Long-term unemployment falling: How much credit for Obama?

Just in time for election season, the Obama administration is touting progress in bringing down the number of people who are counted as long-term unemployed – jobless for half a year or more.

With control of Congress on the line, and with President Obama getting low grades from voters for his handling of the economy, a fair question to ask is: How much credit does Mr. Obama deserve for the improved job-market picture?

Judging by surveys of economists, the answer may be that the president deserves some significant credit – not that the unemployment problem is solved, but that the situation today would be worse without some of the actions undertaken by the Obama administration, with one notable example being big stimulus spending in 2009 and 2010.

The long-term unemployment rate has fallen from 2.5 percent of the labor force in December to 1.9 percent last month, according to a White House fact sheet released Wednesday. And the number of long-term unemployed has fallen by 900,000.

“This decline accounts for around 90 percent of the total drop in unemployment in the past 10 months,” the fact sheet says.

What this means is that the roughly 3 million people who remain long-term jobless now account for about one-third of the total US unemployment rate (which is currently 5.9 percent of the labor force).

For comparison, long-term joblessness stood much higher at its post-recession peak in early 2010: Nearly 6.8 million Americans had been out of work for at least 27 weeks and were seeking jobs, and those people accounted for 45 percent of all unemployment.

So the healing in the job market since then has been considerable.

The administration acknowledges the problem isn’t totally solved. The share of the workforce facing long-term unemployment is still at a historically unusual level, even as the share facing shorter-term bouts of joblessness is back to pre-recession levels.

The White House announced Wednesday new efforts to help Americans who remain long-term unemployed: some $170 million in grants to encourage states and private employers to partner in helping train people for new careers, and steps to promote “best practices” in hiring, so that companies aren’t unfairly biased against job applicants who haven’t worked in a long time.

“We can't afford to have qualified individuals stuck on the sidelines,” White House economic adviser Jeffrey Zients said in a conference call with reporters Tuesday. “We’ve seen real progress,” he said, but the economy will do best with a “full team on the field.”

So, what accounts for the progress? And who gets credit?

Accounting for the job-market gains isn’t as simple as a pro or con political slogan.

For one thing, the adage that “time heals all wounds” often applies to economies. One would expect the job market to be better five years after a recession, even if the response by policymakers was somewhat flawed.

Another factor worth noting is that the lingering challenges for the unemployed are larger than the official numbers portray. Many economists believe that a sizable number of Americans – as many as 2 million – have become too discouraged to look for work, and so aren’t even counted as unemployed.

A final caveat to the “progress” story: The jobs recovery has been slow – slower than in many past rebounds and slower than the Obama administration itself expected in 2009.

All this said, it’s undeniable that the job market has improved considerably – and that the conditions confronting Obama and other policymakers were unusually tough. The 2007-09 contraction hasn’t been named the Great Recession for nothing.

In surveys, economists have widely supported one key, early Obama step: the large stimulus package including tax cuts and government spending on things like infrastructure and aid to hard-hit states.

Since 2010, Obama has sought additional infrastructure spending and additional help for the long-term unemployed, but Republicans in Congress haven’t signed off on such moves. (Congress halted an extended unemployment benefit for the long-term jobless at the end of last year.)

In an August survey, 34 percent of business economists saw policy on taxes and spending as “too restrictive” for the economy, while 22 percent saw policy as too stimulative. The rest saw fiscal policy as about right, the National Association for Business Economics survey found.

This doesn’t mean that economists see all of Obama’s policies as great for growth.

Republicans criticize the president for not cutting a deal to reform the tax code – especially to help attract more business investment to US shores. They say he should be doing more to promote the growth of jobs in the energy industry. And they say he has piled more regulations on the economy rather than reducing them.

Many economists agree with those critiques – though they don’t rally uniformly behind GOP prescriptions on those issues.