It’s Time to Shore Up the Labor Market

Long-term unemployment coincides with higher mortality rates, suicide rates, divorce rates, educational problems for children, and mental illness.

By
19

We officially are in the trenches. Friday’s employment report was the worst in modern history: More than 20 million jobs were lost in April; unemployment is at 14.7 percent. With comparisons to the Great Depression being made, it’s time we rethink the government’s role in supporting work.

The unemployment numbers are based on those who lost a job and report actively looking for work. Meanwhile, the U-6, a broader measure of unemployment that includes those who are underemployed with reduced hours and those who have stopped looking for work, reached a mind-boggling 22.8 percent last month, meaning that more than a fifth of the labor force has been compromised. For comparison, the U-6 rate was 7 percent in February 2020 and the peak during the Great Recession was 17.1 percent. 

It feels quaint to remember that unemployment was at historic lows mere months ago, with job creation on a 113-month streak. But it took little time for COVID-19 to push the economy off the cliff, and now it feels even more quaint to think that we would get out of the pandemic and its economic ravages by the summer. 

The crisis has morphed from stopping the bleeding—with PPP loans and expanded unemployment benefits—to having anything resembling a functioning economy for the foreseeable future with a vaccine not yet in sight. This will take a new set of policy prescriptions than what’s been tried thus far.

Start a Free Trial
Get every newsletter and all of The Dispatch. Support quality, fact-based journalism. Get Started ALREADY HAVE AN ACCOUNT? SIGN IN
19
By
Comments (19)
Join The Dispatch to participate in the comments.
 
  1. Avatar photo
    Ray Salemi

    These are excellent ideas. I love these creative approaches to helping people through hard times without making them dependent upon handouts.

    My frustration with the Republican Party and the conservative movement is that these ideas can’t get any oxygen when it’s all being consumed by yahoos who would rather spend their energy protesting safety measures than fix problems and those who would only support these ideas if they are coupled with overturning Roe v. Wade.

    It is a pleasure to read rational conservative commentary, and I’m again grateful for The Dispatch.

    Collapse
  2. Avatar photo
    Ray Salemi

    Typo: “ Sen. Elizabeth Warren Warren”

    Collapse
  3. Caleb Doxsey

    > the need to expand wage subsidies for low-wage workers as a means for increasing economic opportunity and as a more targeted and business-friendly alternative than raising the minimum wage

    We don't have the money to do this. We spent it all in the last two months. It also wouldn't help. Employers fired their employees not because they couldn't afford to pay them, but because they had nothing for them to do. Business is not a welfare program to help people have a job. Those jobs serve a purpose, and once the purpose evaporates, the return on investment from the job disappears.

    Employers do have an incentive to keep on some workers who don't have anything to do - namely the cost to ramp up employment if/when business does come back - but in a lot of industries that cost is very low, and these business are all out of money anyway.

    > The recently discussed payroll tax holiday too would provide an automatic pay boost for those employed

    Giving a pay raise to the people who still have jobs, who are likely higher income, makes no sense. They're doing fine. It's the ones without jobs that need assistance.

    Also we need the payroll taxes to pay for all this.

    > To the extent there’s a shortage of jobs available, there may be a case for direct government hiring, of youth for whom time out of work early in their professional lives will have decades-long implications, or for the long-term unemployed.

    They tried this during the great depression. It didn't help. The government will end up competing with the private sector and worsening the crisis.

    The government caused this crisis by shutting down the economy. (and perhaps they were justified in doing so as a response to the pandemic) The most effective job creation program would be to get out of the way and let people leave their homes again. Anything else is a futile drop in the bucket.

    This crisis is not the opportunity you've been waiting for to try out all your pie-in-the-sky make-work national-unity government programs. In fact just the opposite. We've now in such dire financial straits that maybe we'll finally tackle fiscal responsibility again (though don't hold your breath).

    After all the problem very few people are talking about is that now that economic activity has fallen so dramatically, and so many people are not working, tax revenue is going to crater. Every city and state in America is going to be on the brink of bankruptcy by years end. And unlike the Federal Government they can't just quantitatively ease their way out of it.

    Collapse
    1. Avatar photo
      Pat Riot

      "We spent it all in the last two months."

      Trump has run trillion dollar deficits his whole time in office. We just went into debt another two trillion. Why particularly is it *now* that we no longer have any money?

      If we let people leave their homes again: A, they won't come out because they are terrified of dying from sickness; B, we will be forced to just lock things down *again* in four weeks as the virus goes even crazier than it is going now costing us *way more*.

      This crisis has utterly incinerated the Ayn Rand world view that everything will be fine if you just leave the economy alone. The Keynesians are having their day here, and thus far *both parties* are fully on board (now that the president is a Republican, GOP politicians are [surprise surprise] on board with fiscal stimulus).

      We are on the edge of a *demand crisis* (aka deflation) here that is going to be far worse than any recession in any of our lifetimes. Our GDP is going to shrink and only massive spending to the tune of 20 or 30 percent of our GDP is going to keep us from falling into the abyss. Spending now will *save us money* in the long run by keeping the economy operating in a more or less normal way after the pandemic is over. Not spending now will do almost *permanent damage* that will take *decades* to climb out of.

      The right approach here is a "pause" of the US economy that is fully insured by the Federal government using debt. That way everything resumes as normal after the quarantine. Anything else will cause our economy to *restructure* and that will be extremely ugly.


      Collapse
      1. Caleb Doxsey

        You are correct that Trump ran trillion dollars deficits. It's this behavior (from both parties) that puts us in the dire financial situation. We have been acting like there's a crisis during boom times and now we get to pay for it.

