Hey, We Did Something Right Here!

April 27th, 2012 at 3:16 pm

I was glad see James Surowiecki take a close look at the long-term damage, both micro and macro, associated with long-term unemployment (see figure showing share of the unemployed who’ve been looking for work for at least six months).  

He takes you through the literature, including the stuff on the dreaded “hysteresis.”  This is basically what happens when a cyclical problem becomes a structural problem.  In this case, it describes a situation where people are unemployed for so long that their skills erode to the point where they’re less productive and thus less employable.  That slows longer term growth and raises the unemployment rate over the expansion.

However, when JS writes this:

We could also follow Germany’s example and subsidize job-sharing programs, which have helped Germany bring down its long-term unemployment rate despite the recession. Sadly, there’s little sign that policymakers have much interest in using these tools.

…he is, I’m happy to report, overlooking that we have, in fact, followed that example!  As noted here, our version of the German work sharing program was included in the deal that extended the payroll tax cut and UI extension.  For the record, Sen Jack Reed from RI and Neil Ridley, an author of the link above, have been tireless advocates of this idea. 

It’s not often you get to crow about something we’ve done right of late to help working people, so I wanted to be sure to correct this.

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7 comments in reply to "Hey, We Did Something Right Here!"

  1. Jill SH says:

    Governor Lynch here in NH put WorkShare into practice in January 2010. Our unemplyment peaked at 6.9% in Dec. 2009, and fell for 17 straight months. Yeah, I think it works.

  2. readerOfTeaLeaves says:

    Sorry to be impertinent, but I’ve read this blog for about a year, and pretty reliably there was always a Friday music post. Along with features like Barry Ritholtz’s (The Big Picture) Week End Summary posts, which are *always* and predictably on Fridays, the OTE music was one of my cues that the weekend was on the horizon.

    Plus, I learned about Justin Bieber via OTE. (And made my kids proud – after they collapsed into hysterics about the fact that I’d stumbled onto Bieber via a video on an econ blog.)

    The OTE graphs and charts are awesome, but the weekly music was a nice touch. Here’s hoping the blog owner will reinstitute it.

    • Jared Bernstein says:

      Ok. I’ll get on it. I just keep coming up w stuff I’ve already used!

      • Rima Regas says:

        One more request… Better titles for your excellent pieces. Why? Because there are millions of people out there who are long-term unemployed and who would love to read you, but might not because… well… the title. 🙂

        I’m off to Facebook, Google+ and Twitter to disseminate this excellent blog piece. Thanks for all you do, Jared!

  3. urban legend says:

    Why should we passively accept the notion that skills actually erode after several or even many months of unemployment? How many times does it take to get back up to speed riding a bicycle? Someone who has worked for 25 years doesn’t lose “skills,” whatever that means, for a long time.

    • Rima Regas says:

      Because some bicycles are ten-speed and others just have the one… A programmer ends up learning several programming languages, as new development platforms are adopted in the programming environment. Sure, you can still find work with the older languages, but not much, and not knowing what’s cutting edge makes you an unattractive hire. A teacher wouldn’t have such a problem but these days, teachers aren’t such a hot commodity.

      • Michael says:

        Your “programmer” analogy is particularly terrible; compared to knowledge of data structures and programming techniques, particular languages are trivial.