The US Department of Labor Statistics' monthly unemployment report is out, including their monthly "Employment Situation Summary." You may have seen the headline number, the U-3 "official unemployment rate," which came in at 10.2%, which is a full 3/10ths of a percent higher than economists were forecasting as recently as yesterday. The less misleading "Alternative measure of labor underutilization U-6" (available elsewhere on their website), which counts everybody who is available to work, needs a full-time job to pay their bills, and doesn't have one is now up to 17.5%, or more than one out of every six. John Williams' Shadow Government Statistics calculates that if you added in (for example) people like myself who are involuntarily retired due to disability, but who could work if there were jobs that needed us badly enough and who would rather work than draw the dole, the actual number as calculated during previous depressions and recessions, it's at 22%, or more than 1 out of every 5. And still accelerating.
So it's not terribly surprising that Congress passed a 20-week extension to unemployment benefits, passed it by wide bipartisan margins and without debate or hesitation, and the President is expected to sign it today, the same day the bill hit his desk. That makes this a good time to talk about how Unemployment Insurance works in the US ... and, more to the point, how and why it doesn't work.
If you still have a job that draws a paycheck, and you look down at the automatic deductions, you'll see that one of them is for Unemployment Insurance, and from your perspective, it works just like any other insurance plan: you pay a regular premium, and if disaster strikes, you draw a benefit that's supposed to help you recover from that disaster. In this particular case, you pay it to your state department of labor, which gets matching funds from the federal government to help keep premiums affordable, but the basic principle remains the same: it's a mandatory, but subsidized, insurance program. Costs and benefits have long been calculated based on the assumption that when one job ends, it typically takes most people less than three months to find another job. So since the government doesn't want to force you take a job in a much lower tax bracket and get stuck there for years the same day you get laid off, they pay you just enough money to keep the wolf from the door for the one to three months it should take you to find a job that pays a similar wage, a job in the same pay range.
Unfortunately, the Labor Department currently calculates the average time to find another job of any kind, let alone one in your same pay range, at 26.9 weeks, a hair over six months. Almost six million of us have been searching for 27 weeks or longer, with still no luck. Two million of us were about to pass the 79 week mark. So, for not even the first time (remember, it wasn't originally 79 months' coverage), the federal government is offering to let states extend the number of consecutive months of unemployment insurance benefits you can draw, paying for it by federal deficit spending rather than by raising unemployment insurance premiums. At this point, I think we can safely say that this is no longer any kind of an insurance program. It's a dole, plain and simple. And worse than that, it's the worst possible kind of dole: one that cripples the recipients.
You see, here's the most important thing to know about this: studies have shown over and over again that if you go past 26 weeks unemployed, you are most probably never going to find another job in your prior pay grade. However many years of education you have, no matter how many years of experience you have on your resumé, they mean nothing: you're a minimum wage clerk or a burger-flipper again or a day laborer or a telemarketer, at best. No employer will give you credit for any education or job experience if there's a six-month gap in your resumé. So how will employers respond, even if the economy recovers, to people who have a 99 week gap, that is to say a twenty three and a half month gap, in theirs?
I'm not saying that the right answer would be to cut off the benefits, replace them with nothing, and throw people (and their kids!) out into the street to starve. What I am saying is that what we're doing only postpones the inevitable. The recipients will never not be on the dole if we just keep extending the benefits. What we need to do, if we ever want them to go back to being productive taxpayers and supportive members of their families and of their communities ever again, is put them back to work.
Unsurprisingly, we are not the first generation of Americans to confront this problem. I'm going to refer you to the single flat-out absolutely best book I've read all year, Nick Taylor's American-Made: The Enduring Legacy of the WPA: When FDR Put the Nation to Work. At the top of the reasons that Roosevelt, and his WPA director Harry Hopkins, insisted not just on any make-work jobs but on jobs that used the same skills people already had was that they understood that some day the Great Depression was going to end, and on that day, we were going to need people who were still physically healthy from working, still in the habit of showing up for work, and just as importantly, still sharp in their skills, still current in their fields: everything that somebody who spends 99 weeks doing nothing for a living but going out a couple of times a week to fill out increasingly-pointless job applications won't be.
It's long past time to stop putting bandages on the gaping wound that's spurting the arterial blood of American worker readiness and competency and stitch up this wound in the body politic. If no employer can or will hire those people, it will have to be we, the taxpayers, who do so until private employers are ready to and can. It is long past time to stop giving out charity, to stop paying out dole, to put Americans back to work.