Several years into the economic recovery, workers in the United States continue to suffer the effects of the Great Recession. Almost 23 million people are unemployed or underemployed, bringing the real unemployment rate to more than 14.4 percent, and the length of unemployment remains daunting, with the average duration stretching to 35 weeks and four out of ten workers jobless for more than six months. Some of these are young workers, whose rocky start in employment is likely to haunt them for decades in the form of lower wages. Others are older workers, whose decades of knowledge and experience are being squandered rather than contributing to the nation's productivity. As Ben Bernanke has warned, this is "a situation where there are too many people whose skills and talents are being wasted."
Long-term unemployment has lasting financial and health repercussions for workers and the economy: losing a good job during a downturn can lead to a 20 percent decrease in lifetime wages and a commensurate loss in tax revenues. Health care costs can also increase along with the increased risks of mental illness, domestic violence, suicide, and higher mortality rates associated with displaced workers. The negative effects of unemployment not only impact our generation, but the next since children of the long-term unemployed perform worse in school and ultimately earn less than those without unemployed parents. While policy makers debate debt ceilings and fiscal cliffs, the economy is producing $1 trillion less per quarter than its current potential given our human and capital resources, and decreased earnings in the future threaten to exacerbate the problem.
It is both a moral and an economic imperative that we aggressively tackle long-term unemployment. We must implement bold programs that simultaneously provide employment to millions and prepare the nation to succeed in the future: rebuilding our crumbling roads and bridges, rebuilding and improving our school buildings, returning hundreds of thousands of teachers to the classroom, and expanding universal pre-school education to prepare the next generation for whatever the 21st century workplace might bring. But in the meantime, we must also increase funding for current programs that help dislocated workers reconnect to the workforce and acknowledge the unique challenges that the long-term unemployed face in finding work again.
The public Employment Service (ES), originally established in 1933, and then integrated into the comprehensive One-Stop system under the Workforce Investment Act (WIA) in 1998, tracks employers' job openings and matches the skill sets of unemployed workers to those positions. While employers lament having millions of jobs for which they cannot find staff and millions of workers remain on unemployment insurance, funding for the ES has decreased by 23 percent in real terms since 2003. Increasingly, these services consist of little more than access to self-service online search tools; less than one-third of workers who visit government-funded job search centers get to work with a human counselor, with the vast majority left to navigate computer searches on their own or to depend on increasingly tenuous networks of former co-workers. With an additional $1.6 billion in annual funding, these programs could serve an additional 2.8 million unemployed job seekers per year and would be offset by reductions in unemployment insurance benefits and increased federal, state, and local tax revenues collected from new paychecks.
Similarly, increased funding for WIA's On-the-Job Training and Customized Training programs targeted for the long-term unemployed would allow these locally-focused programs to partner with businesses experiencing skills shortages to bring on dislocated workers and allow them to earn as they learn new skills suited to the needs and goals of local employers. Small businesses in particular are critical to expanding U.S. employment, but often lack the capital or capacity to train new workers alone, while businesses of all sizes need to become more creative about training workers in the skills they need. We have a workforce in waiting to help our businesses grow if we just fund the programs to help them find one another.
Policy makers have all too often left the unemployed to fend for themselves, sometimes in the face of strong discrimination. Many help wanted ads boldly state that the unemployed need not apply. While important anti-discrimination bills are moving through several state houses and city councils, we should also be considering how to encourage employers to consider hiring the long-term unemployed. The privately-funded "Platform to Employment" in Connecticut (now expanding to ten more locations) subsidizes positions for long-term unemployed workers with local employers, giving business leaders an incentive to bring these workers into their workforce when they might otherwise be inclined to recruit a currently employed worker. The program claims a 70 percent success rate in getting these workers back into the labor force. Funding new federal programs to spur hiring of unemployed workers and renewing programs like the TANF Emergency Fund's subsidized employment program would complement this kind of private effort and expand these critical services to more long-term unemployed workers across the country very quickly.
On their own, these programs cannot solve the crisis of long-term unemployment. Policy makers have never before been confronted with a recovery quite like this one, and it will take a variety of solutions and programs to truly turn the economy around. However, these programs could help hundreds of thousands of workers who today are losing their homes, cutting family budgets, and despairing of ever being part of the U.S. workforce again. We could put paychecks back into workers' hands that would then be spent on much-needed home repairs, long-delayed automobile replacements, clothing and school supplies for their children, and patronizing of local stores and restaurants. Funding these programs is not a gift to these workers; it's a down payment on refurbishing the American Dream.
By Anastasia Christman, Senior Policy Analyst, National Employment Law Project (NELP). Learn more about NELP at www.nelp.org.