Stephen Foley: A long-term labour challenge

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The Independent Online

US Outlook: There are now more than 6.2 million Americans who have been out of work for more 27 weeks, a tragedy for the people involved and one of the more terrifying numbers in what was a slightly better than feared October employment report, published yesterday.

As Ben Bernanke, chairman of the Federal Reserve, has been arguing in increasingly shrill terms, the long-term unemployed pose a greater risk to the economic recovery than do the rest of those who make up the 9.6 per cent unemployment rate. With each passing week without a job, these people will find it harder to re-enter the labour force, and it is likely there are many who have already mentally reclassified themselves as permanently disabled or retired. The US's vaunted flexible labour markets are no match for the entrenching power of long-term unemployment.

The 159,000 rise in private sector jobs last month shows that business confidence is slowly returning, after the wobble since the spring, and for the many owners and executives who have complained about the Obama administration's anti-business tone and the Democratic Congress's inclination towards red tape, the very fact of this week's mid-term victory by the Republicans might lighten the mood further.

But the benefits of new hiring opportunities will fall disproportionately to the recently unemployed, not the long-termers.

What is needed is a blizzard of governmental initiatives aimed at retraining and hiring the people who have been out of work the longest, a long-tentacles intervention in the labour market that goes far beyond a broad-strokes effort to stimulate business confidence and business investment. Unfortunately, these sorts of targeted measures have got a lot less likely with the new make-up of Congress.