        Things are opening up now because governors got the bill and realized just how bad it was going to be. They can't afford to shut down the economy. If they continued tons of government services will have to be cut back. Even now here in Colorado they're pulling back educational spending because they already used up half the emergency fund. Also the DMV is closed. Once we start laying off police officers and fire fighters maybe people will realize how bad things are.

        I don't know the mood of most of the country. I hope you're wrong about them being terrified. If just 50% of people started living again it would help enormously. We will see in a few weeks, but I think Texas and friends will be in much better shape.

        Lock down has not been shown to be an effective strategy. Some places with the most extreme measures have seen worse outcomes than the places with more lax measures. No one can really explain it.

        Probably 0.5% of the population is going to die of this over the next few years. Lock down won't prevent that so now we need to focus on something we can actually do something about.

        Even during WW2 we recognized the need for industrial capacity to keep things going. Without the economy none of these plans are possible. Yes people are going to die but we don't have a choice.

        It was never a choice between saving lives and the economy.

        I don't have an Ayn Rand view of the world and neither do Republicans. They spend just as much as Democrats. Fiscal responsibility has no significant representative in American politics today.

        So how can this crisis have demonstrated the failure of an ideology that no one believes in?

        Anyway we did pause the economy. And we will be forced to *restructure*. It will take decades to come back from this. We already crossed that threshold.

        Collapse
        1. Avatar photo
          Pat Riot

          I agree that running a deficit in a non-crisis was wrong. But why in particular should we pay for this mistake *now*?

          Things aren't exactly opening up, and the virus doesn't care what governors think.

          If we open up too early and the virus starts spreading out of control, THINGS. WILL. GET. FAR. WORSE. And we will have a *longer* quarantine which will cost us *more* money. Nobody is going to show up for work if they think they can catch a virus there and die from it.

          And I don't know where you got it that the quarantine doesn't work, because every single bit of data published that I have seen shows that it does. It's also common sense.

          Collapse
  4. Avatar photo
    Jlenhikes

    I would like to see the dispatch dedicate some more time to the health fallout from the lockdown: sick people failing to receive medical care, testing, and diagnoses; people lacking access to addiction and mental health services; people in the midst of fertility treatment and workup, etc.

    I’ve been told countless times that the bottom line for the lockdown is saving lives. I’m wondering about all these perhaps hundreds of thousands of people who are suffering that we don’t value as much as someone who might contact the coronavirus.

    Collapse
  5. PM

    The good news is that there's at least an acknowledgement that not everyone is doing well. In other words that one can work and still be unable to make a living.

    I have to admit that there's something of an irony here in terms of whether business or government should pay.

    I would tie the minimum wage to cost of living. To make the conversation easier to discuss here, let's say that it should be $15. Business would pay $11. Government would pay $4.

    Businesses would have to pay a 10% minimum tax. So if they're currently paying 0 to 9.99% it would go to 10. They could go below 10 by taking over the government's $4.

    Otherwise, business would not raise wages and would let government pay.

    I would create grants that would pay companies to bring manufacturing/assembly/factory work back to the USA. That's the carrot. Depending on how well that goes or doesn't go, the stick would be passing legislation.

    Housing is problematic. It should be blindingly obvious that x number of households make x amount and are realistically going to be able to pay x amount for housing. So x number of housing units need to be available. If that number isn't available then the city should be reaching out and advertising for someone to address it. If the number still isn't addressed, then the city will need to build it in a public/private partnership.

    Collapse
  6. Chris Underwood

    This article calls for increased welfare spending, additional and new welfare programs, and government-created make-work jobs. How is this fiscally conservative in the remotest way?

    This is insanity, and articles like this make me seriously question my Dispatch subscription. I was under the impression I was subscribing to a fact-based reporting organization with analysis and commentary from conservative, small government viewpoints. Much like those of Goldberg and French.

    The proposals listed here belong better with Vox and Slate than on The Dispatch.

    Collapse
  7. Avatar photo
    Jeremiah

    I have a huge problem with the government directly manufacturing jobs.

    Collapse
  8. Avatar photo
    Logical

    The title of this is karma, given the publication is managed by some of the foremost proponents of hands off economy on Fox News.

    Collapse
    1. Avatar photo
      Logical

      "Despite the increasing murmurs from Democrats such as Sen. Elizabeth Warren Warren, politicians should proceed with caution on adding business mandates, such as greater unionization or a higher minimum wage, that would additionally burden business (and thus reduce employment) in an already constrained time."

      For what? Asking Uber to pay for social costs? Guess who is paying now?

      Collapse
  9. Avatar photo
    Jim Tung

    "Complicating the return to work is that some workers can earn more in unemployment than employment because of the supplemental $600 a month in emergency unemployment insurance benefits, expiring in July."

    Is this an error? Isn't the supplemental unemployment $600/week?

    P.S. Also, there does not appear to be a mechanism for submitting errors for correction.

    Collapse
  10. Victoria Ferauge

    The author proposes a payroll tax holiday but it is not clear to me how that would be of benefit. It will not help those who are unemployed. For those still on a payroll watching the ranks of the unemployed grow and fearing the virus still raging in the land, I am not convinced that they will go on a spending spree with the extra cash. Money in people's pockets may simply stay in their pockets. That would be a very rational and sensible response. So is the idea here that for the sake of the economy we are hoping/assuming that people will be neither of those things?

    Collapse
    1. Avatar photo
      Jake

      Businesses pay the payroll tax as well, so I think the author is assuming the employer will pass that savings on in the form of higher wages.

      Collapse
    2. Avatar photo
      Jeremiah

      I think the payroll tax holiday was in the context of helping businesses and making sure people are not choosing to remain unemployed.

      Collapse
Load More