Fed chief concerned by US long-term unemployment - Long-term Unemployment: 'Out Of The Scope'

The expected cost of high unemployment, on the other hand, is steep. For one thing, the chances that unemployment will remain a problem are close to 100 percent. The debate is whether the country will return to full employment in four years or 10 years.

For another, the consequences of high unemployment are also awful. With fewer jobs, states and cities are short of tax revenue. Families lose their life savings. People’s health can deteriorate. For the long-term unemployed, the financial damage can be permanent. “If things go on and they simply sit at home or work very irregularly,” Mr. Bernanke himself said last year, “when the economy gets back to a more normal state, they’re not going to be able to find good work.”

Unemployment creates political problems, too. Historically, it has tended to make voters less willing to help their fellow citizens, as the economist Benjamin Friedman has written. It’s hard to imagine any grand political compromise — on the deficit, for instance — in an angry country.

One question more than any than other is crying out for an answer: Why has Mr. Bernanke decided to accept widespread unemployment for years on end, even though he believes he has the power to reduce it?

Bernanke At Bat

I’ll outsource this to Atrios, who gets it exactly right:

The questions should focus on “why the hell do we have so much unemployment and why aren’t you doing more about it,” but my guess is they’ll be more along the lines of “will the deficit steal my bicycle” and “ZOMG INFLATION!!!!!!!?!?!!?”

I have to say, even I thought that we wouldn’t make the same mistakes we made in 1931; I thought we’d make different mistakes. But somehow conventional wisdom has gelled into the view that the course of wisdom is to forget everything we’ve learned over the past 80 years.

There's little the Fed can do to target long-term unemployment in particular, Bernanke said.

Part of the Fed's mandate is to promote maximum employment. But two months from the end of the second asset-purchase program, the unemployment rate is high, at 8.8 percent. The number of long-term unemployed, people who have been out of work for at least six months, is now higher than it's ever been since World War Two, Bernanke said.

But there's only so much the Fed can do, the chairman said.

"Long-term unemployment in the current economy is the worst, really the worst it's been in the post-war period," Bernanke said in his first news conference following a Fed policy meeting.

Bernanke noted that about 45 percent of those without jobs have been unemployed for six months or longer amid a slow recovery from recession.

"We know the consequences of that can be very distressing, because people who are out of work for a long time, their skills tend to atrophy."

Jobless_in_Ma wrote:
What did we expect to happen? IMHO NO progress has been made in reversing what wnt wrong. In fact we bailed out those who did set us down this path..
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nuttin2lose wrote:Three letters WPA for the long term unemployed, and as they now call us exhaustees, chronic unemployed.

nuttin2lose wrote:Yeah I doubt this old man could do that work anymore. LOL Seems I vaguely remember talk about a massive update of medical records by entering them on computers. Maybe jobs along these lines? Course I m assuming that they really care and want us to be able to work again!!