Annie Lowrey has a post about the year-long battle over unemployment insurance, well worth reading. The battle to get growth instead of austerity is one I take seriously, and you should too. The long term impact of high unemployment for our country is difficult to measure, but we have every reason to believe it is quite damaging.
Take, for instance, this paper, Short-run Effects of Parental Job Loss on Children’s Academic Achievement by Ann Huff Stevens and Jessamyn Schaller of UC Davis (my underline):
We study the relationship between parental job loss and children’s academic achievement using data on job loss and grade retention from the 1996, 2001, and 2004 panels of the Survey of Income and Program Participation. We find that a parental job loss increases the probability of children’s grade retention by 0.8 percentage points, or around 15 percent. After conditioning on child fixed effects, there is no evidence of significantly increased grade retention prior to the job loss, suggesting a causal link between the parental employment shock and children’s academic difficulties. These effects are concentrated among children whose parents have a high school education or less.
Job losses impact a child’s learning. It’s something you probably assumed already, but here it is confirmed in the data. The study finds this result even after controlling for all kinds of additional variables, including income, race, parents in household, parents divorced, recent moves, etc. There’s some additional stress of being unemployed that impact’s children’s education that is above and beyond simply being poorer for a longer period of time.
I was interested in this statistic from the paper: “The first column of Table 8 includes only the state-level unemployment rate three year average, without the individual job loss indicators. A one percentage point higher unemployment rate leads to a 0.3 percentage point increase in the probability that a child repeats a grade.”
There are roughly 55 million students in K-12 in the country right now. If unemployment is 1% higher that means, roughly, 165,000 additional years of schooling will be repeated. This will fall disproportionately on poorer school districts as the effect is higher for people below the median income, and it doesn’t get an empirical handle on second-order effects of poor school performance such as crime and drugs, though it is easy to imagine they go up as well. This is even before letting teachers and school infrastructure decline.
It is the little numbers like these that stay in my mind. In ‘cost-benefit analysis’, it is always very easy to get a solid number on the cost; the benefit is much harder to quantify. 4 years of unemployment 1% higher than it normally would be is half a million children, particularly those below the median income, needing to repeat schooling that they otherwise wouldn’t have. That’s just one slice; there’s the effect on long-term wages in addition. These things add up for our country. I highly doubt that is on the Federal Reserve’s or the GOP’s mind as we start to move into austerity-mania.
Right now the 10-year bold is under three percent. Money is free yet corporations don’t want to build or expand. The household is repairing its balance sheet. The government can employ people and build out additional stimulus. The Federal Reserve can buy and hold bonds. It’s urgent to do so – a long period of painfully slow growth will have long term damages for our country.