99ers, Beware! No Unemployment Extensions and the Rise of the Permanently Unemployed

Paul Krugman wrote an interesting in the New York Times on July 26 wherein he noted that an over-cautious approach to the record unemployment problem being experienced by the United States could lend itself to making the current long-term unemployed (those on unemployment extensions and the 99ers, those who have exhausted their unemployment benefits and are ineligible for further unemployment assistance) into a permanently unemployable population. With economic forecasts for the next six months or so pretty dire, Paul Krugman could be correct. What does this mean for those currently receiving unemployment benefits and those that will soon see the end of their benefits payouts? It means that many may have entered a virtual jobless 'twilight zone' from which they may never escape.

Krugman cites Brad DeLong in his rebuttal of economist Greg Mankiw's position that the government, since nothing like the current recession and levels of unemployment has been seen since the Great Depression, should be "risk averse" and let the free market correct itself. DeLong notes: "And even a minor and hasty acquaintance with the Great Depression teaches that having the government stand back and wash its hands is the most risky strategy conceivable."

Krugman agrees. He then cites Larry Ball's work on historical unemployment, stating that: "Ball provides compelling evidence that weak policy responses to high unemployment tend to raise the level of structural unemployment, so that inflation tends to rise at much higher unemployment rates than before."

Problematic to be certain, but the words that should dredge up fear in both the long-term unemployed, all 99ers, and policy makers followed: "And the kind of unemployment we're experiencing now, with many workers jobless for very long periods, is precisely the kind of unemployment likely to leave workers permanently unemployable."

Permanently unemployable. Harsh words to read for someone who has been out of work since 2007, 2008, or 2009. Horrifying words for those who have not only exhausted their unemployment benefits, but also their life's savings, pushing out hundreds of resumes and job applications, only to find that they cannot land a job.

But why is this? Why are so many out of work not able to find gainful employment?

There are several reasons why experienced, able-bodied, intelligent, hard-working individuals remain out of work for extended periods of time. Despite what the more extreme conservatives have been dishing out about laziness and drug addiction and entitlement mentality, most of America's long-term unemployed find themselves in a changing job market dynamic. Their inability to be hired now is directly attributable to the age, nearness to retirement, wage expectations, experience level, new technology knowledge, career field phase out, lack of jobs in their respective fields, and an overall lack of job opening altogether. Assuredly, there are even more valid reasons why jobseekers have been unemployed for a year or longer (or even the longer than the standard unemployment benefits payout period, which is 26 weeks) and many of the reasons can be combined for most long-term jobseekers.

But a permanent unemployed population only lends itself to drastic solutions, such as the rise of self-employed endeavors and at-home cottage enterprises. There will be those who will re-invent themselves, but this will most likely be done at government expense, through welfare assistance programs and Pell grants for college courses. And there will be the ones who simply give up and live off of their savings and insurance policies until they retire.

If the federal government continues in the vein of ignoring the plight of the 99ers and the long-term unemployed, they will soon find that 15 million individuals, the 9.5 percent or so that currently are "officially" unemployed, will be joined by several million more as the problem deepens and more of the unemployed remain so for longer periods of time. Remaining aloof with contribute to an ever-growing vicious cycle, one that is already past its infancy. There is talk in Washington that the current unemployment benefits extension, which expires at the end of November, will be the final one. And since the government seems to have taken a backseat to the idea of actually creating jobs, the only avenue left is to provide unemployment benefits extensions to those that are jobless. Or hope that the economy suddenly turns around. Or pray that the millions and millions of unemployed somehow find jobs.

With those last two scenarios very unlikely, Paul Krugman, after noting the huge discrepancy between job vacancies and the unemployment rate, has the last word: "The point is that while policy makers may think they're being prudent and appropriately cautious in their responses to unemployment, there's a good chance that they're prudenting and cautiousing us into a long-term jobs catastrophe."

Cue the ghost of Rod Serling to prepare us for a jobless limbo, a 99er purgatory, where millions remain adrift, permanently unemployed...

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Source:

NYTimes.com