FORTUNE -- It's doubtful most Americans had any idea how good they'd had it.
The scourge of widespread, long-term unemployment was a problem the U.S. hasn't really had to deal with since The Great Depression. For instance, in 2002, the U.S. had the fourth-lowest rate of long-term unemployment -- when taken as a share of the overall unemployment rate -- among all OECD countries. Back then, less than 10% of Americans who were unemployed had been so for more than 27 weeks. Now, 35.8% of unemployed Americans fit into this category.
Long-term unemployment is a particularly pernicious problem because of its compounding nature -- long stretches of unemployment erode workers' skills, while employers have an irrational bias against the long-term unemployed. Employers refuse to hire the long-term unemployed on account of the very fact that these workers have been unemployed for a long time, and so these workers find it harder and harder to find a job.
But there's a kind of silver lining. The fact that many other rich nations have dealt with the problem means policy makers here can learn from others' experiences.
Take Sweden. After suffering from a financial crisis and high levels of long-term unemployment, the government there tried a variety of measures, creating a pretty good natural experiment for what works best. One 2007 study showed that out of six different Swedish programs, whose purposes ranged from worker retraining, helping workers maintain contact with former colleagues, temporary government employment, and employment subsidies, only the latter was effective at bringing down long-term unemployment.
A wage subsidy is a program where the government pays part of a worker's check, thus raising the worker's income and inducing firms to hire more workers. Wage subsidy programs have been proposed by economists and commentators in the U.S. before, usually as a replacement for the Earned Income Tax Credit. As economist and blogger Noah Smith argues, the Earned Income Tax Credit is a better way to help low-income Americans than raising the minimum wage mostly because it's better at targeting aid for those who need it without reducing overall employment. But the EITC simply comes in the form of a per-year tax refund that divorces the recipient from the work that went into earning that money.
Wage subsidies aren't just a potential solution to the debate over the minimum wage. They could also help bring down U.S long-term unemployment as well. Indeed, if Congress does decide to phase out the EITC in favor of wage subsidies, as Smith argues, it would be a perfect time to experiment with added incentives for hiring the long-term unemployed, too. Sweden's program promised to pay half of a worker's wages for the first six months of work -- a powerful incentive for employers taking a risk when hiring a new worker. If it doesn't work out after six months, the company only paid half of what it would normally have had to during a similar trial.
Wage subsidies haven't taken off in the U.S., primarily for political reasons. Raising the minimum wage is a popular issue for Democrats, who don't want to eliminate the issue's electoral potency by instituting a more effective policy that's harder to explain to the public. Furthermore, wage subsidies have the whiff of corporate welfare, as it's a program that relieves some companies from what could be seen as their responsibility to pay a fair wage.
But every program to help poor and unemployed workers comes with drawbacks, and the economic literature clearly supports wage subsidies as a program with the fewest negative consequences. The experience in Sweden shows that this policy can help the long-term unemployed find gainful employment.
Much of the U.S. is still grappling with the aftermath of the financial crisis. Long-term unemployment has been one of the most painful aftershocks. It's time to try something new.
Numbers released by the Labor Department Tuesday show that there are more job openings now than at any time since January 2008.
FORTUNE -- If you've given up looking for work, it might be a good time to start again.
That's because there are more job openings today than at any point since January 2008, according to the Job Openings and Labor Turnover (JOLTS) report released Tuesday by the Labor Department.
There were 4.2 million jobs open MOREChristopher Matthews - Apr 8, 2014 2:26 PM ET
The rebound has been particularly good for those in management and professional services jobs. Finance workers make 20% more.
FORTUNE -- The better off are still better off. And the rest of us are not doing any better at catching up.
This month's jobs report, which came out on Friday, showed that we have nearly regained all the jobs that were lost in the recession. That's good, I guess. But it's also MOREStephen Gandel, senior editor - Apr 4, 2014 2:36 PM ET
Private sector employment levels have reached their 2008 peak, but it's still tough out there for the unemployed.
FORTUNE -- Private sector jobs finally surpassed their previous peak in 2008, according to March's jobs report. The data bore some cheery news this morning, but it's hard to get too excited once we take a closer look.
While the total number of jobs in the economy remains below its pre-crisis peak because of large drops MOREChristopher Matthews - Apr 4, 2014 10:25 AM ET
The money manager argues that the Fed's interventions have ruined the very recovery it was supposed to stimulate and that the market is poised to disappoint investors.
FORTUNE -- If you hate the Federal Reserve, you have a new hero.
A few weeks ago, Jeremy Grantham, the co-founder of money management firm GMO, called newly appointed Federal Reserve chairman Janet Yellen "ignorant" in the New York Times. He also said the reason MOREStephen Gandel, senior editor - Mar 24, 2014 5:00 AM ET
Employers added a respectable 175,000 jobs in February, but it is the increases in hourly earnings that gives real cause for optimism.
FORTUNE -- After years of stagnant wages, workers might finally be seeing their pay go up.
The Labor Department released its employment situation report Friday morning, announcing that the economy added 175,000 new jobs in February. That number in and of itself isn't big enough to knock anyone's socks off, MOREChristopher Matthews - Mar 7, 2014 9:52 AM ET
A slew of discouraging economic data doesn't bode well for February jobs numbers, but there's still hope for broader recovery.
FORTUNE -- This winter has brought subfreezing temperatures and several feet of snow to much of the country, and the weather has done more than mess with your morning commute.
Cold weather also has a tendency to put a temporary damper on economic activity, as businesses often shut down during heavy snowstorms MOREChristopher Matthews - Mar 6, 2014 11:20 AM ET
More than four years after the Great Recession, the economy is healing. And it could only get better.
By Marc Benioff
FORTUNE -- If I had written a title for President Obama's State of the Union address this week, it would be called "America Rising." When he leaves office in 2017, the U.S. will have experienced a period of critical economic recovery. By the end of 2016, Fannie Mae estimates the MOREJan 31, 2014 3:07 PM ET
The U.S. can achieve a lot by reducing inequality.
By Mohamed A. El-Erian
FORTUNE -- In making inequality a topic of Tuesday's State of the Union speech, President Obama did a lot more than address a phenomenon that undermines America's social cohesion and the effectiveness of its political process. He put on the national table an issue that is now attracting the interest of an increasing number of economists: Inequality is MOREJan 29, 2014 10:16 AM ET
The U.S. workforce is shrinking, but that's not because Americans in their prime working years are dropping out.
FORTUNE -- Where have all the workers gone?
The U.S. labor force has dropped by six million. Workers began to disappear during the Great Recession, but it has continued even after the economy has improved. So what's going on?
One answer is demographics. Back in 2006, a paper from a number of Fed economists, predicted MOREStephen Gandel, senior editor - Jan 14, 2014 5:00 AM ET
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