The Emergency Unemployment Compensation program, under which some workers could receive benefits for up to 99 weeks, is about to expire. If it is not extended, some 1.3 million long-term unemployed workers — out of a staggering 4.1 million total long-term unemployed – will immediately lose benefits.
Why would this be a good idea (a) during perhaps the weakest economic recovery, both in terms of GDP and job growth in American history, and (b) at a time when technology may be radically changing the nature of work in America? As AEI’s Michael Strain points out in The Weekly Standard:
These millions of workers are suffering—financially, emotionally, spiritually. Some of them may never work again, and may be forced to subsist on welfare, increasing the rolls and expense of those programs. Society is also suffering: A large pool of willing and able workers are idle; our already segmented society is even more segmented; our country is less dynamic, vibrant, and thriving.
But just extended the programs over and over isn’t a good idea either. Again, Strain:
1. One thing conservatives might push for is relocation assistance—to help the long-term unemployed move from a bad local labor market to a good one. The job market varies widely across cities and states. Instead of continuing to cut UI checks to a New Jersey worker who has been unemployed for eight months, why not cut him a check to help him move to North Dakota, where he has a much better chance at getting a job?
2. As mentioned above, the evidence suggests that many long-term unemployed workers are “scarred”—their lengthy spell out of the workforce is making it difficult for them because firms view workers who have been unemployed for so long as risky hires. Why not reduce the risk associated with the hire by lowering the minimum wage for long-term unemployed workers? A firm may not want to take a $7.25-per-hour risk on a long-term unemployed worker, but might be willing to take a $4 risk. If we lower the minimum wage for the long-term unemployed, then we’ll need to supplement their earnings with an expanded Earned Income Tax Credit or some other government-funded wage subsidy.
3. To help make sure that we aren’t adding any new workers to the rolls of the long-term unemployed, states without worksharing UI programs—about half of them at the moment—should start them. Under worksharing, a worker who has his hours reduced by his employer in response to a temporary lull in demand can receive a prorated UI benefit. This makes it easier for firms to reduce employees’ hours by, say, 20 percent, rather than laying off 20 percent of their workforce. Government shouldn’t tilt the scales towards layoffs by prohibiting workers who have their hours reduced from receiving prorated UI benefits.
4. One way to[help the unemployed back to work and boost economic mobility] would be to improve transportation networks within cities and their outlying areas in order to shorten commute times from low-income neighborhoods to employment centers.
Recent research from economists at Harvard and the University of California, Berkeley, suggests that socioeconomic segregation within cities and their outlying areas plays an even greater role in limiting the ability of low-income Americans to rise than was previously thought. Many low-income Americans face commute times measured in hours, not minutes. Public policy can shorten the distance between working-class neighborhoods and employment centers by shortening commute times for low-income workers.
In its cheapest incarnation, this would involve extra buses that run nonstop from low-income neighborhoods to employment centers, both in city centers and in suburbs. And of course, more money for better roads, bridges, and tunnels would shorten commute times for everyone, including the working poor.