Don’t give up on America’s long-term unemployed just yet
Federal Reserve researchers argue that the central bank has been right not to give up on the ranks of America’s long-term unemployed.
The plight of the long-term jobless has been at the heart of Fed chair Janet Yellen’s position that the US central bank can and should continue to provide support for the US economy in the form of low interest rates and an ongoing—though tapering—bond-buying program.
Opponents have said there isn’t much that Fed policy can do, and that unduly long periods without a job have rendered large swaths of American workers unemployable through a process known to wonks as hysteresis.
But new Federal Reserve research contradicts this pessimistic assessment, and suggests that the recent decline in US unemployment has been driven, largely, by improvement in long-term unemployment. The researchers write:
In many ways the fight against unemployment during the recent recovery has been mainly one of bringing down the long-term unemployment rate. By the end of 2010, short-term unemployment rates (the blue and green lines) were only 1/2 percentage point above their pre-recession levels, while the long-term unemployment rate (in red) was markedly elevated. Since then, about two-thirds of the decline in the aggregate unemployment rate can be accounted for by a retracing of the long-term unemployment rate.
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http://qz.com/238498/dont-give-up-on-americas-long-term-unemployed-just-yet/