Bernanke: ‘Significant Amount of Time’ Before Jobs Return
This morning, Federal Reserve Chairman Ben Bernanke testified before Congress on the condition of the economy. His comments were generally positive, but he cited serious concerns with the labor market and said it will take a “significant amount of time” before the 8.5 million jobs lost in the recession return.
I am particularly concerned about the fact that, in March, 44 percent of the unemployed had been without a job for six months or more. Long periods without work erode individuals’ skills and hurt future employment prospects. Younger workers may be particularly adversely affected if a weak labor market prevents them from finding a first job or from gaining important work experience.
After that statement, Bernanke turned to other matters. The Fed, despite the protestations of economists such as Joe Gagnon, has signaled that it will not do more to combat unemployment. That leaves the action to Congress, where thankfully there are a number of proposals to combat high rates and long spells of joblessness, and their side-effects.
A good plan is Rep. George Miller’s (D-Calif.); his Local Jobs for America Act would provide $75 billion over two years to states to boost hiring. (Several members of the House pushed for the bill today.) Another is the continued extension of unemployment benefits as a stopgap measure. Speaking against a temporary one-month bill on the Senate floor this morning, Sen. George LeMieux (R-Fla.) argued that the benefits are non-emergency and therefore should be pay-go: “Has it been unforeseen that we were going to have to extend unemployment compensation?…Of course it is not. We knew that we were going to have to do this, but there is an unwillingness in this Congress to pay for things.” Economist Mark Zandi countered by saying that not passing benefits would be “counterproductive” and that benefits should be paid for later in the economic upswing.