The Jobs Emergency

Jun 3, 2013Jeff Madrick

On Tuesday, June 4th, the Roosevelt Institute's Rediscovering Government initiative will host A Bold Approach to the Jobs Emergency, a daylong conference exploring the roles of government, policy, and activism in addressing historic levels of unemployment and economic misery.

On Tuesday, June 4th, the Roosevelt Institute's Rediscovering Government initiative will host A Bold Approach to the Jobs Emergency, a daylong conference exploring the roles of government, policy, and activism in addressing historic levels of unemployment and economic misery.

A lot is said about the jobs crisis in America, but not enough. We have a full-fledged jobs emergency and jobs are the nation’s number 1 problem. We at the Roosevelt Institute are holding a full-day jobs conference in Washington on Tuesday, June 4th to address a wide range of solutions to the economy’s alarming inability to create adequate jobs. The conference is sponsored by Bernard Schwartz, who has strongly encouraged this focus at Rediscovering Government and agrees that jobs are America’s major concern. We hope to shift the political agenda by examining what this emergency is, where it came from, and how we might solve it.

The unemployment rate is the first line of evidence of our emergency but not the most disturbing. At 7.5 percent, it has dropped roughly two and a half percent percentage points since its height, but remains far from full employment four years after the Great Recession ended. As many now know, if we include part-time workers who want full-time jobs and discouraged workers, the unemployment rate is roughly 14 percent. In another analysis, between 2007 and 2009, one out of six workers lost a job.

Of greatest concern is the related employment-to-population ratio, which measures the proportion of the country’s working-age population that is employed. It is down to 58 percent from 63 percent. This shows that the only reason the unemployment rate is as low as it is has been is because people are dropping out of the labor force. Recent surveys also show that sharp decline in re-employment rates.  

Then there is long-term unemployment, those out of work for six months or more, which is still millions of workers above its levels before the recession. New evidence shows that the long-term unemployed are “scarred.” They have measurably more difficulty getting new jobs than those out of work for a shorter time.

The emergency worsens because we not creating enough jobs to replace those lost, and the jobs being created are low wage or do not include retirement and healthcare benefits. Two of our conference participants, Annette Bernhardt and John Schmitt, have done original research on these issues. Their findings are alarming.

And what happens even when you get a new job? Researchers find that those displaced now experience sharp declines in wages over twenty years even when re-employed.

One reason I call this an emergency is that the two prior recessions and recoveries were also not creating jobs the way the U.S. once did. Job gains were late in coming in the economic recoveries after the recessions of 1990-1991 and 2001. Again, the jobs being created don’t match those that existed before. Today, the typical male earns less after inflation than he did in 1969. The typical household earns less than in 1999.

And what should worry us most is what is happening to the young.  Employment-to-population ratios for teenagers and young adults have collapsed. This is a social explosion waiting to happen. Early job experiences influence future job outcomes.

So what are we to do? Economists almost universally call for more college attendance. But is that remotely enough? Infrastructure investment has rarely been more appropriate, but will the U.S. spend enough? What about the minimum wage, job standards, local activism, job training? Has Wall Street’s emphasis on short-term corporate profits and the attraction of capital to trading profits made matters much worse? Is globalization the source of most of these troubles?

Finally, are we simply growing too slowly? Washington gives us austerity economics when we clearly need more stimulus. How does one move this mountain of misinformation and uninformed ideology? Full-throated fiscal stimulus might well be an answer that gets us closer to full employment.

We have always found economists who argue there is a structural employment problem, claiming that we don’t have the workers who qualify for the jobs. The evidence for this is thin at best. We will discuss this issue as well.

This jobs emergency now requires a full-court press. That is why we have seven different panels to address these questions and a host of possible solutions.

Some insist we should talk mostly about what is politically practical. If we limited ourselves to what Congress might do, we’d have little to talk about. We must change their priorities. Jobs must be number one, but the nation cannot seem to admit that to itself.

We need, as one of my colleagues puts it, a job-creating president and a job-creating Congress. Jobs should be on everyone’s lips. Many talk narrowly about how only business creates jobs, yet corporate profits are enormous and job creation lags. I hope that with this conference, we will begin to pave the way to a far broader job-creating political agenda for 2014 and 2016.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

 

Emergency light image via Shutterstock.com

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Daily Digest - May 28: Global Economy, Global Loopholes

May 28, 2013Rachel Goldfarb

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Globalisation isn't just about profits. It's about taxes too (The Guardian)

Click here to receive the Daily Digest via email.

Globalisation isn't just about profits. It's about taxes too (The Guardian)

Roosevelt Institute Senior Fellow Joseph Stiglitz argues that in today's global economy, all countries suffer when major corporations take advantage of tax loopholes, and that reform is needed so that corporations pay a fair income tax rate internationally.

