One major thing left out of the
Murray-Ryan budget dealis an extension of the Emergency Unemployment Compensation (EUC) program. Come January 1st,
1.3 million Americans will lose their jobless benefitswhen the EUC expires.
Democrats are working tirelessly lobbying their counterparts across the aisle for another year-long extension, but Republicans are not budging. They are concerned that unemployment benefits will cause people to stay on the government’s dole instead of finding work.
But beyond that, those benefits are not going to help the long-term unemployed find work. Employers are wary of hiring workers who have been out of work for more than 27 weeks, making it particularly challenging for the long-term unemployed to find a job.
That’s why, along with renewing the EUC program until 2015, Congress should pass legislation that directly attacks the long-term unemployment crisis. Here are five policies ideas to do so:
- Lower minimum wage and wage subsidy. This is functionally the same as offering a tax credit to firms that hire the long-term unemployed. The goal is to incentivise businesses to take a chance on the long-term unemployed without reducing wages. One way of doing so is to have the government pay a chunk of the wages, either through a lower minimum wage for the long-term unemployed and a wage subsidy or through a tax credit to employers.
- Education and Job Training. One reason that companies are wary of hiring the long-term unemployed is that their skills may have atrophied during their time between jobs. Another reason may be that the long-term unemployed don’t have the skills necessary to succeed in the current labour market. Funding job training and education programs is a way to attack both of those problems by teaching the long-term unemployed new skills.
- Relocation assistance. The United States is a large and diverse place. Some areas have high unemployment and few jobs. Other have the opposite. Moving people from the former to the latter would give unemployed workers a chance to search for employment in a tight labour market where there will face less competition for more job openings. However, as I said, the U.S. is a large and diverse place so moving isn’t easy. It’s expensive. Offering the long-term unemployed a relocation bonus to move to an area of low unemployment would help solve that problem.
- Government jobs program. As Matt Yglesias notes today, after the Great Depression, the U.S. put its long-term unemployed back to work by mobilizing that massive war effort. Hopefully, that won’t be the solution this time around. But the government can still hire the long-term unemployed for public work projects and directly put them back to work.
The plight of the long-term unemployed is quickly becoming a national crisis. Unlike cutting their benefits, these four programs can help solve this growing problem.
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