• Rediscovering Government

    How Can We Solve the Jobs Emergency? A Q&A with Jeff Madrick

    May 17, 2013Cathy Harding

    On June 4th, the Roosevelt Institute will bring together leading thinkers, activists, and policymakers for A Bold Approach to the Jobs Emergency: Setting the Political Agenda for 2014 and 2016, a daylong conference in Washington, D.C. that will focus on America's desperate need for more and better jobs. Recently, Cathy Harding, Roosevelt's VP of Operations and Communications, sat down with Jeff Madrick, Roosevelt Institute Senior Fellow and Director of the Rediscovering Government initiative, to discuss his goals for the conference and his thoughts on what we can and must do to address the ongoing jobs crisis.

    On June 4th, the Roosevelt Institute will bring together leading thinkers, activists, and policymakers for A Bold Approach to the Jobs Emergency: Setting the Political Agenda for 2014 and 2016, a daylong conference in Washington, D.C. that will focus on America's desperate need for more and better jobs. Recently, Cathy Harding, Roosevelt's VP of Operations and Communications, sat down with Jeff Madrick, Roosevelt Institute Senior Fellow and Director of the Rediscovering Government initiative, to discuss his goals for the conference and his thoughts on what we can and must do to address the ongoing jobs crisis.

    Cathy Harding: At the upcoming Rediscovering Government conference titled “A Bold Approach to the Jobs Emergency,” you’re going to make the case that solving the jobs emergency requires a comprehensive approach. Is that a new perspective on job creation? In other words, what needs to be included as part of a meaningful response that has not be included before?

    Jeff Madrick: I think it basically is a new approach. I think people have their one or two favorites. Mainstream economists almost solely talk about education; in fact, there is a quote from Claudia Goldin and Larry Katz of Harvard in a Mike Milken Institute publication that says, yes things like minimum wage and unionization may matter, but they really don’t matter very much. It’s almost all education, or Raghuram Rajan, who is a well-known Chicago economist, says the big problem is education. I think even left-wing economists will say the big problem is education. In my view it is one of many problems.

    There are bills out there that are moderately comprehensive, like Tom Harkin’s bill, and he’s going talk about that.

    Minimum wage contributes too, and de-unionization contributes to it. I think the lack of enforcement of the employment laws contributes to it, which has been serious.

    We don’t pay any attention to job training programs in a serious way, aside from college education.

    I think there are issues about health insurance that have to be talked about; there are issues about Wall Street, in particular, that are almost totally ignored by Washington, D.C. Wall Street’s impact on suppressing good jobs has been very serious, and it’s not part of any of these bills. So I think all of these matter.

    And finally, government investment in infrastructure and new technologies are job creators.

    CH: What happens if you don’t approach the jobs crisis across many planes?

    JM: We are going to continue to generate fewer jobs than we should, and we won’t generate enough jobs that pay well. That’s a big deal. We are already in a very serious hole merely on the number of jobs, but the quality of jobs, in terms of wages they pay, and in terms of benefits like retirement and health insurance, is stunningly bad.

    CH: So you are saying that without a multi-pronged approach to the jobs issue, it is just going to get worse?

    JM: I think, yeah. I think if we listen to what most economists tell us to do, we would be a very sad country.

    CH: So, Jeff, when we read reports that say unemployment is going down, and that jobs are being created, what questions should people be asking about those numbers?

    JM: Long-term unemployment, that is, people who can’t get jobs for 6 months or more, is very high. It has been setting records for a long time now. So yes, there is a slight improvement in the unemployment rate, but it is not nearly enough. What are the reasons for that? Part of it is slow economic growth in itself. Why do we have slow economic growth? Probably the single most important reason, but not only reason, is high levels of debt that are held over from the mortgage boom. So slow growth contributes to that lack of rapid job creation, but so do these other factors, including Wall Street and pressure on wages by business. Some of it generated by Wall Street needs and stock market needs, some of it generated by globalization and the ability to go somewhere else.

    CH: So you are not cheered when you see a report that says the unemployment rate is down to 7.5 percent?

    JM: All of it has to be in context. I think it suggests, given that the government is taking money out of the economy through this now famous sequestration process, that the economy is stronger than we thought it might be. If only they would get out of the way, we would probably be creating a lot more jobs, but they are not getting out of the way. So that is another issue we have to deal with. So I am cheered that the job situation in the latest reporting month was better than most people thought, given that the government is stepping on the breaks and we are still moving.

