What About the Jobs Deficit?

May 27, 2010 at 5:27 pm

Members of Congress who are opposing the pending jobs legislation on the grounds that it isn’t fully paid for and will increase the current deficit are focusing on the wrong deficit.  Yes, we have a long-term budget deficit that we need to take very seriously.  But the current deficit to worry about right now is the jobs deficit.

Despite encouraging signs of revival in the job market, we are still down almost 8 million jobs from where we were at the start of the recession in December 2007.  And, of course, population growth since then has expanded the potential labor force and hence the number of jobs we need to create to restore full employment.

There are roughly six unemployed workers for every job opening, 46 percent of the unemployed have been looking for work for at least six months, and the average unemployed worker has been looking for work for 33 weeks — by far the highest average on record and well above the 20 or so weeks in the deep 1981-82 recession.

If Congress leaves town without extending the temporary unemployment insurance benefits set to expire next week, the unemployment insurance map will change from this:

Unemployment Map

to this:

Unemployment Map

(For an explanation of the different types of unemployment insurance expansions cited in the maps, see here.)

Letting these benefits expire wouldn’t just impose unnecessary hardship and uncertainty on the unemployed.  It would also slow the recovery by depriving the economy of a needed boost that would encourage stronger job creation.  As my colleague Paul Van de Water and I have argued, this is too high a price to pay to avoid the very small long-term deficit impact from passing the full jobs bill.

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More About Chad Stone

Chad Stone

Chad Stone is Chief Economist at the Center on Budget and Policy Priorities, where he specializes in the economic analysis of budget and policy issues. You can follow him on Twitter @ChadCBPP.

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4 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. jonathan #

    It’s pretty well established that unemployment insurance adds somewhat to the length of time a person may stay unemployed IF – not the capital letters – the local area has a relatively low unemployment rate. Even if the rate is somewhat higher, there may – repeat, may – be a smaller effect. These effects are drowned out by the also unarguable fact that UI provides lubricant to labor markets by allowing employers to let people go in the knowledge that UI will carry them to their next job. This helps enable companies to manage their workforces and it keeps employees in the market, both for in the jobs workforce and in the local area.

    Now right wing kooks have decided that UI is a vacation for lazy people. This is not justified by research. For example, any extending of being jobless by UI is measured in days, not months. It has also never been shown to exist when jobs are scarce, which makes sense.

  2. Richard #

    Mr. George Ianev, as a former CFO and current consultant to manufacturing firms, has probably not experienced unemployment in his lifetime, at least not the type where one is without assets and without the prospect of a job for months on end. The abuse of the unemployment system is modest, especially compared with (a) the suffering alleviated and (b) the massive abuse of trust and funds in some white collar jobs (c.f. the banking industry).

  3. George Ianev #


    I completely disaggree on your ‘too great a price.’ Unemployment insurance was meant as a temporary stop-gap. After so many extensions it has become an entitlement. There are plenty of jobs at the low end on the payscale, but few takers for them. Why would someone take an $8 an hour factory job when they can earn that much off of the government dole and sit on the couch the entire day.

    George Ianev

    • jerseycityjoan #

      George Lanev:

      Please share with us the names and location of all the many employers who have “plenty of jobs at the low end on the payscale, but few takers for them.” I will gladly forward your list to websites set up to help the unemployed get through this difficult time.

      As noted in the article above, this recession has been far worse for the long term unemployed than others we’ve had. I believe the federal government’s stattistics show that in 2010, the ratio of unemployed persons per job opening has been somewhere between 5-6:1. Only one person can get the job, the other 4-5 people get nothing.

      You might not like the reality of the situation, none of us do. How lucky for you that you have a job and don’t desperately need Unemployment Benefits. It’s so easy to say no to others. But if you’d been jobless since September 2008, wouldn’t you want your Benefits to be extended? Or would you be willing to abide by your principles and be homeless?

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