Permanent unemployment

The economy will eventually recover, but we may see a different America when it does. It will take industry a long time to recover psychologically from the prolonged recession and government intervention. Before, those in poverty were not very static -- there's been a small group of Americans in permanent poverty, but many in poverty were young people working their way up and moving to the middle class.

In the last few years industry has become more efficient and productive, requiring fewer workers to turn a profit and remain competitive and viable. Plus, wit all the government intervention, government is unsure of the labor costs. Most companies will have few incentives to hire for quite a while. We see this effect now with stubborn high unemployment and many people giving up looking for work. The unemployment benefits have been extended, and families are adjusting to the much lower income, supplementing the unemployment benefits with under the radar side-work, food stamps and rent subsidies. This income can become sufficient for many Americans to remove themselves from the taxable job market. If this happens like I suspect it will, we could have up to 25% of Americans permanently out of work.

The government, so far, shows no willingness to stop unemployment benefits, food stamps or rent subsidies. If people find this combination of income equal to lower middle class income, they'll have no incentive to change -- for the most part (some will be too ambitious to settle for lower-middle class). A liberal government might even see this as the route to redistribution of wealth and social justice, gradually increasing the benefits. As more people see this combination of benefits sufficient to get by and enjoy free time, it will become an attractive alternative to 8-10 hour workdays.

The middle class and wealthy will be taxed at higher rates to support the permanenty unemployed, placing a permanent drag on the economy and practically insuring we won't see high employment again, except the numbers will show high employment as more and more people are not counted in the job market.

I'm not sure if this will count as "poverty" if the benefits are counted as income, but it will create a divided society and more resentment in those paying higher taxes. Anyone who doesn't think this will happen, doesn't understand human nature. Not all people will take advantage of the system, but 25% is not unreasonable. How this wil eventually affect our economy, I'm not sure -- if everyone adjusts economically and the 25% are basically hidden, it might last for a long, long time until it becomes such a burden politicans are forced to do something -- but that 25% will represent a large voting block who've grown accustomed to a certain lifestyle and inome, so who knows if there will ever be the political will to force people back into the workforce.