NPR

Living Without Work: The Long-Term Unemployed

Jobseekers line up to enter a career fair in Los Angeles. Last month, the nation's unemployed totaled 15.1 million. (Getty Images)

For many of the long-term unemployed, time has run out.

Until this past week, emergency jobless benefits lasted as long as 99 weeks for people in the hardest-hit states. But with five people unemployed for every job available, 99 weeks might not be long enough.

Since the 1950s, the federal government has consistently extended emergency unemployment benefits whenever the jobless rate has been more than 7.5 percent. On Capitol Hill, lawmakers are using unemployment benefits as a sweetener for a deal on the Bush-era tax cuts, working on a compromise that would temporarily extend both policies.

Alexandra Jarrin, 49

"We are a huge, huge population of people that just want jobs."

Sustained high rates of unemployment could result in an unemployed underclass disconnected from the workforce, economist Kevin Hassett says. He tells NPR's Audie Cornish that it may be time to rethink the federal unemployment insurance program altogether.

The Psychological Cost

A lengthy stint without a job doesn't just take an economic toll, says economics professor Arthur Goldsmith. It has real physical and psychological costs.

"Work organizes a person's day," Goldsmith tells NPR's Cornish. "It connects you with other people. It places you in part of something that's bigger than just you."

Workers who have lost their jobs may miss the structure of employment and feel a loss of agency, says Goldsmith, who teaches at Washington and Lee University in Virginia. For some people, it can result in anxiety and depression, as well as self-destructive behaviors such as drug and alcohol abuse, and even violent outbursts.

Goldsmith says that after a long period of unemployment, the jobless may experience drastic psychological changes, similar to going through stages of grief.

Most newly unemployed people approach the job search with a good effort. "They search hard," he says. "And they believe the bout will be short and [after] a good night's sleep … it will all be over."

Helplessness starts to set in as weeks and months of unemployment go by.

"That then begins to change your mindset," Goldsmith says. "But it also alters the way potential employers look at you."

Still, even if people get a job offer after being unemployed for a long time, he warns, they shouldn't automatically take it.

"If they were to take a job that would not enhance their marketability in the future, it can actually be damaging to them as they search for jobs when the economy actually begins to grow again."

Alternatives To The Current Benefits System

Hassett, director of economic policy studies at the American Enterprise Institute, points to Germany's work-sharing program as a viable alternative to the current federal unemployment insurance program in the U.S.

In lean times, German employers can reduce the hours for some of their workers, who then receive a fraction of the unemployment insurance they would have been eligible for if they were laid off completely.

"That's good for employers because when they start to expand again, they don't have to have a costly search for new workers," Hasset says. "And it's great for workers because they don't have to be disconnected from the workforce, and they don't have to go through the shame of saying they're unemployed."

Countries with work-sharing programs will suspend them when "times are good again," he says.

In 1978, California became the first state to offer a work-sharing program. And a number of states have followed suit -- although all those programs are dwarfed by standard unemployment-benefits programs.

Other alternative unemployment insurance programs can make compensation less dependent on how long a worker has been unemployed, which would prevent people from being penalized if they take a job early, Hassett says. For example, instead of receiving a check every week, an unemployed worker would receive one or two payments upfront.

Ultimately, job searching is a lot easier to do if you already have a job.

"The longer somebody doesn't have a job, the harder it is to get a new job," Hassett says. "The reality is that if you're out of [a] job, and you're looking for a job, then the new employer's going to say, 'Well, why don't you have a job now? What's wrong with you?' "

Hassett warns that sustained cyclical unemployment could become a "structural problem" if the number of unemployed people isn't cut soon.

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Transcript

AUDIE CORNISH, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Audie Cornish, in for Guy Raz.

2010 started with unemployment at a grim 9.7 percent. We're headed toward the year's end with a downright Grinch-like 9.8 percent. This was not on the White House holiday wish list.

Vice President JOE BIDEN: There's no denying that the report is disappointing. There's too much pain out there. There's still million of people out of work and trying to make do without a paycheck and without the dignity or respect that goes with a job.

CORNISH: That's Vice President Joe Biden at the White House after Friday's jobs report. On Capitol Hill, lawmakers are using unemployment benefits as a sweetener for a deal on the Bush-era tax cuts, working on a compromise that would temporarily extend both policies. But for many of the long-term unemployed, time has run out.

Until this past week, emergency jobless benefits lasted as long as 99 weeks for people in the hardest-hit states. But with five people unemployed for every job available, 99 weeks might not be long enough.

Our cover story today: the price of living without work.

