U.S. In Longest Period Of High Unemployment Since Great Depression

If you’re unemployed and searching for job and it seems like things are REALLY tough out there, it is not your imagination.

As far as unemployment is concerned, these are officially hard times, according to a new report by the Congressional Budget Office (CBO).

High unemployment Unemployment benefits aid begins. Line of men inside a State Employment Service office at San Francisco, Calif., waiting to register for benefits on one of the first days after the office opened in Jan. 1938.These workers will receive dfrom $6 to $15 per week for as long as 16 weeks. Twenty-two states begin paying unemployment compensation as national unemployment reached 10 million, 19% of the workforce. Photo: Lange, Dorothea,/Library of Congress

Unemployment benefits line, San Francisco, Jan. 1938

Not only is the United States is in the midst of the longest period of high unemployment since the Great Depression, the number long-term unemployed have increased dramatically.

The United States unemployment rate has topped 8% since February 2009, making the past three years the country’s longest stretch of high unemployment since the Great Depression. The portion of unemployed people looking for work for more than six months — the long-term unemployed — topped 40% in December 2009 and since remained above that level.

Don’t look for significant improvement in the job market in the near-term future. The CBO projects the unemployment rate will exceed 8% until 2014.

Rep. Sandy Levin high unemployment

Rep. Sandy Levin

Rep. Sandy Levin of Michigan, the ranking member of the House Committee on Ways and Means, requested the CBO’s study of high unemployment, which was prepared by Gregory Acs and William Carrington of CBO’s Health and Human Resources Division.

In the study the CBO examined:

    • What are the consequences of unemployment?
    • What factors have caused high unemployment?
    • What policies would increase demand for workers?
    • What other policies could reduce unemployment?

Many of the conclusions of the CBO report are fairly obvious, and some of the research seems to ignore the numerous Bush-era polices that lead directly to the fraud-fueled housing crisis and the subsequent financial crisis that shook the American economy to its core.

Some of the proposals for policy changes, such as kicking people off unemployment more quickly, seem anti-worker.

Other findings, such as a discussion of the ever-present issue of worker’s lacking the skills employers want with the solution being more training, have been talked about in the past to little effect. Employers wants workers with better skills but don’t want to have to pay higher taxes for improved education.

A summary of the CBO report’s findings–

The United States is experiencing the longest stretch of high unemployment since the Great Depression. The U.S. unemployment rate has exceeded 8% since February 2009. The CBO projects unemployment will remain above 8% until 2014.

    • Slack demand for goods and services is the primary reason for the persistently high levels of unemployment observed today.
    • When demand ultimately picks up, structural factors—such as mismatches between employers’ needs and workers’ skills and locations, the erosion of unemployed workers’ skills, and the stigma of being unemployed—may continue to keep unemployment higher than normal

Some Policies Could Increase Demand for Workers

In analysis of a number of tax and spending policies designed to increase output and employment in 2012 and 2013, CBO found the largest increases in employment per dollar of budgetary cost would be produced by:

    • Reducing the marginal cost to businesses of adding employees and
    • Targeting people most likely to spend the additional income (generally, people with lower income).

Other Policies Could Also Reduce High Unemployment

Lawmakers could aim to reduce unemployment by:

    • Improving workers’ skills,
    • Modifying the unemployment insurance program, or
    • Facilitating transitions to work.

Such policies could be implemented using mechanisms ranging from federal block grants to direct federal operation.

The polices would probably not have a significant effect on unemployment over the next two years because of the difficulties of scaling them up in that span of time. However, by reducing the extent of unemployment and long-term unemployment in the future, the policies might have longer-term benefits.

See also: What Are The Consequences of Unemployment?

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