Unemployment and the Oligarchs

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Mark Thoma takes a look at who pays the cost of the recession:

The recession is taking away opportunity for the young to gain employment experience, and many who are employed are working below their abilities in jobs they are likely to get stuck in for many years, if not forever.

The recession is wiping out the accumulated assets of the unemployed as they try to bridge the gap until jobs return, and since many of these are older workers, this will have a large detrimental effect that lasts throughout their retirement years. Recessions cause skills to depreciate, there are psychological costs, there are costs to family members, the loss of a job generally means loss of health care, the costs to working class households go on and on.

It is worth repeating that many of the externalities of the financial crisis are likely to become perpetual, as middle-aged workers are forced to retire and young workers are unable to develop the skills that they might otherwise have gained, leaving them permanently handicapped in the future job market. The gravity of this situation is so strong that has produced a temporary respite from America's partisan sclerosis, as lawmakers push for a government solution.

Roughly one in ten Americans is officially unemployed, with the effects of unemployment becoming more dire, yet America's GDP managed to grow at 5.7 percent last quarter. What explains this juxtaposition?

Thoma blames taxpayer-funded financial bailouts, calling for more support at the bottom of the income pyramid:

The fact that many of the costs were concentrated among those least able to pay them stands in contrast to the fact that the bailout benefits were concentrated among those at the opposite end of the income distribution.

Government transfers to compensate low income groups for the costs they were forced to pay but had no hand in causing, transfers that are financed by those who received the benefits during the bubble years and the bailout money when the bubble popped, seem more than justified.

Might America's GDP growth be over-representing the gains of its wealthiest citizens?

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