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Strategies for Preventing Long-Term Unemployment

Strategies for Preventing Long-Term Unemployment. George Wentworth National Employment Law Project MIT Mini-Conference on Long-Term Unemployment May 6, 2014. Long-Term Unemployment: Overview. Scope of the emergency and the labor market outlook

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Strategies for Preventing Long-Term Unemployment

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  1. Strategies for Preventing Long-Term Unemployment George Wentworth National Employment Law Project MIT Mini-Conference on Long-Term Unemployment May 6, 2014 National Employment Law Project www.nelp.org

  2. Long-Term Unemployment: Overview Scope of the emergency and the labor market outlook Assisting the Long-term Unemployed: Federal policy responses to date Policies for preventing long-term unemployment National Employment Law Project www.nelp.org

  3. The Recession is Not Over For Millions of American Workers December 2007 • 5.0% unemployment • 7.7 million unemployed • 1.3 million LTU • 16.6% LTU • 16.6 weeks avg. duration April 2014 • 6.3% unemployment • 9.8 million unemployed • 3.5 million unemployed • 35.3% LTU • 35.1 weeks avg. duration National Employment Law Project www.nelp.org

  4. Long-term Unemployment in the Aftermath of the Great Recession (as % of all unemployed)

  5. The Low-Wage Recovery:  Industry Employment and Wages Four Years into the Recovery (April 2014) • New NELP report NELP Low-Wage-Recovery2014-Report shows low-wage job creation has persisted for more than four years . • In labor market downturn (January 2008 to February 2010), employment losses occurred throughout the economy, but were concentrated in mid-wage and higher-wage industries. • But during recovery (measured from February 2010 to February 2014), employment gains concentrated in lower-wage industries. • Lower-wage industries -- 22 %of recession losses, but 44% of recovery growth. • Mid-wage industries -- 37 %of recession losses, but only 26 % of recovery growth. • Higher-wage industries-- 41% of recession losses, and 30% of recovery growth. National Employment Law Project www.nelp.org

  6. Figure 1. Net Change in Private Sector Employment (in thousands) Source: NELP analysis of Bureau of Labor Statistics data. Note: Wage ranges are updated from earlier reports to adjust for inflation and are in 2013 dollars. At the time of publication, employment data for disaggregated industries was only available through February 2014.

  7. Figure 3. Four Years of Private Sector Job Growth, 2001 and 2008 Recessions Source: NELP analysis of Bureau of Labor Statistics data. At the time of publication, employment data for disaggregated industries was only available through February 2014.

  8. The New Normal:More Competition for Fewer Good Jobs • Since Recession began at the end of 2007: • Nearly 2 million fewer jobs in mid-and higher-wage industries • 1.85 million more jobs in lower-wage industries. • Service-providing industries that generally provide low wages have accounted for 39% of the private sector employment increase over the past four years. • Food services and drinking places • Administrative and support services (includes temp/staffing) • Retail trade • Clear evidence that discrete driving force in continuing high rate of long-term unemployment is lack of quality jobs with livable wages National Employment Law Project www.nelp.org

  9. Federal Policy Responses since 2008 • Emergency Unemployment Compensation (EUC) and Extended Benefits (EB) (2008-2013) • Approximately $260 billion to over 24 million workers/ 69 million family members (incl. 17 million children) • At peak in 2010, 2 out of 3 unemployed receiving some form of unemployment insurance (UI) • ARRA --Federal COBRA Subsidy (65%) (2009-2010) • ARRA --Federal Additional Compensation (2009-2010) • ARRA – UI Modernization (2009-2012) – 39 states enacted reforms aimed to help low-wage workers • ARRA --TANF Emergency Fund (2009-2010) • 260,000 placed in subsidized employment • After TANF Emergency Fund expires in 2010, no national subsidized jobs program National Employment Law Project www.nelp.org

  10. Meanwhile in State Legislatures • States make damaging cuts to state UI programs • 8 states (MO, MI, SC, ARK, FL, GA, NC, KS) cut below 26 weeks of benefits (as low as 12) • Redefining “suitable work”, new eligibility restrictions, increased work search requirements, drug testing, more complex filing rules and access obstacles • With elimination of EUC and EB programs, only 1 in 4 unemployed workers receiving UI • Some states implement subsidized jobs programs with state dollars after ARRA dollars dry up National Employment Law Project www.nelp.org