The Facts (Captive Audience)

Roosevelt Institute Fellow Susan Crawford corrects what Comcast's Executive Vice President told the U.S. Conference of Mayors about how great high-speed Internet access is in the U.S. If the mayors believed him, they must not look at what household Internet costs in their cities.

See How Citigroup Wrote a Bill So It Could Get a Bailout (MoJo)

Erika Eichelberger spoke to Roosevelt Institute Fellow Mike Konczal about Citigroup's attempt to gut the "push-out rule," which would forbid banks from trading certain derivatives. This prevents banks from protecting risky trades with FDIC insurance, and Konczal says we need it "more than ever."

This Week in Poverty: Homeowners Take the Foreclosure Fight to the DOJ (The Nation)

Greg Kaufmann spoke to activists involved in protests last week to fight illegal foreclosures and push for principal reductions for homeowners at risk of foreclosure. These newly minted reformers first fought to keep their own homes; now they’re fighting for others.

  • Roosevelt Take: The jobs crisis hasn't helped people struggling to keep their homes. Roosevelt Fellows and other distinguished guests will discuss A Bold Approach to the Jobs Emergency on June 4th.

America is the only rich country that doesn’t guarantee paid vacation or holidays (WaPo)

In honor of Memorial Day, Ezra Klein reminds us that in the U.S., poorer workers are less likely to have any paid time off, and if they do, they get less. Compared to European countries' paid time off guarantees, yesterday's barbeques seem a little less exciting.

Let Them Make Their Own Jobs (NYT)

Nancy Folbre considers that statement to be the new "let them eat cake," because entrepreneurs and start-ups struggle as much as established businesses with the lack of demand. Creating your own job doesn’t guarantee you've created any income for yourself.

The Falling-Bridge Lesson: The U.S. Infrastructure Failure Is Still Totally Inexcusable (The Atlantic)

Matt Thompson thinks the bridge that collapsed near Seattle last week needs to be a wake-up call to increase spending on infrastructure. Maybe some members of Congress will take family road trips this summer and notice how the roads just end at that big blue space on their map now.

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Daily Digest - May 22: Where Have All the Good Jobs Gone?

May 22, 2013Rachel Goldfarb

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The Case for Raising the Minimum Wage (U.S. News and World Report)

Click here to receive the Daily Digest via email.

The Case for Raising the Minimum Wage (U.S. News and World Report)

David Cooper makes the case that raising the minimum wage is not only advisable but necessary: with full-time minimum wage workers living below the poverty line, every taxpayer is subsidizing low wage employers. Not the most uplifting way to see your tax dollars at work.

Workers Strike Over Federal Contracts and Low Wage Jobs In D.C.(HuffPo)

Arthur Delaney and Dave Jamieson spoke to workers striking yesterday to protest low wages at workplaces funded by federal contracts. If taxpayers subsidize low-wage workers, this piece of the puzzle is even more frustrating, because federal contracts could set a higher wage floor.

SNAP Rolls: They’re Elevated for a Reason (On The Economy)

Jared Bernstein explains why SNAP enrollment isn’t dropping right alongside unemployment, even though that’s a pretty logical idea. Unemployment may be down, he says, but that doesn’t mean people have actually gone back to work, and in the meantime, they still need to eat.

Keynes Skeptics Find New Economic Poster Boy (NY Mag)

Jonathan Chait has discovered the new face of austerity, following the collapse of Reinhart-Rogoff: James Buchanan (the economist, not the unloved U.S. president). Buchanan argued “temporary” stimulus would create permanent long-term deficits, but Chait isn’t buying it.

Naming Names in the Dodd Frank Mess (TAP)

David Dayen wants us to stop blaming generic “Wall Street lobbyists” for gutting Dodd-Frank when they have name-brand help. Regulators like Mark Wetjen, one of the Democratic commissioners on the Commodity Futures Trading Commission, are also responsible for weaker rules.

The IRS controversy isn’t about taxes. It’s about disclosure. (WaPo)

Dylan Matthews thinks that the IRS controversy is really about the distinction between 501(c)(4)s and 527s: the former can keep donors a secret, but 527s must disclose. Apparently Tea Party organizations are worried that no one would donate to them if they had to own up to it.

A Keynesian Victory, but Austerity Stands Firm (NYT)

Eduardo Porter examines why Keynesian economists are running victory laps around austerians, yet austerity politics are still reigning across the globe. The intellectual battle may be won, but politicians are resisting.

New on Next New Deal

Creating Good Jobs is the Defining Issue of Our Time (Next New Deal)

Roosevelt Institute Senior Fellow Richard Kirsch knows that our biggest economic problem isn’t the deficit or national debt: it’s jobs. Good jobs, the ones that provide decent pay and benefits, are disappearing, and the economy can’t recover without them.

