tide of new jobs won’t lift all the battered dinghies bobbing in the unemployment sea. We have millions of long-term unemployed persons, which the government defines as people looking for a job unsuccessfully for more than six months. In an essay that ran in this past Sunday’s New York Times, Dean Baker, co-director of the Center for Economic and Policy Research, and Kevin Hassett, director of economic policy studies at the American Enterprise Institute, describe the problem in stark terms. Long-term unemployed accounted for 4.2% of the work force in 2010 — a figure Baker and Hassett claim would be over 6% if it included those who have given up looking for work — compared to 0.8% in 2007. This group is made up “disproportionately by the young, the old, the less educated, and African-American and Latino workers,” they wrote. “The number of unemployed people between ages 50 and 65 has more than doubled.” At a time when many seniors are facing the prospect of having to work longer before retiring, their chances of finding a job are below 10% and falling with each passing month. People out of work for an extended period “are more likely to be discouraged, more likely to have seen their skills wane, and more likely to be seen as a risk by a prospective employer,” the authors wrote. Baker and Hassett have some recommendations, of course, the main one being that this “national emergency” deserves its own policy spotlight. I wholeheartedly agree. The social consequences of ignoring it are too awful to contemplate. (Higher incidences of cancer and suicide are two mentioned in the essay.) Moreover, accelerating U.S. economic growth will require strong hands on all oars.
2012 Economic Growth Fellow
John Prestbo is retired as editor and executive director of Dow Jones Indexes. Previously he was markets editor at The Wall Street Journal. He has co-authored or edited several books over the past 30 years. The most recent is “The Market’s Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average,” published in 1999 by Dow Jones Indexes. His column, Indexed Investor, appears on the highly regarded “MarketWatch” business and finance website. He received his bachelor's and master's degrees from Northwestern University.Full Bio
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