  11. Prevention Policy #1 : Invest in Reemployment Services Despite evidence that quality job search assistance can shorten duration of unemployment, public Employment Service has been flat-funded for over 20 years ($724 million in FY13) NELP recommends increasing ES funding under the Wagner-Peyser Act by $1.6 billion to expand, job search workshops, individual counseling and job placement services to an additional 2.8 million workers annually Reliance on Worker Profiling Reemployment Services system to identify and prioritize services to those most likely to become long-term unemployed National Employment Law Project www.nelp.org

  12. Prevention Policy #2: Expand Use of Work-Sharing • Voluntary program which serves as an alternative to layoffs during a temporary decline in business. • Employers reduce hours and wages of all or some employees in lieu of layoffs. Employees receive pro-rated UI benefits to supplement lost wages under a formula not otherwise available under regular UI rules. • Example: • ABC Corp. employee normally works a 40-hour work week (and earns $500). • Under work-sharing plan, worker’s schedule reduced by 20%. • Assuming UI weekly benefit rate of $250, the employee receives work-sharing benefit of $50 (20% of benefits) in addition to the 32 hours of wages earned. • $400 (wages) + $50(UI) = $450 National Employment Law Project www.nelp.org

  13. Prevention Policy #2: Expand Use of Work-Sharing (Cont.) • Benefits for Employers: • Retain qualified workers; maintain continuity in workforce • Avoid costs to hire/ retrain employees when business picks up. • Increased employee morale and job security. • UI tax consequences generally same as layoffs. • Employee Benefits: • Retention of job and economic security. • Retention of health insurance and retirement benefits. • Avoid financial hardship of unemployment and economic disruption associated with starting over with new employer. • Avert psychological/emotional consequences associated with layoff. National Employment Law Project www.nelp.org

  14. Prevention Policy #2: Expand Use of Work-Sharing (Cont.) Layoff Prevention Act of 2012 provides incentives (reimbursements & grants) for states to adopt/expand work-sharing programs 17 states with work-sharing prior to Recession Work-sharing usage increased by 10 times from 2007 to 2009 (10k to 110K claims weekly) More than half million jobs saved through work-sharing from 2008-2013 Virginia became 28th work-sharing state in April Based on international experience and studies of high use states during Recession, consensus of economists that work-sharing slows rate of job destruction and reduces unemployment rate

  15. Prevention Policy #3: Prohibit Discrimination Against Unemployed • History • Media reports of exclusionary hiring practices in 2010-11 • EEOC meeting hears testimony on issue of unemployment discrimination for first time (2/16/11) • NELP releases briefing paper Hiring Discrimination against the Unemployed as Reps. DeLauro and Hank Johnson introduce the Fair Employment Opportunity Act of 2011 (FEOA) (7/12/11) • Senate version introduced (8/2/11) • FEOA included in President’s American Jobs Act (9/8/11) • More than 300 Businesses (including 45 of the Fortune 200) sign White House Best Practices document (January 2014). National Employment Law Project www.nelp.org

  16. Prevention Policy #3: Prohibit Discrimination Against Unemployed (Cont.) • State and Municipal Activity • State laws banning discriminatory classified advertising in New Jersey and Oregon • Municipal laws in DC, NYC and Madison extend prohibition beyond advertisements to failure or refusal to (a) consider for employment, or (b)hire an individual as an employee because of his unemployed status • Bills advancing in CT and MA; pending in NY and OK National Employment Law Project www.nelp.org

  17. Other Potential Unemployment Insurance Reforms with LTU Implications Extended Benefits reform Extended Benefits for UI Claimants in Training Reforming Partial UI (benefits for claimants working part-time) Stricter federal standards for UI programs – requiring states to provide 26 weeks of UI benefits National Employment Law Project www.nelp.org

  18. For More Information: Contact: George Wentworth NELP 75 Maiden Lane Suite 601 New York, NY (860) 257-8894 gwentworth@nelp.org

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