Why more isn’t being done about unemployment

August 3, 2012 at 2:48 pm 3 comments

This might be a bit on the wonky side, but I think worth some discussion. Jonathan Chait of the Daily Intel, New York Magazine’s blog covering political news, has a post today called “Why Washington Accepts Mass Unemployment.” It’s worth a read, as it provides insight into something related to our blog from yesterday– that while the economy was officially in recovery as of June 2009, the results have been largely uneven. For those who have jobs and live in areas where the jobs numbers are looking up, the recession feels like it’s really over because they personally have not felt the impacts the economic crisis as severely as others. For these millions of others, the very real impacts of the recession persist as they struggle with unemployment, underwater mortgages, and less than rosy economic outlooks for their communities. And this disparity in perspective has a impact on our nation’s economic policies.

As Chait puts it,

In the years since the collapse of 2008, the existence of mass unemployment has stopped being something the economic powers that be even pretend to regard as a crisis. To those directly impacted, the economic crisis is an emergency, a life-altering disaster the damage from which will endure for years. But most of those in a position to address it simply have not seen it in such terms. History will record that the economic elite has viewed the economic crisis from a perspective of detached complacency.

He illustrates this point with the refusal of the Federal Housing Finance Agency to offer lower rates on mortgages to homeowners with underwater mortgages. While this would provide homeowners with some relief against the possibility of defaulting on their government-backed mortgages (which would save the government money), their lower payments would free up some of these households’ funds so that they could spend on other things (which would be good for the economy). It seems that those in positions of power acknowledge this as a problem, but don’t see it as a priority.

Another point that Chait makes is that those who are more affluent, who have higher levels of education, have been largely buffered from the devastating impacts of unemployment. The unemployment rate for workers with a bachelors degree is 4.1 percent, compared to 8.7 percent for those with a high school education, and 12.7 percent for those with less than high school. The rates grow even more disparate when you look at unemployment by race– the rate for whites as of July 2012 was 7.1 percent, compared to 14.1 percent for blacks.

Chait’s argument is that if our elected officials in Washington are listening to their most affluent constituents, and if those people haven’t felt the depth of the impacts of the economic crisis, then they will not be able to relate or feel a sense of urgency around these issues. “It is more akin to a famine in Africa,” writes Chiat,

“For millions and millions of Americans, the economic crisis is the worst event of their lives. They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth. But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.

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Entry filed under: Economic Development, Economy, Housing, Jobs & Employment. Tags: , , , .

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