    CH: You talked about it not just being a matter of jobs, but the question of good jobs. The students involved in Roosevelt Institute | Campus Network through their Government By and For Millennial America report have identified that quality of jobs as being a very important issue for the country as a whole, and their generation. Can you specify what a bold approach might look like, specifically for the generation just coming onto the job market?

    JM: Young people are getting the tail end of what is a pretty crummy job market for almost everybody. So to tailor a jobs program for the very young probably requires a variety of different types of policies. Still, going to college enables you to at least get a job, even if it is not a good job. A lot of people who go to college have to take jobs where you don’t really need a college education. So is there a simple answer – go get a college education? It is a negative answer. Don’t not get a college education.

    We may have to tailor jobs programs run by the government to hire young people. It may come to that. We might need job-hiring programs by the government in the end. And we can’t neglect that idea, or keep it out of sight because we haven’t done for so long, or because “it is not the private market.” The big crisis is for the young people.

    If you get a bad- or lower-paying job at 25, it probably affects your earning power for the rest of your life. So it is a pretty serious issue.

    CH: You have written a lot about what you call “the age of greed.” Is there is a cultural aspect to this current jobs crisis?

    JM: I haven’t thought about that sufficiently. I think there is now too easy an acceptance that people won’t get good jobs and that the future may not be very good. That’s rather a new thing in America. One of my favorite stories is from Fernand Braudel, the historian, who says, way back who knows when, a Frenchman wrote a letter from Wyoming or somewhere like that. He said, “You can’t believe what they are doing in this town. They are building City Hall a mile from where we all live, and where the town center now is. Why? Because they’re so optimistic the town is going to grow so much that will be the new center.” I don’t think we have much of that kind of optimism. Ironically, the great so-called optimistic president, Ronald Reagan, in my view, was the guy who made us all pessimists -- that we can’t rely on government to make things better and that all we have to do is have good thoughts and things will get better on their own. So now that I think about it and you brought it up, I think there is a pessimism that’s taking root in our society that is very dangerous. I don’t think if you talk to people who are 35 now and have children that they are extremely optimistic about prospects for their children. 

    CH: The closing panel at the jobs conference will address momentum building. What can people expect to take away from that?

    JM: I think that most of us don’t think that a jobs conference or a well-written jobs proposal is immediately going to result in action. I think we have to win people over with argument, and persuasion, and facts, and a sense of what is really at stake here. And I think that’s what building momentum is about. One can say, “Win over one person at a time, and then eventually you get a movement.” It is something like that. And I think that is what Rediscovering Government is going have to be dedicated to. We are not going go down there and change the world on June 4th, but we want to lay the groundwork for fighting the ongoing battle. And indeed, laying the groundwork and setting the political agenda for the elections of 2014, and especially 2016. We want to influence elections. We want a job-creating President and a job-creating Congress.

    The full agenda for the June 4th conference is now available online. Click here to learn more about the speakers and RSVP today.

     

    Job search image via Shutterstock.com

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  • Price Point
    Daily Digest

    Daily Digest - May 17: It's Gatsby's World, They're Just Working In It

    May 17, 2013Tim Price

    Click here to receive the Daily Digest via e-mail.

    Gatsby and the McJobs Rebellion (KC Star)

    Click here to receive the Daily Digest via e-mail.

    Gatsby and the McJobs Rebellion (KC Star)

    Roosevelt Institute Fellow Dorian Warren notes that the new adaptation of The Great Gatsby is timed nicely with fast food and retail workers' push for fairer wages. The story of unbridled greed keeps being retold, but this time they plan to write their own ending.

    Millennials reject 'lazy, entitled' label: 'Who are they talking about?' (Today)

    Roosevelt Institute | Pipeline Fellow Nona Willis Aronowitz writes that while pundits sneer at Millennials, members of the generation that came of age during the Great Recession are too busy working to improve the bad hand they've been dealt to have time for haters.

    84 Percent of NYC Fast Food Workers Report Wage Theft in a New Survey (The Nation)

    Josh Eidelson highlights a new report that finds many fast food restaurants are pulling a fast one on their workers, who are forced to work without pay or denied breaks and overtime. Even the Hamburglar himself would never have stooped to this kind of petty thievery.

    That's a 'Depression': Europe's Double-Dip Is Officially Longer Than Its Great Recession (The Atlantic)

    Matthew O'Brien notes that GDP data prove Europe's response to the recession has been worse than the recession itself, but polls still show widespread support for the euro and austerity, so the continent may just have an unusually large population of masochists.

    Surprise! Inflation is too low almost everywhere on earth (WaPo)

    Neil Irwin writes that in contrast to inflationistas' repeated warnings that quantitative easing would lead to a grim, dark future in which there is only Bitcoin, none of the leading central banks have even been able to hit the 2 percent inflation rate they were aiming for.