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Creating Good Jobs is the Defining Issue of Our Time

May 21, 2013Richard Kirsch

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. Today, Roosevelt Institute Senior Fellow Richard Kirsch, who will take part in a panel on "Creating Momentum for More Good Jobs," explains why job quality is as important as job quantity.

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. Today, Roosevelt Institute Senior Fellow Richard Kirsch, who will take part in a panel on "Creating Momentum for More Good Jobs," explains why job quality is as important as job quantity.

What is the single biggest economic problem facing people early in this century? It is not the budget deficit or national debt. It is the eroding and disappearing of good jobs. People with good jobs – jobs that provide decent pay and benefits and the flexibility to be able to take care of one’s family – are the fuel of the economy and the basis for broadly shared prosperity. Good jobs, and the things that go with them – a good education, affordable health care, and a secure retirement – are the very definition of a successful economy.

The public gets it. When asked to identify “the single biggest problem facing this country today,” 40 percent answered “jobs and the economy.” Number two was “budget deficit/national debt,” at 6 percent.

Four years after the official end of the Great Recession, the real economy – not corporate profits or the stock market – remains stalled. The proportion of Americans working is the lowest in 30 years, or basically since women started entering the work force in large numbers. Most of the jobs that have been created since the recession pay low wages. Long-term unemployment also is at levels well above anything since the Great Depression. And income for all but the richest has gone down.

So why does Washington and elite discussion remain focused on the debt and deficit? And what will it take to move the politics of the nation to take on what the public correctly understands is the central economic issue?

The fundamental reason that good jobs is not the defining issue is that an economy in which some people have a lot while more and more scrape buy is working just fine for the wealthy and huge corporations that control our politics and media. Personally, the rich are doing better than ever, as their inflated pay and corporate profits are supported by the financialization of the U.S. economy, low-wage service sector jobs here. and low-wage manufacturing and importable services abroad. The middle class in the U.S. may be getting squeezed and shrinking, but it’s still broad and big enough to fuel demand for U.S. goods and services. The disasters to come from the lack of retirement savings, high student loan debt, and long-term wage stagnation are not stopping the rich from getting richer today.

The interest of the ruling elites has been powerfully popularized by the right’s highly disciplined, focused narrative on the national debt and budget deficits. While the motivation here is ideological – to shrink those government services and activities that improve social welfare or regulate the markets – the weapon has been convincing Americans that the national debt is an unconscionable burden on our children, that government deficits are as unsustainable as household deficits, and that taxes are paid to a wasteful, corrupt government. Instead, the right insists that businesses are the “job creators” and that any effort to interfere with what business thinks is best will put people out of work.

As a result, the great public concern about the lack of good jobs doesn’t translate into support for government action – or any action, other than to do your personal best and pray that things get better. People don’t believe that there are solutions for good jobs in a global economy. They certainly don’t see that government has a role in creating jobs or that tax dollars could be spent on effective job creation. And while they support regulations to improve job quality, they are very susceptible to pro-business arguments.

What do we do about it? Here’s an overview of a strategy. One, we need to make good jobs the central, driving focus of progressive discourse, just as the right has put deficits/debt/limited government at the center of their policy, politics, and communication. That requires clearly linking every issue to the need to create good jobs that will enable working- and middle-class families to have opportunity and security. In doing that, we need to be talking about good jobs in a multi-dimensional way. Good jobs are about having enough pay to support your family, flexibility to allow you to care for your family – from children to elders – and access to good, affordable education, affordable health care, and a secure retirement.

Two, we need to center our discourse on good jobs in a powerful, values-based story about how we create an America that works for all of us. This story starts with a vision of an America that provides liberty, justice, and prosperity for all. It reinforces the notion that people believe but rarely hear: working families and the middle class are the real engines of the economy. It provides examples from American history of how decisions we have made together built the great American middle class. And it follows those with a vision and example of how we can make decisions together in the 21st century to create good jobs for everyone in America. It clearly identifies who is responsible for the mess we’re in – the super-rich and corporations who game the system at our expense and buy off our government. And finally, the story empowers people as the heroes who can take action for change.

Third, we need to champion a program of policies that will work to create good jobs. We have policies and innovative ideas that will work today, many of which will be discussed on June 4th in Washington when the Roosevelt Institute holds a daylong conference on A Bold Approach to the Jobs Emergency. Certainly, we will need to continue to develop policy solutions that address major challenges like globalization and technology. But we should be clear that it is in our power now to redirect economic policy to dramatically improve the quality of the jobs Americans now hold and to create millions of new good jobs for people who are out of work.

