Today’s Policy Agenda: The Labor Market Is Getting Better, But Is It Still a Hireless Recovery?

by Andrew Smith

The labor market keeps getting better — but is it still a hireless recovery?

Josh Mitchell reports in the Wall Street Journal on the newest jobs market indicator showing improvement: job openings. On Tuesday, the Bureau of Labor Statistics released their newest data on openings, and they continue to surge:

This number is yet another positive sign of labor-market recovery, as more firms are finding themselves able to hire. Sensing this shift in demand for labor, more workers believe that they’ll be able to find another good job, hence the rising quit rate. But, in addition to the problem of stagnant wages, one question that remains to be answered is on the supply side: Did bouts of long-term unemployment permanently scar former workers? Are the long-term unemployed returning to work? Ben Casselman explains why that is still an open question.

Immigration is at the front of voters’ minds.

In a new poll released by Gallup today, the border crisis appears to be moving public opinion: Immigration has overtaken the state of the economy as the second most important issue, behind only general dissatisfaction with our government.

While there seems to be public support for legalizing those already in America and the economic case for increasing high-skill immigration is an easy one to make, Reihan has pointed out that the public appears to oppose increasing higher immigration flows much beyond what they are today. With immigration now such an important issue to the voters, a political response is necessary that both recognizes voters’ preferences and can reform the system in a way that could be helpful to the economy and not so hurtful to native low-skill workers, as Reihan and Yuval Levin have laid out.  

Work requirements didn’t leave the poor behind during recessions.

Ron Haskins and others at the Brookings Institution have released three studies in one report focusing on how post-welfare reform programs responded to poor economic conditions. Haskins et al.:

The new report is based on three studies. First, the researchers compared changes in the TANF rolls to increases in Aid to Families with Dependent Children rolls (AFDC – the pre-1996 cash welfare program with weak work requirements) during previous recessions, as well as changes in TANF rolls in relation to state-by-state increases in unemployment. They found that TANF rolls increased more in the recession of 2001 and the Great Recession of 2007 than AFDC did on average during the pre-welfare reform recessions of 1980, 1981 and 1990. In addition, the increase in the TANF rolls was greater when examined during the unique period of rising unemployment in each state (12 and 30 percent respectively under two methods of measuring increases in state unemployment rates) than during the inclusive dates of the official national recession (7 percent), according to the research. . . .

Haskins, Albert, and Howard then used a nationally-representative longitudinal data set to examine how single mothers fared in the three most recent recessions (1990, 2001, 2007-2009), given the increase in the size of this demographic over the last few decades and their high poverty rates. Single mothers were less likely to receive benefits from the TANF program during the 2001 and 2007 recessions compared with the 1990 recession before welfare reform, but they were more likely to have a job and to get other government benefits, including unemployment benefits, Supplemental Nutrition Assistance Program (SNAP, previously known as food stamps), Supplemental Security Income, and tax credits based on work. Overall, a broad measure of income which includes many of these benefits showed that poverty among single mothers and their children was lower during the Great Recession than during the recession of 1990 before welfare reform…

Third, the researchers interviewed state TANF directors, finding that most states did not struggle to pay for growing TANF rolls during the Great Recession, in part because of the Stimulus bill passed by Congress in 2009, and that most directors considered their state’s response to the Great Recession as adequate or better… All in all, the American system of balancing work requirements and welfare benefits worked fairly well, even during the most severe recession since the Depression of the 1930s.

One of the major concerns with the work-requirement model embraced by the Right for welfare reform is that in economic downturns, many would be able to find work and then be left behind by our work-focused safety net. It’s an important consideration – even Ron Haskins himself has wondered, “The issue here is, can you create a strong work program, as we did, without creating a big problem at the bottom?”

But the data don’t seem to support it. In fact, the work of these Brookings scholars suggests that not only were single mothers not left on their own in recessions, but that they actually had significantly lower poverty rates than would be expected under the pre-1996 system. They also found that the new TANF proved to be a reliable safety net by increasing its rolls when times got tough, as we would hope.