    Foreclosure Crisis Cost U.S. $192.6 Billion in Lost Wealth Last Year, Study Finds (HuffPo)

    Jillian Berman writes that even as the housing market rebounds, millions continue to lose their homes or struggle in vain to save them, with minority borrowers hit particularly hard. Is there no "moral hazard" in leaving enough people underwater to re-settle Atlantis?

    The real IRS scandal: Targeting by class (Salon)

    David Dayen points out that unfairly scrutinizing one group over another isn't new behavior for the IRS. That's why the working poor get audited while big corporations get away with just about anything as long as they employ a sufficiently intimidating number of lawyers.

    Billionaires Unchained (TomDispatch)

    Andy Kroll argues that you can't measure the impact of money in politics by simply chalking up big donors' wins and losses and calculating the score. The point is that something's off when one person can spend more in one election than most voters will ever make.

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  • The Ongoing Crisis Demands Jobs, Not Deficit Reduction

    May 16, 2013David Woolner

    Today's leaders must recognize that job creation is the key to boosting revenues for the government and the people.

    Today's leaders must recognize that job creation is the key to boosting revenues for the government and the people.

    Now, the rise and fall of national income—since they tell the story of how much you and I and everybody else are making—are an index of the rise and fall of national prosperity. They are also an index of the prosperity of your Government. The money to run the Government comes from taxes; and the tax revenue in turn depends for its size on the size of the national income. When the incomes and the values and transactions of the country are on the down-grade, then tax receipts go on the down-grade too. If the national income continues to decline, then the Government cannot run without going into the red. The only way to keep the Government out of the red is to keep the people out of the red. And so we had to balance the budget of the American people before we could balance the budget of the national Government.—Franklin D. Roosevelt, 1936

    The news that the nation added 165,000 jobs in April and that the unemployment rate has dipped to 7.5 percent—its lowest since December 2008—is of course welcome. It has eased the fears of many economists that recent cuts in federal spending might stall our somewhat anemic recovery, helped boost the stock market to record levels, and has been cited by Alan Krueger, the Chairman of the President’s Economic Advisors, as “further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.”

    But as many economists have also reported, the April rate of job growth is still far too low to bring about the level of re-employment needed to bring us back to full employment, and, worse still, the slight improvement in the overall unemployment rate masks a good many far more disturbing statistics. Many of the jobs acquired in April are low-skill and low-paying. Some of the drop in the unemployment rate can be attributed to the fact that millions of Americans have stopped looking for work and have dropped out of the work force all together—496,000 people in March 2013 alone. Then there are the under-employed, who also rank in the millions. If we add their ranks to those who are unemployed or have dropped out of the work force altogether, we arrive at an overall “underemployment rate” of 13.9 percent, up from the previous month’s rate of 13.8 percent. Taken together this means that roughly 22 million Americans are either unemployed or under-employed—a staggering figure, which after four years of so-called “recovery” has some economists predicting that long-term un-and under-employment may now be a permanent fixture of the American landscape.

    What is even more shocking, however, is that in spite of all of these grim statistics, grim statistics that reflect the hardship and pain of millions, much of the political discourse in Washington—and in the media—remains fixated on the debt and deficit and the Republican demand for a balanced budget. It is almost as if Washington has all but given up on trying to take direct action to bring about a better employment picture. This realization is perhaps best evidenced by the fact that one of the more significant contributors to our persistently high unemployment rate in the past year has been public sector layoffs. 

    Calls for the federal government to balance its books are not new, of course. Thanks to the extremely effective public persuasion campaign of the conservative right, we have heard this refrain time and time again. It has now become de rigueur for most politicians— no matter what their party—to pay lip service to the need to get “our house in order” and cut the deficit no matter what the consequences for the average American.

    It wasn’t always this way, however. In the mid-1930s, when faced with a similar economic crisis and similar calls for cuts in federal spending, Franklin Roosevelt took an entirely different tack. He insisted that in the midst of a crisis where—much like today—we faced both declining federal revenues and increasing unemployment, “a national choice had to be made” between those who argued that the government should do nothing and “let Nature take its course” and those who argued for federal intervention in the economy, even if it meant running a deficit. As FDR saw it, what stood between his administration and a balanced budget were “millions of needy Americans, denied the promise of a decent American life.” In light of this, he argued that “to balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people,” which would have required either “a capital levy that would have been confiscatory” or accepting “human suffering with callous indifference." "When Americans suffered,” he went on, “we refused to pass by on the other side. Humanity came first.”

