Federal Reserve Chairman Ben Bernanke: Long-Term Unemployment A ‘National Crisis’

Federal Reserve Chairman Ben Bernanke said Wednesday that long-term unemployment is an American “national crisis” and suggested that Congress should take further action to combat it. He also said lawmakers should provide more help to the battered housing industry.

THE failure of the Congressional super committee to come up with any agreement on the budget deficit makes it even less likely that Congress will rise above its partisan divisions and act on behalf of the millions of out-of-work Americans.

A tax cut that reaches 160 million Americans and government aid for the long-term unemployed will expire at the end of the year — sucking $165 billion out of the economy next year — unless Congress takes action.

The Federal Reserve is also paying heed. At a speech in late August, Chairman Ben Bernanke warned that long-term unemployment could harm the economy’s long-run growth prospects, though since then he has done little to help. Nothing would be so effective as a strong economy and a tight labor market. Despite growing interest in their troubles, that seems a distant prospect for those languishing on the edge of the working world.

The high level of unemployment America has had since the financial crisis is a wound to its self-esteem. This is a country that built itself on being able to offer work to those who can’t find it where they’re from. And if they do have it, there’s always been the promise of better paid and more interesting work on offer in the US.

“We have a large population in their teens or 20s with relatively low levels of education,” says Jeff Michael, a labor expert at the University of the Pacific (Stockton). “It’s a huge problem: a whole generation of young people who are going to find difficult employment prospects.”

It wasn’t great, good or, depending on whether your glass is always half full or empty, even that encouraging. But there was nothing in the latest US jobs report that has had anyone borrowing the doom-laden language that Europe has had a recent monopoly on.

Optimists argue that the solution to the US’s sky-high unemployment and income inequality is more companies like Apple–the resurgent tech company that has revolutionized the digital industry and become one of the most valuable companies in the world.

An even bigger hurdle looms at the end of 2012. That’s when the tax cuts passed during the Bush administration are set to expire. Losing those tax cuts would cost taxpayers up to an additional $4 trillion over 10 years.

Precisely because long-term unemployment is such an affront to America’s self-image, it’s one that the country surely needs to put more energy into understanding and trying to solve.