With 16 Million Jobless, Should the Feds Pay People to Work?
The phrase "public jobs" carries decades of baggage, from the Great Depression of the 1930s to the "workfare" programs of the 1980s. But with nearly 16 million people unemployed and a recovery that's halting at best, there's growing pressure on the federal government to get directly into the job-creation business. "There are people who need work and there is much work to be done," Deepak Bhargava, executive director of the Center for Community Change, said this week in making the case for a $40 billion public jobs program.
The feds already have offered tax cuts and tax credits to spur all kinds of economic activity. They have given aid to strapped state and local governments. They have extended unemployment and health benefits and poured money into road and bridge construction. Jarred by October's 10.2 percent unemployment rate, Congress is weighing another round of all of the above, including stalled initiatives for transportation and school renovation projects.
But here's the problem: None of it puts lots of jobless people to work quickly.
The state aid helps employed people keep their jobs. The benefits are a lifeline but not a job. The tax incentives are indirect and take time to have impact. The infrastructure projects also take time to ramp up.
A '70s Government Jobs Program That Didn't Work
Leaders of six liberal groups, including the AFL-CIO, the NAACP, and the National Council of La Raza, held a forum this week to promote their five-part plan to address the jobs crisis. Direct federally funded creation of jobs is No. 3, right after bolstering the safety net and state governments. "There is an economic, moral and political calamity afoot," said Lawrence Mishel, president of the Economic Policy Institute.
Mishel and Bhargava say a government jobs program could put hundreds of thousands of people to work in 2010. The jobs could include painting and repairing schools, community centers, and libraries; cleaning up abandoned and vacant properties in distressed neighborhoods; maintenance and renovation of parks and playgrounds; or service work at food or preschool programs. That would be "visible job creation in a way that people can see and that creates confidence in the possibilities of the future," Bhargava told me.
Yet there is a back to the future quality to the proposal, a New Deal echo, and that disconcerts some Democrats. "A jobs program that smacks of the WPA is the old Democratic Party," Democratic strategist Steve McMahon told me, referring to the Depression-era Works Progress Administration. He said President Obama and Democrats should be talking about "green jobs that are sustainable, not project jobs that go away. Putting a shovel in someone's hand for three months or six months or a year is a great way to get through the 2010 election, but not the best way for the American economy to grow."
So far, there's no groundswell for the public jobs idea. The House plans to pass a jobs bill before Christmas, majority leader Steny Hoyer said this week. But there is no sign at this point that it will have a public job creation component, or that Obama wants one.
House leaders are talking mainly about extending jobless and health insurance benefits, state and local relief, transportation projects, and tax incentives. Obama told Fox News this week that he is worried about jobs but also about the national debt, which has climbed to $12 trillion.
"There may be some tax provisions that can encourage businesses to hire sooner rather than sitting on the sidelines. So we're taking a look at those," Obama told the network. "I think it is important, though, to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession."
Mishel says deficits were not an issue in bailing out banks and expense is no barrier when tax cuts for business are on the table. "I would think jobs would deserve at least the same priority," he told me. As for politics, AFL-CIO president Rich Trumka says voters care more about jobs than deficits. "No one at any door that I've ever knocked on has ever told me 'my biggest concern is the deficit,' " he said.
In any case, the progressives have a way to pay for their plan and even shrink the deficit, both over a 10-year period. They would do it with a small tax on financial transactions to take effect in the third year, when the recession presumably will be over. Given that financial transactions precipitated the economic collapse, Mishel said, "it's not only poetic justice -- it's good economics and has great political appeal."
There are complications beyond money and political perceptions, however, if Congress were to seriously consider a public jobs program. First of all, it would have to avoid displacing people or undercutting unions. "It is important for us that we craft the program carefully, so we're not just replacing people who have good jobs now with lower paid volunteer-type workers," said Thea Lee, a senior policy adviser at the AFL-CIO. She said state and local aid is a higher priority for the AFL-CIO.
There's also the question of how to shape a public jobs program. Some groups say money should be distributed through an existing system and formula such as Community Development Block Grants. Others would like to see a new program in the Labor Department with a formula that targets distressed communities.
Either way, local communities would identify job needs and organizations to administer the program in their area. The idea of community groups handling federal money made me think of ACORN, and wonder if that would deter lawmakers. "This is not a stalking horse for funding ACORN in any way," Mishel said. "The main drivers of this would be local governments. Local governments could choose to contract with community based organizations to do work that creates jobs."
Bhargava said even close monitoring would not prevent problems because the federal response will have to be so massive. "There will undoubtedly be missteps along the way," he said. But he added that "the urgency of human suffering is so great, it would be a tragic mistake not to act because some money somewhere might be misspent."
Despite the public silence from Obama and Democratic congressional leaders, the group of six says their government jobs plan will be part of the discussion on Capitol Hill and at a Dec. 3 jobs conference at the White House. "I wouldn't be surprised to find that this is something that gets legislated," Mishel said. Personally, I would be surprised. But if unemployment keeps rising through 2010, all bets are off.
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