Put succinctly, the article poses as its fundamental thesis that unemployment itself leads to social degradation. But I could find no actual supporting evidence for that claim.
The Youngstown example is just as likely a posterchild for the alternative theory: the dangers of unmitigated poverty.
Now, I grant you, social pressures likely lead people to feel shame and so forth in the face of unemployment. But that just means a cultural shift away from the idolization of work is necessary, not that we must find some way to employ those folks who might truly be unemployable.
The question I think we're debating is whether the flow of causality goes unemployment->poverty->social degradation (this is your case, I think) or whether unemployment leads to social degradation more directly, even among people who don't currently need money (so, removing the variable of poverty) because it's a terrible blow to esteem, purpose, and community. I think there is a lot of evidence for this claim; see the section Paradox of Leisure.
I totally disagree.
The problem is that society, as it's structured today, does little to support the unemployed to provide the kind of social contact and meaningful activity that would offset depression and isolation.
In addition, there is a social expectation foisted upon the unemployed that they must become employed, and that expectation creates pressure, depression, and further isolation.
The fundamental issue is that we, as a society, have decided that unless you're working you're idle, and if you're idle you're useless.
Consider, there are many many retirees who manage just fine. Why? Because there's a social network put in place to support retirees... activity centers, social groups, travel clubs, etc. And a social expectation that retirees will specifically be idle!
Similar support mechanisms do not exist for the unemployed today because the unemployed are viewed as failures. Unemployment is not a valid life choice, and therefore society does nothing to support them.
This fundamentally comes down to the western idolization of work. Address that and I believe you'll address many of the psychological harms supposedly caused by a lack of employment.
I'm okay with disagreeing over the centrality of work. Some very smart people think that maintaining structured busy-ness is very important psychologically. Some people disagree. But it seems to me that we agree on many of the solutions, including a basic income and activity centers.
It is also about actually accomplishing something that needed doing. This is precisely why we want it to disappear: unfilled needs are bad.
The reason I focus on the other effects is that, in deciding how government/culture might rearrange itself to replace work, I think it's critical to see that work is about more than money--and the benefit of work is about more than a paycheck. It is about esteem, flow, purpose, community, a sense of meaningfulness in life, and it's not clear to me that all of those things comes with a monthly government check; so it's useful to think of ways we could replace these values in the future.