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  • Long-term Unemployment Still Too High

    Job seekers line up for jobs at Citi Field in Queens in New York

    The stock market reacted favorably this morning when it was announced that the number of people on payrolls fell by 36,000 in February, better than the 50,000 loss expected by economists. The unemployment rate held steady at 9.7%, also slightly better than expected.

    Another indicator that may have received less attention is the 15-Week unemployment rate—the percent of the labor force that has been unemployed for 15 weeks or longer and is still looking for employment. In December, 2007 this statistic stood at only 1.6%. In February, 2010, it was 363% higher at 5.8%. This, after three “stimulus” bills during the time frame is proof that the idea that we can “spend our way out of recession” is for the birds. In fact, after rising the astronomical 363%, the rolls of those unemployed 15 weeks or more has only declined by 147,000 since it peaked in November of 2009 at 8 million 976 thousand people looking for work.

    The longer-term 15-week unemployment rate is most often used to detect the level of economic pain being felt in the economy. Equally important though, this statistic reveals the percent of the workforce whose skills are eroding by not being put to use. People unemployed for 15 weeks or longer are becoming less employable as time goes by. Skills deteriorate when not put to use. Therefore the chart below is alarming.

    Long-term unemployed

    “Stimulus Bill” spending crowds out the private sector. There are more government jobs competing with private market jobs and it is not a level playing field. The government jobs are paid by the taxpayers regardless of whether their employers run them prudently because it can operate at a loss indefinitely until the government goes bankrupt and the federal spigot must be turned off. Jane Businesswoman in the private sector though has to remain profitable and compete.

    Another problem with “Stimulus Bill” spending is that many workers hired by the government are paid Davis Bacon wages, which are artificially high. Therefore fewer workers can be hired, contributing to longer-term unemployment.

    The solution to fighting longer-term unemployment is to put more money in the pockets of small business owners. This can be done through tax cuts such as by:

    • Permanently repealing the Death Tax which keeps business from expanding and growing.
    • The government should provide assurance that small business owners aren’t going to be hit with a per-worker health insurance tax.
    • The corporate tax rate of 15 to 38 percent should be lowered to 15 percent across the board so jobs are no longer lost overseas to other countries that have lower corporate tax rates.

    Until policies such as these see the light of day, it will be nighttime in America—the unemployed will suffer and their skills deteriorate.

    Posted in Economics [slideshow_deploy]

    5 Responses to Long-term Unemployment Still Too High

    1. LAD says:

      Odd that you wouldn't include repeal of the Davis-Bacon Act as one of your solutions.

    2. Pingback: Paul Krugman Embraces Ren and Stimpy School of Emotional Economics. « DouglasernstYLP

    3. Terry M says:

      This is an appalling piece. There is much to attack, but i'll pick just two tidbits.

      the notion that government employment is crowding out private sector jobs is ludicrous. perhaps in a period of low unemployment, we could see the impact of high wage public jobs vs lower wage private jobs, but with so many unemployed, it is still a sellers (employer's) market.

      and – re the notion that repealing the estate tax might help businesses hire anyone is one of those notions that no one can demonstrate. the typical small business closes upon the death of the owner, not because of the estate tax, but because of the need to repay the debt. even incorporated small businesses typically borrow through personal loans. and the only data i have seen re the numbers of estate that are taxed suggests that federal estate taxes touch no more than a handful (count the fingers) of businesses/farms.

    4. republicanblack says:

      This article is ok, but I think it will do everyone good to check out this article, that so accurately describes the economic debate in washington and the pros and cons of each one in a nutshell, its about the only article I've seen to so clearly and concisely articulate the economic debate, it is a conservative MUST read:

      http://bit.ly/investment-vs-debt

    5. Pingback: The King of Kong, Health Care, and Liberalism « DouglasernstYLP

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