Long-Term Unemployed at All-Time High!

In a typical business cycle the long-term unemployed comprise 20-25% of all unemployed. “In recent months, that percentage has jumped to nearly 40% — an all-time record!” writes Cato’s Dan Mitchell. A strong economy is the salve for long-term unemployment. Big government is not. But both sides of the aisle are to blame. “Under both Presidents Bush and Obama, the size and scope of government has expanded, and the United States — which had the world’s third-most free-market economy when Bill Clinton left office — has now dropped to 17th in the Economic Freedom of the World rankings,” Mitchell explains and continues here:

We also need to make sure the unemployed don’t get lured into long-term dependency. One glaring example of misguided big-government policy is the argument to endlessly extend unemployment benefits. That sounds compassionate, but according to economists such policies discourage the unemployed from aggressively seeking new jobs.

There is also persuasive evidence that employers are reluctant to hire people (regardless of any “pledges” they may sign) who have been out of work for lengthy periods, which makes the President’s preferred approach of more unemployment benefits akin to an overprotective parent who hinders a child’s development.

Moreover, Obama’s proposed hike in the minimum wage would actually counteract any good his pledge would do. Why? Increasing the minimum wage is the equivalent of sawing off the bottom rungs on the economic ladder. Simply stated, businesses create jobs when they think a new employee will help the bottom line. Artificially raising the cost of workers — particularly those with marginal skills — is a recipe for creating more unemployment.

The president’s effort to get companies on board with hiring the long-term unemployed should be applauded, but he shouldn’t for one second think that it will solve the problem. In fact, too many of his other proposals would serve only to exacerbate the problem the long-term unemployed are facing. Instead, Obama should take a page out of the Reagan and Clinton presidencies and take action to get to the root of unemployment: economic growth.

Bio
Latest Posts

E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.

E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.