More than six years after the Great Recession technically ended, there are still about two million Americans who are out of work and have been trying to find a job for at least 27 weeks. With businesses reluctant to hire someone with a large gap in their resume, long-term unemployment becomes a self-fulfilling prophecy for many workers. The human costs can be severe: workers with long spells of unemployment are much more prone to depression, and even their children tend to have lower levels of emotional wellbeing.
While the long-term unemployment rate is slowly declining from the peaks it reached after the Great Recession, some of this decline is because workers are giving up on ever finding a job, and no longer being counted as unemployed. Instead, they have become living proof of Martin Luther King, Jr.’s warning in 1961: “When human values are subordinated to blind economic forces, human beings can become human scrap.”
Some policymakers may believe that long-term unemployment is not a solvable problem, but allowing it to continue unabated is actually a policy choice. Last week, the Center for American Progress put forth a new proposal that offers a different choice by establishing a policy to automatically expand national service programs, such as AmeriCorps, to put people back to work during times of high long-term unemployment. These programs would be scaled down to their baseline levels as the economy returns to normal.
We know this can work because it has worked before. New Deal programs put millions of Americans back to work during the Great Depression, bringing the unemployment rate down from 16.9 percent to 9.9 percent in 1936 alone and building public works that still exist today, such as LaGuardia Airport and Camp David. Today’s national service programs continue this legacy by engaging Americans to solve problems in education, energy, housing, conservation, and other vital sectors of society.
Studies have found that national service helps participants build skills and improve their career prospects, and participating in these programs would directly address the problem of resume gaps for the long-term unemployed.
CAP proposes automatically creating 25,000 new national service positions for every tenth of a percentage point by which the long-term unemployment rate exceeds its historical average of 1 percent, with guardrails to ensure that these temporary positions are not created or eliminated too suddenly. If such a program had been in place in the wake of the Great Recession, it would have ultimately created over 400,000 national service positions.
These new positions would be temporary and designed specifically to wind down as long-term unemployment returns to normal levels. Such positions could focus on project-based work, for instance, by reducing maintenance backlogs in conservation and infrastructure. Temporary national service positions can also respond to increases in demand for particular types of assistance during recessions. For example, national service could temporarily engage laid-off professionals in the mortgage and legal sectors to provide counseling for families facing foreclosure, similar to the way that Justice AmeriCorps currently provides legal services for unaccompanied immigrant children.
This policy would make national service an automatic stabilizer, meaning that the federal government would spend more to mobilize national service when the economy is weak, and reduce this spending when the economy is strong. Unemployment insurance and food stamps are also automatic stabilizers, ensuring that the ups and downs of the business cycle are less disruptive to American households and communities. From a broad economic perspective, automatic stabilizers are ideal fiscal policies because they pump more money into the economy when demand is weak and businesses lack customers for their products, and then scale back during expansions to prevent the economy from overheating.
Unfortunately, the United States is only scratching the surface of the potential for national service. In 2009, Congress authorized a major expansion of national service in the Edward M. Kennedy Serve America Act, which authorized 250,000 AmeriCorps positions. But when lawmakers failed to follow through with the necessary funding, national service became just another casualty of the misguided austerity that began in 2011 with severe budget cuts and destabilizing political brinksmanship.
As a first step, Congress should fully fund the Serve America Act. At the same time, lawmakers should also lay the groundwork for an automatic stabilizer that would further expand national service in response to future spikes in long-term unemployment.
Reengaging long-term unemployed workers is not charity; it is economic necessity. The American economy is fueled by American workers. What President Franklin Roosevelt recognized in 1934 remains just as true today: “No country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance.”