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Has the Federal Government Given Up on Solving the Jobs Crisis? Has the Federal Government Given Up on Solving the Jobs Crisis?

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The Next Economy | Big Questions

Has the Federal Government Given Up on Solving the Jobs Crisis?

Washington lawmakers act like the extension of emergency unemployment benefits is about gaining political advantage, with little thought to a broader plan to put millions of Americans back to work.

A man waits in line at a jobs fair in New York City.(Mario Tama/Getty Images)

photo of Nancy Cook
January 8, 2014

Harvey Holbrooks, the holder of an M.B.A. with 20 years of experience in the health care field, never imagined he'd find himself out of a job for this long.

January marks the first anniversary of getting laid off from his position at a nursing-home health care company, where he managed doctors and medical staff. "I'm devastated. I spent all of this money and time to get an education only to find out that it has become worthless to me," the 53-year-old says from his Pennsylvania home. "You wake up and look for jobs. Then, do you everything again."

Holbrooks's frustration is not unique this week, as 1.3 million Americans face the expiration of federal emergency unemployment benefits, which provided an average of $300 a week. Holbrooks's checks stopped on Dec. 28. Now, he's scrambling to borrow money from family, considering cutting off his Internet service, and driving less to save money on gas. "I'm making phone calls to beg and borrow," he says. He'd take any job. "I will work for $7 an hour, plus tips. I'm grateful and doing cartwheels if someone calls and just says come in for an interview."

 

These personal stories can get lost as Washington lawmakers wrangle for political advantage over a proposed three-month extension of unemployment benefits, a move that would cost the government $6.5 billion and faces long odds for passage. What's even more worrisome to economists and unemployed workers is how far the broader war on joblessness has slipped from the Washington agenda.

"Sadly, I expected this to happen. For a lot of voters and policy makers, it is out of sight and out of mind," says Gary Burtless, a former Labor Department economist. "The unemployment situation is not regarded as a crisis. Instead, we have moved onto other things like the stock market rising or Beyonce selling a new album."

The unemployment crisis is quite alive, however, for the 4.1 million Americans who've been out of work for more than six months. They comprise about 37 percent of unemployed people. The surging stock market and other renewed signs of health in the U.S. economy only serve as reminders that they are missing out on the recovery.

While extending federal unemployment benefits would prevent many from becoming destitute in the short term, it would not solve structural economic problems that have kept the unemployment rate close to 7 percent. It also would not ease the stigma of long-term unemployment, prevent discrimination for older workers, or offer retraining for people whose skills fall short. Fighting those deeper problems requires solutions that are barely on the radar in Congress.

"We know what it would take. It would take more job creation," says Harry Holzer, a professor of public policy at Georgetown University and former chief economist for the Labor Department. "Those are doable things if the political will is there."

Some House Republicans, like Speaker John Boehner, have expressed a willingness to pass an extension of the federal unemployment benefits, provided Congress can find a way to pay for them. What's missing is discussion of creating new jobs through infrastructure projects, reviving tax credits for businesses to hire people who've been out of work, or partnering with community colleges to develop job training for specific regions or sectors.

Behind closed doors, the Obama administration has been debating ways that it could use executive orders to help the long-term unemployed by working more closely with local and state employment offices and career centers, according to a former administration official and Holzer, who has attended a few brainstorming sessions. The only problem with this plan is that any real efforts, not at the margins, would require cash, and Congress controls the money.

At least one conservative economist is calling for a different set of priorities from both the GOP and Democrats. Instead of obsessing about debt and health care, respectively, they should be extending unemployment benefits and giving Americans money to move to states with more jobs. "The No. 1 policy concern should not be bringing 30 million more people into the private health care system or the debt 25 years from now. It should be helping the unemployed," says Michael Strain, a resident scholar at the American Enterprise Institute. "Conservatives are supposed to be people who champion work."

Both progressives and conservatives should care about the millions of people still out of work, Strain says, because it will affect the economy over the next few decades. People without jobs pay less in taxes. Worse, many of them may end up taking advantage of government benefits like Social Security or disability earlier than they normally would have.

These abstract arguments do not help people like 58-year-old Barbara Harmony of Ohio. Just hours after the Senate voted Tuesday to consider a measure to extend the federal emergency unemployment benefits, Harmony sat in her house and wondered how to get through the next few days. After years of working for the state government, owning her own small mail-order business, and working in sales for a utility company, Harmony found herself out of work. She'd lost her job in mid-April and her federal emergency unemployment benefits in late December.

She starts to cry a little as she considers how she's going to pay her electric bill this week, or her rent, due on Friday. "The electric company is calling me to disconnect me," she says over the phone, her voice cracking. "Honestly, I'm a very positive person, but today it just hit me."

Harmony is worried about drastic measures that might be required to find a job—like leaving behind her elderly parents in Ohio and moving to another state. She said she also might start her own consulting business to teach people how to open and manage a small enterprise, like she did for 19 years. She's trying to stay upbeat.

But when asked if she thinks Washington is doing enough to help people like her, she chokes up again. "I'm trying to follow what Congress is doing, but they don't work on the most important things. They work on their own agenda," she says. "They are not considering where the American people are right now.''

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