Vox Executive Editor Matthew Yglesias discovered the problem of long-term unemployment two years ago. He didn’t understand the causes then, and he sure doesn’t understand them now.
He calls his chart (not this?) “the scariest chart in the American economy today.”
Note the big jump in long-term unemployment around the time that President Obama came into office in January 2009. Notice, too, that there has been noticeable improvement in the past year or two (not since December 2014, as the chart misleadingly suggests).
Gee, what could possibly account for that?
Once again, we’ll quote President Obama’s former Treasury Secretary Larry Summers:
To fully understand unemployment, we must consider the causes of recorded long-term unemployment. Empirical evidence shows that two causes are welfare payments and unemployment insurance.
…
Unemployment insurance also extends the time a person stays off the job. [Kim] Clark and I estimated that the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months. If unemployment insurance were eliminated, the unemployment rate would drop by more than half a percentage point, which means that the number of unemployed people would fall by about 750,000. This is all the more significant in light of the fact that less than half of the unemployed receive insurance benefits, largely because many have not worked enough to qualify.
Welfare payments and unemployment insurance. Strangely, there is no mention of either of these factors in Yglesias’ Vox article. Go figure.
Related:
The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?
14 MILLION MORE ON FOOD STAMPS UNDER OBAMA
Brilliant: Matthew Yglesias discovers long-term unemployment is a problem