    And so the Roosevelt Administration launched programs like the Works Progress Administration that built much of the infrastructure we still enjoy today and which gave millions of Americans, from common laborers to structural engineers, the joy and dignity of work. FDR admitted that “this cost money”—and the American people understood that this would continue to cost money “for several years to come.” But given the dire state of the economy and the lack of demand in the private sector, the American people understood that it was the right thing to do.

    Unlike today’s politicians, however, FDR refused to pander to the sky-is-falling rhetoric of the conservative right on the disastrous consequences that would accrue to the country by running a deficit in the midst of an economic crisis. For them FDR had a simple answer. He flat out rejected “this foolish fear about the crushing load the debt will impose upon your children and mine.” On the contrary, he went on:

    This debt is not going to be paid by oppressive taxation on future generations. It is not going to be paid by taking away the hard-won savings of the present generation. It is going to be paid out of an increased national income and increased individual incomes produced by increasing national prosperity.

    In other words, FDR understood that the real crisis the country faced in the Great Depression was an employment crisis—not a deficit crisis—and that in the long run the “only way to keep the Government out of the red” was, as he said, “to keep the people out of the red.” And so he set his priority on the one thing he knew would help bolster the revenue of both the American people and their government: millions upon millions of jobs.

    Unfortunately, much of our leadership in Washington today seems to have lost sight of this fact, and instead of taking meaningful action to help grow the economy and alleviate the suffering of the millions of unemployed, would prefer to cut spending and engage in another endless round of bickering about the debt and deficit. Such “callous indifference” to the plight of millions of Americans is no way to bring about an end to the current crisis or build a better future for our children.

    David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

    For more on solutions to the ongoing unemployment crisis, join the Roosevelt Institute in Washington, D.C. on June 4th for A Bold Approach to the Jobs Emergency: Setting the Political Agenda for 2014 and 2016.

     

    Unemployment line image via Shutterstock.com.

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  • Price Point
    Daily Digest

    Daily Digest - May 16: Thirty-Seventh Time's the Charm

    May 16, 2013Tim Price

    Click here to receive the Daily Digest via e-mail.

    Four Better Ways to Spend the $55 Million Wasted on Votes to Repeal the Affordable Care Act (Think Progress)

    Click here to receive the Daily Digest via e-mail.

    Four Better Ways to Spend the $55 Million Wasted on Votes to Repeal the Affordable Care Act (Think Progress)

    House Republicans will vote to repeal Obamacare for the 37th time today because they still haven't found a genie to grant their wish, but Bryce Covert and Adam Peck write that instead of paying them to pretend to work, we could pay for things we actually need.

    Sequestration Cuts Taking Money Out of People's Unemployment Checks (HuffPo)

    Arthur Delaney notes that 2 million long-term unemployed are seeing their benefits cut as a consequence of the sequester. Now that money can be put toward reducing the already rapidly shrinking federal deficit instead of being wasted on, say, a family's dinner.

    The global epidemic of underemployed youth (Reuters)

    Shane Ferro highlights a report from the International Labor Organization that finds fewer than 20 percent of young people in high- or low-income countries are fully employed, with the rest either hustling, studying, or just waiting around and wondering when life starts.

    IRS Fallout: The Real Scandal Is Secret Money Influencing US Elections (The Nation)

    While some critics are mad that the IRS dared to question the legitimacy of a bunch of guys in Thomas Jefferson costumes, Ari Berman argues the bigger problem is that they didn't even bother to question what the guys in the expensive suits and ties were up to.

    Europe's endless recession, in one chart (WaPo)

    Brad Plumer notes that the euro zone economy has now contracted for the sixth consecutive quarter, making it the longest recession the euro zone has ever experienced and, based on how its members are souring on the project, quite possibly the last.

    The Fed's Credibility Problem (ProPublica)

    Jesse Eisinger argues that while it might be fun to point and laugh at the hedge funders who have been complaining that the Fed doesn't know what it's doing, they kind of have a point, even if it's by accident: the central bank's track record is pretty abysmal.

    Why Won't the SEC Rein in the Firms That Tanked America's Economy? (MoJo)

    Erika Eichelberger writes that a handful of credit rating agencies helped blow up the economy by telling banks for a fee that the piles of toxic junk they were selling smelled like roses, but the SEC still isn't sure it sees anything wrong with that scenario.

    Guerrillas in the Boardroom (TNR)

    David Dayen writes that shareholder activists are learning to work the system, winning 66 percent of proposal votes this year and engineering the ouster of a Fortune 500 CEO. Now they're on the verge of making Jamie Dimon take his ball and go home.

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