Binyamin Appelbaum recently posted a piece in The New York Times’ Economix blog regarding the job prospects for the long-term unemployed. A significant number of the long term unemployed are not white, a little older, and a little more educated. Employers, right or wrong, may view the long time out of work as a strike against the long term unemployed when reviewing applications for work. The piece asks what types of monetary or fiscal policies may help to alleviate the pain of the long term unemployed? Below is the comment I left on the post.
“I don’t see how further tax cuts would help. Given that businesses are getting more out of the permanent labor on their payrolls, tax cuts will simply go to their bottom lines. There is nothing wrong with that from an earnings stand point, but as a public policy approach to solving unemployment, it will have the most minimal impact.
Higher interest rates attract investor capital. The Federal Reserve may have to consider speeding up their tapering and start selling off more of its portfolio of treasury and asset backed bonds, taking money out of the system and driving up rates. As more capital flows back to the U.S., increases in employment has a higher probability of increasing.”
What do you think the appropriate policy prescription should be, if any, for addressing long term unemployment? Should more weight be placed on social and community agents, i.e., family, friends, civic and community organizations, etc., to help resolve the problem?