Ms. YVETTE WARD: My name is Yvette Ward.

Ms. ALEXANDRA JARRIN: My name is Alexandra Jarrin.

Mr. RICHARD IRITANO: Richard Iritano.

Ms. THERESA IACOVO: Theresa Iacovo.

Mr. AARON ELSON: Aaron Elson.

Ms. WARD: My last job was with the city of Philadelphia.

Ms. IACOVO: I was working as a dispatcher for 34 years.

Ms. JARRIN: Director of client services.

Mr. IRITANO: Director of business development.

Mr. ELSON: I used to work as a copy editor at a newspaper, and my last unemployment check was in mid-June.

Ms. JARRIN: March of...

Ms. WARD: March...

Ms. IACOVO: August.

Mr. IRITANO: It was Sunday, March 28, 2010.

Ms. WARD: 2010.

Ms. JARRIN: 2010.

Ms. IACOVO: 2010.

Mr. ELSON: 2010.

Ms. JARRIN: I went from making about 70,000 to $405 a week on unemployment.

Ms. WARD: I've professionally worked for about 35 years. I've always worked.

Ms. IACOVO: You're not prepared to be unemployed. You're not prepared to be homeless. You're not prepared to be hungry.

Mr. IRITANO: When I stopped working, I was living month to month. Then when unemployment benefits began, it was week to week. Now I live minute to minute.

Ms. JARRIN: As the time went by, it just got more desperate.

Mr. IRITANO: And it's an insidious way to live. It's destructive.

Ms. JARRIN: I just started to apply for entry-level positions, service positions, every fast food. I've applied everywhere.

Ms. WARD: I've never had this problem before with getting employment.

Mr. ELSON: I used to edit stories in the business section about how people should diversify their portfolio and what they should do with their 401(k). Well, I can tell you what I did with my 401(k). It went to subsidize my unemployment insurance. And so now, I, you know, have no 401(k), no income. And also, I gave up my apartment and moved into an office. I rented an office. So like some people have a home office, I have an office home.

Ms. IACOVO: You fear every day of what will become of you.

Mr. IRITANO: There's a sense of shame and dishonor, and people look at you differently.

Ms. IACOVO: I'd watch C-SPAN. I'd watch the Congress debate. I'd watch the Senate talk. And nothing, and then they would leave town and go away.

Ms. WARD: I haven't taken the time to register or digest it.

Ms. IACOVO: You felt like you didn't count as a person anymore.

Ms. JARRIN: It took a period of time to get food stamps. So I did - I went without food for a while. It's really a sad thing to say, but the one thing that kind of saved me, Nashville had the flood, and it destroyed buildings, and it destroyed the building that had the paperwork for my eviction. And so my eviction was put off.

Mr. ELSON: I have a sister who lives in a gated community in Boca Raton. It's palatial. How am I supposed to tell her I'm sleeping on the floor of my office, you know?

(Soundbite of laughter)

Mr. IRITANO: I planned my life the way so many others do, and I never imagined that I would be living in this kind of a situation.

Mr. ELSON: I miss the structure, being somewhere at a certain time and doing something for seven or eight hours.

Ms. WARD: Nobody wants to sit around all day long and do nothing.

Ms. IACOVO: Any job that would give me a salary would be the perfect job.

Ms. JARRIN: We're a huge, huge population of people that just want jobs.

CORNISH: The voices of a few of the long-term unemployed.

Arthur Goldsmith studies the psychological toll of unemployment. He's an economics professor at Washington and Lee University in Virginia.

Professor ARTHUR GOLDSMITH (Economics, Washington and Lee University): What we know about joblessness is that it unseats a person in many ways. So for instance, work organizes a person's day. It connects you with other people. It places you in part of something that's bigger than just you. And that's very satisfying to most people.

And when they lose their job, they miss that, and that loss of agency can be really quite damaging. It can lead to anxiety. It can lead to somatization, difficulty sleeping. It can certainly bring on bouts of depression. You also might cope by engaging in some what I would describe as self-destructive behaviors: abuse of alcohol and other drugs. You might have violent outbursts. And, of course, those things are quite adverse to your long-run wellbeing.

CORNISH: You mentioned after a certain amount of weeks, if you're not finding work, say, after five weeks or so, you may go through different sort of stages, almost mimicking the stages of grief, I guess.

Prof. GOLDSMITH: In the early phase, people are typically quite reactant, which means that they give a good effort, they search hard, and they believe that the battle will be short, and a good night's sleep, and it'll all be over.

But when you have extensive duration of unemployment and that helplessness sets in, that then begins to change your mindset, but it also alters the way that potential employers look at you.

