The economy may be recovering, but unemployment is still on the rise, hitting 9.8 percent in September. Temporary assistance programs for jobless workers, such as enhanced unemployment insurance and health insurance subsidies, will expire at the end of the year unless Congress allows an extension.
What should Congress and the administration do now to assist those who are out of work and to help speed job recovery?
Margaret Simms, Institute Fellow
Strengthen two weak links in the employment system: short-term training and job placement. The unemployment rate for those with less than a high school education is 50 percent higher than the overall unemployment rate. Getting these workers into new jobs will require improving their skills so they are prepared for the jobs that are likely to be created. The employment service side of the unemployment system also needs to be bolstered so that workers can be connected to jobs generated during the recovery.
Harry Holzer, Institute Fellow
Extend unemployment insurance and other forms of assistance, especially to those in low-income families.
Engage in targeted job creation.
Unemployment insurance coverage should be stretched beyond the current 79-week limit, especially in high-unemployment states, and extended at least until the end of 2010. Beyond that, we should consider tax credits for firms that expand their payrolls by hiring new workers above some baseline level and retaining them for at least a year. We should also look into funding community service jobs for low-income workers.
Olivia Golden, Institute Fellow
Stay the course. Don’t turn off key parts of today’s stimulus package, such as help for state governments so they shed fewer jobs, before jobs have truly returned.
Create subsidized public jobs—as some states (like Tennessee) are doing with current stimulus money—on a national scale for national priorities.
Look for two-generational solutions. The damage to children from their families’ loss of income can be lifelong. Investments in early childhood and child care programs can stand on their own to create jobs and help children, or they can be paired with other jobs and training programs.
Signe-Mary McKernan, Senior Research Associate
Provide generous support to the country’s automatic stabilizers—our safety net, including the Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, and unemployment insurance programs. Doing so will put money in the hands of low-income families, who are most likely to spend the money and stimulate the economy; avoid supporting a specific industry and thus having government choose winners and losers; and help avoid long-term spending because these automatic stabilizers are set to turn off when the economy recovers.
Also, we should give banks and credit unions incentives to make small, short-term emergency loans so that families in need don’t rely solely on payday loans or other expensive options in the alternative financial sector.
Caroline Ratcliffe, Senior Research Associate
Provide stronger work supports to low-income families that are looking for a job. Child care and transportation assistance (e.g., reimbursed transportation costs) can give parents, particularly single parents, the edge they need to find a job and reenter the work force.
Research shows that owning a car may boost employment. Thus, federal dollars to support state and local programs helping low-income families purchase and repair cars could improve the employment prospects of low-income families. Such programs could further benefit these families by keeping them out of subprime auto loans, which have high annual interest rates, high default rates, and can ruin a family’s credit history.
Genevieve Kenney, Senior Fellow
Extend the increases in federal matching rates for Medicaid programs so that states maintain their programs. Otherwise, states will cut back on Medicaid coverage because of the large projected budget shortfalls for 2010 and 2011, which will add more people to the ranks of the uninsured.
Extend eligibility for COBRA subsidies beyond this year and increase the level of COBRA subsidies for low-income families.
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