The president took to New Orleans on Friday to give (yet another) speech on his plans for improving the economy, part of a series of economic speeches which he will pick up this Thursday in Cleveland. But, after five years of slower-than-needed growth, does the president still have economic credibility?
There are a number of signals indicating that this recovery is one of the slowest on record, yet one increasingly important segment has received relatively little attention: the long-term unemployed.
Although these numbers are staggering, they fail to include the number of unemployed who aren’t even measured by the Bureau of Labor Statistics. Those who have lost all hope, completely giving up on searching for work (more than 700,000 gave up in October alone), contribute to another unflattering characteristic of this administration’s economy – the lowest labor force participation rate since 1978. Currently, these poor souls account for millions and climbing.
There are a number of reasons why this president’s policies haven’t been able to mitigate the plight of the long-term unemployed. We need GDP growth to be at least one percent above our normal growth trends just to push unemployment down by 0.5 percent (see Okun’s Law). Even with the recently released third quarter growth rate of 2.8 percent, which is the highest since the same time last year, we are barely above the growth that what would be expected from population increases alone. With growth so weak, how can anyone be surprised that long-term unemployment has remained so high?
Meager growth isn’t the only reason for the growing number of long-term unemployed. Far too often they simply lack the skills to fill jobs in other industries, are unable to get out from under upside-down mortgages resulting from the housing crisis, and, surprising to many of us, are actually incentivized to remain unemployed by the expansion of SNAP benefits and the extension of unemployment benefits, according to recent research.
The reasons are clear, but the consequences are clearer. Long-term unemployment is hurting Americans, and not just in the pocketbook. Without a steady income, many of us – especially Milennials, whose finances are supposed to be the keystone of Obamacare - put off purchasing health insurance or going to the doctor. The long-term unemployed are becoming the least healthy among us, adding to our national healthcare costs.
Long-term unemployment significantly impacts our children too. Families with unemployed members are more likely to break apart and children in these families are likely to perform poorly in school.
If you find yourself among the millions of the long-term unemployed, your economic outlook only gets worse. The longer you are unemployed, the lower the chances are that someone will want to hire you and the lower your wage will be when you finally do find a job. . . if you find a job.
Those of us who are lucky enough to remain employed aren’t immune to the impact of long-term unemployment. Increases in crime and welfare put a strain on government resources, revenues, and our tax dollars. Guess whose door your legislators’ will come knocking on when your state needs money?
Despite all of the rhetoric suggesting that Democrats - especially the president – are more adept at helping Hispanics and African Americans, these minority groups have suffered worse than any of us since the Great Recession, with greater wage losses, larger decreases in total wealth, and fewer employment prospects.
All is not lost, however. There are a number of ways to realistically, quickly, and vehemently fight our unemployment problem. The President even mentions some of them, sometimes. But, unlike his energy policy, he refuses to take an “all-of-the-above” approach to battling unemployment, brushing aside any policy ideas that hint at reducing government oversight, control, red tape, or federal tax revenues.
In New Orleans the president tried to convince us that, although things aren’t perfect, we will continue on the path of recovery if only we give him more time for his plan to work. In Cleveland he will try to do the same. After more than five years of one of our slowest recoveries in history, how much more time are we going to waste on politics, when we can be creating real economic stability and growth?
Vélez-Hagan is executive director of The National Puerto Rican Chamber of Commerce, economic policy researcher at the University of Maryland-Baltimore County, and author of the upcoming book, Nousonomics: The Common Sense behind Basic Economics.