Another troubling issue is how long many Americans are having to sit out of the workforce. About 2 million individuals are among the long-term unemployed – meaning they have been unemployed for more than 27 weeks.
AEI scholar Michael Strain addresses many of the downsides to long-term unemployment in an interview with journalist Brad Plumer. The big problems? Anxiety and stress for people who want to work but can’t find a job – and a troubling cycle wherein the longer someone is out of work, the harder it is for them to get hired.
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BP: This might be belaboring the obvious, but what are the main reasons why people should worry about this?
MS: First of all, just at a basic level, work is very important and a well-functioning labor market is very important — not only for the economic benefits of working. But if you have a bunch of people who want to work and can’t, that’s a lot of potential that’s sitting on the sidelines, and it’s bad for economic efficiency. Also, if people aren’t working, they’re more reliant on government welfare, taxes are higher.
And more important are the basic human issues. People derive so much of their identity and of their moral core from being able to work. It’s how people provide for their families, express creativity, gives you a sense of purpose. There are all these moral and spiritual and psychological benefits to working. So if you want to ask how society is doing broadly, certainly the economics are important, but more important is whether this society is functioning in a way that people can live the fullest life possible and can maximize their potential. And right now, for these 4 million folks, we’re failing.
BP: The other part of this argument is that long-term unemployment isn’t like regular employment. If you’re out of work for a long time, it actually becomes harder to get a job after awhile. What’s the evidence on this score?
MS: There’s the survey evidence, you can just ask businesses, if you have two candidates and one’s been unemployed for four weeks, and one’s been unemployed for 30, who would you hire? I think there’s a limit to what you can learn from acting.
There have also been résumé studies that have been really good, where people create fake résumés and send out pairs of résumés where the only difference is the length that each person has been employed. And sure enough, the longer a person’s been unemployed, the smaller the probability that people get called for an interview. So there’s some compelling evidence that “scarring” is actually happening.