As Spanish unemployment hits a new record high of 27.16 per cent, another statistic in a series of dire data from the Eurozone, it can be easy to forget the human cost of unemployment. Youth unemployment also rose to a fresh high of 57.2 per cent from 55.1 per cent in the previous quarter. There are now 6.2 million without jobs in the country and over half of those have been jobless for over a year. There are 1.9 million Spanish households where no one is in work.
This picture is not unique to Spain. In February Eurozone unemployment reached a fresh high of 12 per cent, an increase of more than a percentage point on the same month last year, when the rate stood at 10.9 per cent. Last week German finance minister Wolfgang Schäuble said that Eurozone unemployment levels are "catastrophic".
Bryan Caplan, professor of economics at George Mason University, says that we should care more about the human impact of joblessness:
Simple cost-benefit analysis grossly understates the horrors of unemployment. We should also consider the effect of unemployment on happiness. When workers don't get a raise, they're often disappointed or angry. But when workers lose their jobs, they literally weep. For most of us, a job isn't only a paycheck. A job also provides a sense of identity, purpose, and community. Happiness research strongly supports this fact, but introspection should suffice. Think about the shame and despair you'd feel if you were suddenly unable to support your children.
Many studies show that there is a link between time out of employment and lower wages. Those who are unemployed now may suffer from deskilling, and be unable to contribute more fully in the future when growth eventually does return to the Eurozone. The cost of the euro project and sovereign debt crises is a high one that will be shouldered by these individuals.
However, it is important that this is not taken as support for government jobs programs. There are many existing barriers to getting a job that could be eliminated first, without politicians getting into the business of picking winners. Bryan Caplan elaborates:
Every government imposes a vast array of employment-destroying regulations. Minimum wages. Licensing laws. Pro-union laws. Mandated benefits - especially mandated health insurance. Anyone who appreciates the grave evil of unemployment should bitterly oppose these regulations - and vigorously reject the cavalier, callous view that a heavy-duty safety net is a good substitute for a job. Government regulation is hardly the sole cause of nominal wage rigidity, but it definitely makes a bad situation worse.
While European Union politicians talk of recovery returning to the area, they forget those who they have hurt most. Mistakes made can not be reversed as quickly as GDP growth trends might. When bureacurats decide to experiment with policies such as a common currency or to rack up unsustainable spending patterns, they risk making mistakes that can not quickly be resolved. The legacy of these failures will haunt those affected by prolonged unemployment for the rest of their lives.