A jobs agenda for the right


Job seekers fill out job applications for recruiters as they attend a job fair in New York, June 11, 2013.

Article Highlights

  • Over the past 4 years, the unemployment rate has dropped from a high of 10% in October 2009 to 7% this past November.

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  • The fact remains, however, that an unemployment rate of 7% is much too high.

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  • The economy is home to 1.3 million fewer jobs today than when the Great Recession began.

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  • The three-month moving average of employment gains is currently 193,000 jobs per month.

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Editor's note: This article originally appeared in issue number 18 of National Affairs from Winter 2014. Read the full article here.


Over the past four years, the unemployment rate has dropped from a high of 10% in October 2009 to 7% this past November. The fact remains, however, that an unemployment rate of 7% is much too high, and that even this troubling rate masks the true weakness of the labor market.

A quick review of the most recent labor-market data tells the story. A broader measure of unemployment includes both workers who want full-time jobs but have to settle for part-time work and workers who are marginally attached to the labor force. Defined this way, the unemployment rate in November was 13.2%, more than four percentage points higher than it was at the beginning of the Great Recession. The economy is home to 1.3 million fewer jobs today than when the Great Recession began. The three-month moving average of employment gains is currently 193,000 jobs per month. At that rate, the Brookings Institution's Hamilton Project calculates that the jobs gap will not close until more than five years from now.

Low-skill workers in particular are still suffering terribly in the labor market. The unemployment rate for African-American teenagers is 35.8%; for white teenagers, it is 18.6%. Just under 11% of high-school dropouts are unemployed. Disability rolls have grown as the unemployment rate has risen.

Long-term unemployment is an even more daunting problem. Both the number of long-term unemployed workers (who have been actively looking for work but unable to find jobs for 27 weeks or longer) and their share of total unemployment are at post-war highs. The chart below describes an economic and human catastrophe — productive economic resources asking to be used are sitting on the sidelines, as millions of unemployed workers lose their sense of dignity, their dreams and aspirations, and their ability to live a flourishing life.

The labor-force participation rate fell to its lowest level in over three and a half decades in October. The share of the population with jobs — a broad measure of the overall health of the labor market — plummeted during the Great Recession and has not increased during the recovery.

Some dismiss this employment decline as a consequence of the fact that the population is getting older and that young people are working less. But this argument is easily refuted by looking at the employment rate for Americans between the ages of 25 and 54. As the chart below demonstrates, the employment rate for people in their prime working years — when essentially everyone is too old to be in school but too young to retire — has a long way to go before it recovers from the Great Recession.

Unfortunately, the longer such workers are without a job, the more these economic and social problems compound. Indeed, if the situation does not significantly and quickly improve, we will be living with the effects of today's labor market for decades to come. Many of today's young workers who are unable start their careers will have damaged work lives for years into the future. Many of today's long-term unemployed will likely never finish their careers — at least not in the manner they had planned. Some of the damage will be borne by the children of the long-term unemployed. Tomorrow's public-assistance rolls will be shaped by today's labor market. The economy's productive capacity years into the future depends to a large degree on the health of the labor market today.

This employment crisis is one of the most important and immediate social and economic problems facing the country today, and none of our elected leaders can afford to ignore it. Yet both parties are more or less doing just that. The Democrats talk about jobs policies, but their approach to the problem — with its emphasis on massive short-term fiscal stimulus and inefficient public spending — has proven neither popular nor (at least in the form attempted at the beginning of the Obama years) up to the challenge. It consists of the timeworn economic mantras of the left and is not equipped to address the problems we now have.

Republicans are, if anything, worse off. They often refuse to even acknowledge the problem, or to acknowledge the fact that it requires ambitious policy solutions. They, too, mostly repeat familiar formulas from their party's glory days which offer proposals that do not seem well connected to today's economic realities. Some of their ideas — fostering a more stable business climate and financing lower tax rates by shrinking a few tax loopholes, for example — could help, but they are not nearly adequate for the challenge America confronts. To offer the public a plausible agenda for a true recovery of the labor market, Republicans will have to dig deeper.

It is, however, from the right and not the left that solutions are likely to come. In the years since the Great Recession, liberal ideas have been tried and found wanting. Conservative ideas and intuitions have not yet been put to work on the problem. If they were, they could well point to some promising answers.

To read the full article, please visit www.NationalAffairs.com.

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About the Author


Michael R.
  • Michael R. Strain is a resident scholar at the American Enterprise Institute, where he studies labor economics, public finance, and applied microeconomics. His research has been published in peer-reviewed academic journals and in the policy journals Tax Notes and National Affairs. Dr. Strain also writes frequently for popular audiences on topics including labor market policy, jobs, minimum wages, federal tax and budget policy, and the Affordable Care Act, among others.  His essays and op-eds have been published by National Review, The New York Times, The Weekly Standard, The Atlantic, Forbes, Bloomberg View, and a variety of other outlets. He is frequently interviewed by major media outlets, and speaks often on college campuses. Before joining AEI he worked on the research team of the Longitudinal Employer-Household Dynamics program and was the manager of the New York Census Research Data Center, both at the U.S. Census Bureau.  Dr. Strain began his career in the macroeconomics research group of the Federal Reserve Bank of New York.  He is a graduate of Marquette University, and holds an M.A. from New York University and a Ph.D. from Cornell.

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