How can Obama solve long-term unemployment?

@CNNMoney August 21, 2011: 9:11 AM ET
Government-subsidized jobs may be one way President Obama can fix long-term unemployment.

Government-subsidized jobs may be one way President Obama can fix long-term unemployment.

NEW YORK (CNNMoney) -- Want to help the long-term unemployed, President Obama? Subsidize their paychecks, experts say.

The president next month plans to unveil a job creation package, looking to address the top concern on Americans' minds. Though details remain scarce, some of the measures will seek to help the long-term unemployed.

But assisting those who've been jobless for months, or even years, will not be simple. Some 13.9 million Americans remain unemployed, 44% of whom have been out of work for six months or longer.

Both conservatives and liberals say addressing the needs of the long-term unemployed will likely require additional government spending, which won't be easy to get past the deficit hawks in Congress.

Paychecks from Uncle Sam

One way to get the long-term unemployment back on the payroll is to have the government cover their paycheck for a period of time, according to experts. This gives companies a risk-free way to see what the employee can contribute, while giving workers a possible foot in the door.

"It can show employers how good somebody is, how valuable they are to the company and then there is the incentive to bring them on after," said Judy Conti, federal advocacy coordinator, National Employment Law Project.

She pointed to the Temporary Assistance for Needy Families emergency fund as an example of how the government can help get people working again. Some 39 states and the District of Columbia used about $1.3 billion of the fund, which was part of the 2009 federal stimulus plan, to create new subsidized employment programs or expand existing ones.

More than 260,000 low-income adults and youth were placed into jobs before the program expired last September, according to two advocacy groups. The majority of them were in the private sector. States used the federal stimulus funds to pay part or all of these workers salaries for several months.

Conti thinks the Obama administration could push for a similar program now, though she does not support using unemployment insurance funds to do so, as the president mentioned on his jobs tour last week.

Are my job skills useless?

Government subsidies can also be used to place the unemployed in non-profit jobs, particularly in the social services sector, which is having trouble meeting the increased demand, said Bill Rodgers, chief economist, Heldrich Center for Workforce Development at Rutgers University.

"Let's put them into these types of projects to help keep them active so their skills don't atrophy and to plug up their resume," he said.

Ideally, once they are back in an office, the workers can remain at the non-profit or transfer to a private sector job, Rodgers said.

More job training

Conservative experts have mixed views of the idea of government-subsidized jobs, leaning instead to job retraining programs.

The government can provide a subsidy to employers as an incentive, but should also help them upgrade the skills of the unemployed so they can become more marketable, said Maurice McTigue, a scholar at the Mercatus Center at George Mason University.

"We should focus on improving the employability of the unemployed, not creating jobs for them," he said.

While a multitude of job training programs already exist, not all of them are effective, said Alex Brill, research fellow at the American Enterprise Institute. The administration could create an "education bank" that could spark different initiatives to prepare the unemployed for the jobs in their area. Educational institutions and start-up companies could vie for the funding.

Some of the job creation proposals being bandied about met with mixed reviews.

For instance, spending government money on infrastructure projects could help, but it might take time for the program to ramp up. So it could be awhile before jobs become available.

But all the experts agree that the best way to help the long-term unemployed is to kick start the economy.

"There's no silver bullet to addressing the needs of the long-term unemployed," Rodgers said. "The first piece of business is to strengthen the overall economy and increase the pool of jobs." To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
View rates in your area
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
  • -->

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.