Long-term unemployment in the U.S. has reached a level not experienced since the Great Depression. Over 40% of the currently unemployed have been jobless for at least six months, translating to roughly 6.2 million Americans. Unemployed workers are now more likely to drop out of the workforce than to find a job. Some economists have begun to fear a “jobless recovery,” in which the economy improves but high unemployment becomes the norm. Meanwhile, dynamic human capital is going to waste as unemployed workers have no productive outlets for their skills.
President Barack Obama’s jobs plan attempts to address the crisis of long-term unemployment by providing tax credits of up to $4,000 for employers who hire applicants who have been out of work for at least six months. This is a vital first step toward providing more opportunities for discouraged job-seekers who are locked out of the job market by employer discrimination.
Discrimination against the long-term unemployed has become fairly standard practice by employers seeking to filter large numbers of applicants. Some job advertisements even include the stipulation that only the currently employed or recently unemployed should apply. The legality of this discrimination is debatable. Unemployment is not a protected status like race or age, but discrimination based on employment status does often have a “disparate impact” on minorities and the elderly, which could violate civil rights laws. In March, New Jersey banned the practice. Congress is considering similar legislation.
Employers commonly argue that the long-term unemployed inevitably are less attractive applicants than their employed counterparts. They presume that there must be a reason why they have been unable to find work. Workers who have not been active in their respective industries for long periods of time may have fallen behind on technological advances, and their skills may have atrophied. Until recently, these were often reasonable assumptions to make about the long-term unemployed. But the current employment crisis has drastically transformed the job market to the point that the old rulebook on hiring practices is outdated. The average unemployed worker may still be less qualified than the average employed worker, but given the widespread nature of the unemployment crisis, using employment status as a filter now excludes many excellent candidates from consideration.
Some criticism of Obama’s jobs plan has come from the unemployed themselves, particularly the so-called “99-ers” who have been out of work for so long that they have depleted their allotted 99 weeks of unemployment benefits. They take issue with the plan’s definition of “long-term” as six months or more. They worry that employers will strive to meet the minimum requirements for the tax credit but continue to discriminate against applicants who have been jobless for more than a year.
While the tax incentive in Obama’s jobs plan is only a first step toward tackling the crisis of long-term unemployment, it is a necessary one. Otherwise, discouraged job-seekers will remain persistently locked out of the job market. Unemployment figures would decrease as the jobless continue to drop out of the workforce, but the pain faced by millions of Americans would not be alleviated.
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