In his July 22 testimony to Congress, EPI President Lawrence Mishel said that a vigorous jobs creation agenda was still needed to “fill the huge jobs hole.”
Mishel testified one day after Federal Reserve Chairman Ben Bernanke warned that unemployment rates would remain elevated for several years, and in comments to the House Committee on Financial Services, he provided several additional sobering forecasts. Mishel said the unemployment rate, which was 9.5% in June, will likely rise again before the end of the year. Mishel also relayed the recent Congressional Budget Office forecast that in 2011, four years after the recession began, unemployment is expected to average 9.5%.
Efforts to provide more assistance to millions of unemployed workers cleared a major hurdle this week when Congress approved a measure to preserve extended unemployment insurance benefits for the long-term unemployed. The law will restore unemployment insurance benefits to more than two million unemployed workers and will prevent millions of others from losing benefits.
But Mishel also stressed that much more action was still needed to address the severe shortage of jobs. In June, 45.5% of all unemployed workers had been looking for work for more than six months, a level not seen since the Great Depression. About one-quarter of all unemployed workers today have been jobless for more than a year.
Because the official unemployment rate does not count discouraged workers who have stopped looking for jobs, or those who want to work full-time but can only find part-time work, Mishel further stressed how a much larger portion of workers will be underemployed, not earning a sufficient income and putting an additional drag on growth. In June, the underemployment rate was 16.6% nationwide, but significantly higher – 23.6% – for black and Hispanic workers, and for those with a high school degree or less. Workers with less than a high school degree had an unemployment rate of 14.1% in June, and an underemployment rate of 31.9%. “In 2010, I expect that roughly a third of the workforce and more than 40% of minority workers will be unemployed or underemployed at some point during the year,” Mishel said.
Mishel, who on multiple occasions has testified about the severity of the two-year-old jobs crisis, acknowledged that many lawmakers had likely grown tired of the topic. “It is surely true” Mishel asserted, “that American families are even more tired of having to endure extreme labor market distress with no real end in sight.”
The reason that a more robust effort is required, he said, is that the current pace of job creation is not nearly strong enough to create the 10.6 million jobs needed to return to pre-recession levels of unemployment: Even if the country could achieve the strongest rate of job growth seen during the late 1990s (2.6% in 1998) and sustain that indefinitely, it would still take until 2015 to return unemployment levels to the pre-recession rate of 5%.
In his testimony, Mishel also outlined a number of factors that could make a bad situation even worse, chief among them, a premature focus on deficit reduction.
“Creating more jobs in the short run will necessarily mean having higher deficits in the next few years,” he said. “One should not invoke worries about future deficits as a reason to avoid creating jobs now. In fact, these are complementary strategies, creating jobs and more taxpayers now is the way to move the fiscal situation to a healthier place.”
He urged Congress to take certain immediate steps: restore a weekly supplement to unemployment benefits; continue the extension of COBRA subsidies to help the unemployed pay for health care; provide relief to cash-strapped state governments; and invest in infrastructure, such as school modernization and modernized transportation, which could fuel job growth going forward.
