We published a new report at the Center for American Progress that details a policy to automatically and temporarily expand national service programs in times of high long-term unemployment. There are still over two million Americans who have been out of work and looking for a job for at least 27 weeks—the definition of long-term unemployment—even though the Great Recession technically ended more than six years ago.
This is especially relevant on Martin Luther King Day, both because the holiday is associated with service and because the long-term unemployed are victims of a mindset that King warned about in 1961: “When human values are subordinated to blind economic forces, human beings can become human scrap.”
The most important point in the report is that long-term unemployment is a solvable problem. Our policy isn’t a panacea, but we think it can be a big part of the solution. Here are some of the details from our report:
Under this plan, national service would function as an automatic stabilizer. Automatic stabilizers, such as unemployment insurance and nutrition assistance, expand during recessions and contract during times of economic expansion. The need for assistance from the nonprofit sector is greatest when the economy is struggling, meaning that recessions are the perfect time to boost capacity with a surge of national service. Specifically, the plan would establish a formula for an automatic funding source that would support 25,000 new and temporary national service positions for every tenth of a percentage point by which the long-term unemployment rate exceeds 1 percent. The long-term unemployment rate has averaged about 1 percent from 1948 to the present, and no temporary positions would be created whenever long-term unemployment is at or below this historical average. The plan includes guardrails to ensure that national service is not expanded more rapidly than the system can support, and also to prevent economic shocks from withdrawing temporary positions too rapidly.
In the aftermath of the Great Recession, this policy would have responded decisively by supporting a peak of 475,000 temporary national service positions at a time when about 4.6 million people were long-term unemployed. If this automatic policy had been in place from fiscal years 2000 to 2014, it would have cost an average of $2.6 billion per year—enabling 1.87 million Americans to serve their country for a year during tough economic times and delivering a return on investment of $3.93 in benefits to society for every dollar spent based on an economic study of national service.
The full report is posted on the CAP website.