On June 10, 2010, Rep. Jim McDermott (D), Chairman of the House Ways and Means Subcommittee on Income security and family support, conducted a hearing on policy responses to long-term unemployment. Long-term unemployment has reached crisis proportions as unemployment benefits expire for thousands or American workers. As reported in an earlier article, thirteen thousand Hoosiers are losing benefits as U.S. Senate inaction costs American workers unemployment benefits.
The crisis is compounded by the economy's failure to create jobs. As reported previously, the economy created only 41,000 private sector jobs last month. In May, the primary source of job creation was the U.S. Census. It is almost universally acknowledged that these temporary jobs disguised the real state of the labor market.
Rep. McDermott's subcommittee took testimony from five economists:
Lawrence Mishel, Ph.D, President, Economic Policy Institute
- Heather Boushey, Ph.D, Senior Economist, Center for American progress
Michael Reich, Ph.D., Professor of Economics, University of California, Berkeley, California
Till Marco von Wachter, Ph.D., Associate professor of Economics, Columbia University, NYC
Jason Taylor, Ph.D., Associate Professor of Economics, Central Michigan University, Mt. Pleasant MI
Each economist addressed the problems confronting the long-term unemployed: expiration of unemployment benefits and the economy's inability to create jobs. Dr. Heather Boushey bluntly told the House Committee
that Congress should focus on three goals:
Stop adding to the problem of unemployment;
Help the long-term unemployed beat the odds and find work; and
Fund national jobs programs.
Dr. Boushey testified that:
"today’s record-high long-term unemployment is a function of the reality that there simply aren’t
enough jobs to go around due to a lack of demand. While the economy has been growing for
three quarters now, businesses have not yet begun to ramp up hiring. While long-term
unemployment creates significant hardships for individual families, it also threatens the nascent
economic recovery: The long-term unemployed can’t spend what they don’t earn and most are
limited in what they can borrow due to falling home prices and the credit squeeze, and spending
is what keeps our economy humming. Thus, there is a direct link between lack of hiring and
future economic growth."
The experts submitted extensive testimony supported by economic research and historical data. Knowing these facts is critical to discerning reality from political soundbites. I encourage you to follow me over the next week as I provide in-depth review of each expert's testimony. I will also follow any political or legislative fall-out from the hearing.
Dr. Mishel's testimony on long-term unemployment
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