Ignore the unemployment rate

A national average had its utility in the mid-20th century, especially in helping us understand the nature of a massive labor force. It brought about the collection of a vast amount of data, which now allows us to see just how disparate the job situation is from one part of the country to another.

Today, however, we need to pay much more attention to the details of the data and much less to an average that obscures far more than it reveals. This shift would allow us to design policies for those segments of the economy and the labor force where help is most needed.

True, Congress is especially bad at allocating resources selectively, except in the case of natural disasters or to industries such as farming that cut across enough states to form a voting coalition. It would be hard going to craft legislation that would focus on the needs of Detroit, Phoenix, central Florida, upstate New York and so on.

But such targeted legislation is the only cost-effective way for government to address the structural issues of unemployment. Spending tens of billions of dollars a year on unemployment benefits is perhaps the least effective way to deal with the problem. It relies entirely on the belief that once this thing called the economy gets humming again, employment will just materialize. But for many Americans who are bearing the brunt of the downturn, that is unlikely to happen. And we will have spent years of benefits with nothing to show for it.

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