While Congress continues to bail out Wall Street, Main Street continues to suffer. We need jobs!
If you’re looking for a job right now, your prospects are terrible. There are six times as many Americans seeking work as there are job openings, and the average duration of unemployment — the time the average job-seeker has spent looking for work — is more than six months, the highest level since the 1930s.
You might think, then, that doing something about the employment situation would be a top policy priority. But now that total financial collapse has been averted, all the urgency seems to have vanished from policy discussion, replaced by a strange passivity. There’s a pervasive sense in Washington that nothing more can or should be done, that we should just wait for the economic recovery to trickle down to workers.
This is wrong and unacceptable.
Yes, the recession is probably over in a technical sense, but that doesn’t mean that full employment is just around the corner. Historically, financial crises have typically been followed not just by severe recessions but by anemic recoveries; it’s usually years before unemployment declines to anything like normal levels. And all indications are that the aftermath of the latest financial crisis is following the usual script. The Federal Reserve, for example, expects unemployment, currently 10.2 percent, to stay above 8 percent — a number that would have been considered disastrous not long ago — until sometime in 2012.
And the damage from sustained high unemployment will last much longer. The long-term unemployed can lose their skills, and even when the economy recovers they tend to have difficulty finding a job, because they’re regarded as poor risks by potential employers. Meanwhile, students who graduate into a poor labor market start their careers at a huge disadvantage — and pay a price in lower earnings for their whole working lives. Failure to act on unemployment isn’t just cruel, it’s short-sighted.
So it’s time for an emergency jobs program.
How is a jobs program different from a second stimulus? It’s a matter of priorities. The 2009 Obama stimulus bill was focused on restoring economic growth. It was, in effect, based on the belief that if you build G.D.P., the jobs will come. That strategy might have worked if the stimulus had been big enough — but it wasn’t. And as a matter of political reality, it’s hard to see how the administration could pass a second stimulus big enough to make up for the original shortfall.
So our best hope now is for a somewhat cheaper program that generates more jobs for the buck. Such a program should shy away from measures, like general tax cuts, that at best lead only indirectly to job creation, with many possible disconnects along the way. Instead, it should consist of measures that more or less directly save or add jobs.
One such measure would be another round of aid to beleaguered state and local governments, which have seen their tax receipts plunge and which, unlike the federal government, can’t borrow to cover a temporary shortfall. More aid would help avoid both a drastic worsening of public services (especially education) and the elimination of hundreds of thousands of jobs.
Meanwhile, the federal government could provide jobs by … providing jobs. It’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment. There would be accusations that the government was creating make-work jobs, but the W.P.A. left many solid achievements in its wake. And the key point is that direct public employment can create a lot of jobs at relatively low cost. In a proposal to be released today, the Economic Policy Institute, a progressive think tank, argues that spending $40 billion a year for three years on public-service employment would create a million jobs, which sounds about right.
Finally, we can offer businesses direct incentives for employment… [emphasis added]
Inserted from <NY Times>
I have little to add. We’ve been waiting for wealth to trickle down since 1980. It hasn’t. It won’t. It gushed up and will continue to so so until we correct the insane injustice that the bottom 40% of Americans own only 0.2% of the wealth. Therefore, to pay for Krugman’s jobs programs we need to restore the progressive income tax structure gutted by Reagan, Bush I, Crawford Caligula, and the GOP.
