Summary...
THE UNITED STATES IS EXPERIENCING THE LONGEST STRETCH OF HIGH UNEMPLOYMENT SINCE THE GREAT DEPRESSION
The rate of unemployment in the United States has exceeded 8 percent since February 2009, and CBO projects that it will remain above 8 percent 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 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. But they 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. Nonetheless, by reducing the extent of unemployment and long-term unemployment in the future, they might have longer-term benefits.
CBO report was issued at the request of Rep. Sander Levin (D-MI).
CBO Report Unemployment 2-16-2012CBO: Many people would like to work but have not searched for a job in the past four weeks, or are working part-time but would prefer full-time work. If those people were counted among the unemployed, the unemployment rate in January 2012 would have been about 15 percent.
Furthermore, the CBO reported that the “United States is experiencing the longest stretch of high unemployment since the Great Depression” with no end in sight through 2014.
Worse, the CBO reports that the ravages of the Obama Economy have created an unprecedentedly high rate of long-term unemployment, which the CBO defines as a person who has been seeking work for over 26 months.
Over 40 percent of people who are currently unemployed have been out of work for more than half a year, as compared with about one-quarter during the 1981–1982 recession. The extent of long-term unemployment is much greater than would be expected on the basis of its historical relationship with the overall unemployment rate.