CORNISH: We're hearing the argument that getting unemployment benefits, that people who are getting them essentially aren't getting jobs, aren't moving on to jobs because of the unemployment benefits because they have something in place.

Prof. GOLDSMITH: There is some evidence that as people get very close to the end of their unemployment benefits, there's a spike or an increase in the likelihood that they'll find work. But the question is whether they're finding work that'll be long-term and satisfying to them.

CORNISH: So you don't subscribe to the sort of a job is a job? But some people would say if you can get a job that you should take it.

Prof. GOLDSMITH: I think that's a very naive way of thinking about it. And, in fact, one of the things about this recession that makes it so different than other recessions is that this one started in Wall Street and has spread to Main Street.

If you look at the people that have been predominantly unemployed early on in this recession back in 2007 and '08 and who are still now suffering some of these long bouts, they were very, very skilled people. And they had established certain expectations, certain lifestyles.

If they were to take a job that would not enhance their marketability in the future, it can actually be damaging to them as they search for jobs when the economy actually begins to grow again, which looks like it'll happen in 2011 and '12.

CORNISH: Arthur Goldsmith is an economics professor at Washington and Lee University in Virginia.

Arthur Goldsmith, thank you for talking with us.

Prof. GOLDSMITH: Thank you, Audie.

CORNISH: In the last 60 years, the federal government has consistently extended emergency unemployment benefits whenever the jobless rate's been more than 7.5 percent.

But economist Kevin Hassett says it's time to rethink the federal unemployment insurance program altogether. He's the director of economic policy studies at the American Enterprise Institute.

Mr. KEVIN HASSETT (Director of Economic Policy Studies, American Enterprise Institute): In Germany, they have a program that is called work-sharing. Kurzarbeit is the actual German word, short work.

And what work-sharing does is it allows an employer to reduce somebody's hours and their take-home pay, say, 20 percent, 30 percent, 40 percent, and then have that person receive a fraction of the unemployment insurance they would have got if they were laid off completely.

And so what that does is it incents employers to instead of taking one person and kicking them off the grounds of the firm, they can take five people, reduce their hours 20 percent and have the same labor cost savings for the firm, and those individuals will then get, say, 20 percent of their unemployment insurance.

And that's good for employers, because when they start to expand again, they don't have to have a costly search for new workers. And it's great for workers because they don't have to be disconnected from the workforce, and they don't have to go through the shame of saying they're unemployed.

So it's a program that's a lot better than what we do. And it's very, very puzzling that we haven't been able to get the American government, the federal government, to bet more money on work-sharing. And so I think...

CORNISH: But is there evidence that in these places where they do have these programs, when things get better, employers bring everyone back to full hours and bring back up their wages?

Mr. HASSETT: Generally what happens is that the countries that have work-sharing programs will suspend them when times are good again. And so you could imagine - I think in the U.S., most economists think the economy's growing maybe in the 2.5 percent range now, but the unemployment rate's very high. If we started growing four or 5 percent, and the unemployment rate dropped a couple of percent, well then we would suspend the work-sharing program.

CORNISH: What are some other alternative out there to the current system?

Mr. HASSETT: The other type of system that people talk a lot about is one where the compensation that you get from the unemployment insurance program isn't so heavily dependent on the duration of your spell of unemployment.

And so instead of, you know, cutting you a check every week, we could instead give you, you know, a big lump sum payment upfront or maybe a big lump sum payment in the first four weeks and then another one for the, you know, second half.

What that would do is it would make it so that you're not really penalized if you take a job early.

CORNISH: This is fast becoming a record period of unemployment in terms of the length of time the economy has been suffering. How has it changed the way you look at unemployment?

Mr. HASSETT: Well, I think that one of the things that we have to recognize is that the longer somebody doesn't have a job, the harder it is to get a new job. You know, the reality is that if you're out of job and you're looking for a job, then the new employer's going to say, well, why, you know, don't you have a job now? What's wrong with you?

And so what can be kind of a cyclical unemployment becomes a structural problem for the U.S. because we have a large set of discouraged people who are kind of disconnected from society, disconnected from the workforce.

And so it's really urgent that people put down their political labels and start to gather together and think about what we can do to help folks who have been unemployed for a long time before we do create a kind of, you know, second society of people that really are disconnected.

CORNISH: That's Kevin Hassett. He's the director of economic policy studies at the American Enterprise Institute.

Kevin, thanks so much.

Mr. HASSETT: Thanks. It's been great to be here. Transcript provided by NPR, Copyright NPR.

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