Michael Strain, an economist at the American Enterprise Institute, attracted a lot of attention recently with his essay in the winter edition of National Affairs, “A Jobs Agenda for the Right,” which proposes policies such as special wage subsidies for the long-term unemployed, a decrease in the minimum wage for those workers, work-sharing to avoid layoffs in future recessions, relocation benefits for those out of work, and more. The ideas won’t surprise anyone who’s been following Strain for a while: He laid out a similar agenda to address the economy’s most serious problem, unemployment and especially long-term unemployment, in a May 2013 piece for NR.
Why focus on the long-term unemployed? Because they are a growing share of out-of-work Americans and still represent near a historically high share of the labor force. They’re a cross-section of America, with some sad unifying characteristics: Employers get more and more skeptical of hiring them purely on the basis of their unemployment, their skills atrophy, and they get more likely to drop out of the work force altogether — a disheartening prospect economically, personally, and spiritually.
The charts above should be enough to show that this is a serious problem, of historic proportions. President Obama alluded to the issue in his State of the Union, but his policy suggestions so far have been minor and repetitive (extending unemployment insurance, mostly). Now one Republican senator, South Dakota’s John Thune, says he likes Strain’s ideas on the issue — in fact, he already has a proposal that mimics some of them.
Thune remarked on his support for a new jobs agenda in a conference call on Thursday organized by the Young Guns Network, a group supporting conservative policy solutions.
The senator’s own proposal closely follows a number of Strain’s ideas: It would create a six-month holiday for the employer side of payroll taxes for any long-term unemployed worker who’s hired (that’s about a 5.8 percent reduction in the cost of employing someone), exempt such workers from the Affordable Care Act’s employer mandate (this won’t matter till 2015, when the mandate is enforced, but it would be worth thousands per worker), and offer low-interest relocation loans for people who are moving more than 50 miles away to a place with a lower unemployment rate.
Strain, also on the call, liked the idea, and raised a couple others — trying to reduce commute times immediately, and lowering the federal minimum wage for those who’ve been out of work for a while. Thune also supports a House bill, the SKILLS Act, to consolidate the dozens of federal jobs-training and job-search programs and offer them more flexibility at the state level.
When asked about Democratic plans to push for an increase in the minimum wage, Senator Thune said that Republicans plan to have a set of innovative policy alternatives when the Senate takes up the minimum wage in March, better tailored to the unemployment crisis, the most acute problem in our economy, the unemployment crisis. “It will consist of measures that we think actually address the fundamental problem and that is the cost of hiring,” Thune said.
“Low taxes and balanced budgets – those are very good policies and worthy and necessary policies for long-term economic growth,” Strain said on the call. ”But I don’t see them offering a lot of potential to help the long-term unemployed over the next few years.” Neither, of course, would increasing the minimum wage.