11 Responses to “Krugman: The Jobs Imperative”
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a book could be written about this; let me try a few lines…the first stimulus was made so inept by politics thats its taken the wind out the sails for any further initiative; so expect the deficit hawk dems to line up with the right to block any further spending packages…and with larry summers advising, i wouldnt hold much hope for obama's jobs summit past the usual rhetoric…so with those caveats, i would think we need a jobs czar, (to keep any national jobs plan out of the hands of the congressional porkers; we cant have a 2000 page jobs bill that no one reads), who could evaluate infrastructure projects to be undertaken which will transcend congressional districts; replacing 150 year old water systems in the east and high speed rail in the west might be examples…
I like the idea of an infrastructure jobs program – alot of our infrastructure (roads, bridges, highways, etc.) is crumbling. And even the college kids could join in and gain some valuable skills. (Your MBA is just sitting in a drawer collecting dust right now anyway…)
heres a summary of an artilce from CNN: Congress' next trick: Pull jobs out of a hat – Whatever Congress decides, no single measure will be a panacea. Here are some of the leading ideas being discussed. Offer a payroll tax holiday; Temporarily suspending the payroll tax – which is a 12.4% tax on workers' first $106,800 of wages – could accomplish two goals, supporters say.Create a new jobs hiring credit; The idea behind a hiring credit is to offer employers a sweetener if they bite the bullet and hire more people. Help close state and local budget shortfalls: With jobless rates rising in many states, revenue has fallen, leaving many states with yawning budget deficits. And this could cause the loss of up to 900,000 jobs in 2010 alone Offer public-service employment: Blinder and others have suggested the federal government put money towards creating new public-service jobs.
RJ, if it could inspire a book, you would be the one to write it. 😉
Lisa, back when I could still work, I investigated going to work for another firm. They offered me the job, but I refused because they were offering lower wages than what I was already making. I only completed two years of college. The person who took the job that I refused was a recent MBA grad. And that was two years before the collapse.
RJ, I disagree with the payroll tax holiday. Most of the relief would go to the rich.
as you might expect, since the unemployment rate went north of 10%, this has been the topic de jour on all the blogs, and i have several links each week since on my blog with proposal for solutions and predictions for worse to come; krugman once calculated that at current gdp growth rate, unemployment wouldnt return to acceptable levels until palins second term…others are predicting a 14% rate within a year…there is still another wave of downsizing in retail coming after christmas, with a worse than usual seasonal layoff…and next year, most states face severe budget constraints and in cutting services, more layoffs will come there as well…here's noriel roubinis take: The Worst is yet to Come: Unemployed Americans Should Hunker Down for More Job Losses
RJ, I expect that it will be some toime before we turn the corner on unemployment.
while the usual suspects have attacked Krugmans article, Megan McArdle at the Atlantic has written a direct response to it; short summary: This is Not Your FDR's Federal Government – Paul Krugman and I seem to agree that the worst part of a recession is unemployment. Where we differ is that Krugman doesn't understand why the administration has not made creating jobs a top priority. He wants transfers to state and local governments, a tax credit for increasing payrolls, and a WPA-style jobs program. I want to talk about the jobs program, because it's a superficially compelling idea that just won't work. I don't say this because I necessarily think it's a bad idea. During an employment slump as deep as ours, there are some compelling reasons to support the creation of temporary, low paid public jobs as an alternative to collecting unemployment. Unfortunately, all this is entirely academic, because the federal government cannot create something akin to the CCC or the WPA on the time frame that would help the people who are suffering now. For one thing, there are powerful public sector unions, who are going to fiercely resist any attempt to create low paid temporary jobs that could be done by well paid government workers who have excellent benefits and job security. I doubt the Republicans would be willing to take this one on (or well disposed to a New WPA). But with Democrats in control, this is pretty much a fatal objection. Even if you could surmount union opposition, the federal government has an ever-increasing thicket of red tape that makes such a thing impractical. It takes months to get hired for a job with the federal government. It takes months to ramp up a new program. By the time you'd gotten your NWPA through Congress over strenuous union objections, appointed someone to head it, set up the funding and hiring procedures, and actually hired people, it would be 2011. Maybe 2012. Perhaps you could waive all the civil service and associated procedure surrounding federal hiring, but I don't see how.
RJ, that's an excellent point. Could not the public works programs (small scale as recommended) be run through state agencies?
tomcat, i imagine some kind of jobs program could be run at the state level, but that adds another layer of bureaucracy and pork politics – but it will take $100B from the treasury just to keep paying unemployment in 2010, and the states face massive layoffs if they dont get another couple hundred billion to make up their revenue shortfall…theres a lot of unraveling coming before we can start putting things back together…
I agree. See today's article.
SPAM 🙁