Fourth, we need to organize campaigns for good jobs, starting with a focus at the local and state level. Even though municipalities and states don’t have as many resources as the federal government, there are policies that can be taken locally to create a new economic paradigm. The success of those policies will be more immediately visible to people. The lessons learned in building popular support for these policies will be transferable to other places and to the federal level.

Finally, we need to make good jobs a defining issue of the 2016 election. To reach that goal, we will need to do all of the above, with a strategy that brings the work together for the 2016 election. In 2014, we should focus on a few U.S. Senate and congressional elections to experiment with the best approaches. We can take a page from specific strategies used from 2007-2008, which made health care the central issue of the 2008 election.

American’s historical optimism is being deeply challenged by the squeezing, and indeed crushing, of the middle class. Our job is to rekindle that optimism and make it a powerful force for change. We can build an America that works for all of us by building a movement to demand good jobs for everyone. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

Lab workers image via Shutterstock.com

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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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The Ongoing Crisis Demands Jobs, Not Deficit Reduction

May 16, 2013David B. 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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How to Pensa 2040: Italy's Millennials Share Their Blueprint for Change

May 13, 2013Alan Smith

An Italian offshoot of the Roosevelt Institute | Campus Network shows that Millennial policy priorities reach across national borders.

An Italian offshoot of the Roosevelt Institute | Campus Network shows that Millennial policy priorities reach across national borders.

In 2010, the Roosevelt Institute | Campus Network created the Blueprint for Millennial America, a generational vision for the country we hoped to see by the year 2040. In the conversations that established the backbone of the blueprint, we identified a core set of values shared by Millennials. The top three -- a deeply held concern for equity, a respect for the individual and society, and a belief in community empowerment and self-determination – represent a commonality that we think underlines what is unique about this generation of Americans. We are a group that seeks self-empowerment and strives to improve our society, but not always through the traditional power structures.

Over the last year, a similar project has been taking root on university campuses and among active Millennials – except this time it’s in Italy, where students have stepped up to take charge of their country’s uncertain future. “Pensa 2040” has taken the values-based collective ethos of the Roosevelt Blueprint and the Budget for Millennial America but introduced an Italian perspective. More than a thousand Italians have participated in conversations similar to those that built the Blueprint, and a Millennial vision for Italy is coming into focus.

If we’ve learned anything at the Campus Network, it’s that ownership of the process is equally as important as ownership of the outcomes. From what we’ve seen so far, the leaders of the Pensa 2040 process have carried on the successes of the Thinks 2040 framework by being willing and able to customize their discussions for the people in the room and the issues that are near and dear to their hearts. Holding discussions that engage people through the fundamental framework of values, and in so doing asks participants to examine which issues they truly believe are the most important, can yield a deeper and more lasting engagement on the issues that the community decides on together. 

So, what happened in Pensa 2040? The top-ranked value listed by the Italian Millennials reveals a clear difference between our two cultures: a deeply held respect for the idea of “legality.” This concept, rooted in Italy’s ongoing problems with the mafia and organized crime, extends to ending tax evasion and corruption within government. The very fact that the idea of legality would be a core value reveals a desire for order that is not at the forefront of many Americans’ minds. Still, some of the outcomes that students hope for in this category include a fair tax system and a more effective and fair legal system – important underpinnings of the Government By and For Millennial America discussion. 

It is in the second and third values expressed by the Italian students that we find a direct match with their American counterparts: equality and respect for the rights of the person. These essentially match word for word the underpinnings of the American Blueprint, and we find kinship with a generation focused on an absolute right to citizenship, same-sex marriages, and “civil service for all” (outcomes under “Uguaglianza”) as well as a right to health and full access to the sorts of “primary goods” that people need to be active and successful citizens (outcomes listed under “Rispetto per i diritti della persona”). There is something here, direct and definable, that speaks to a global generational identity. 

This sympathetic outlook makes sense: there are more and more shared experiences for people across borders and oceans. Not only could we jump on Skype to hear the results of the Pensa 2040 discussions, but many of the core issues facing Millennial Italians are the same issues facing American students in the Campus Network. Global climate change, economic uncertainty, and the challenges of a consistently volatile yet ever-more-interconnected world mean that the experience of being young often establishes a stronger bond than the experience of being “American” or “European.” While the 39 percent youth unemployment rate in Italy dwarfs the 17 percent unemployment rate for American youth, both countries are experiencing talk of a “lost generation,” and anyone trying to get a job out of college right now can tell you that unemployment is only a part of a bitter cocktail that includes low-wage jobs and student debt.  The economic example serves to highlight a greater truth: that a generational movement is real and important. 

Pensa 2040 has moved from the conversation stages to the building of a values-based blueprint for Italy. Students are working with other stakeholders now to write policy recommendations for Italy going forward, and to follow in the footsteps of the Campus Network by creating a crowd-sourced and collaborative budget for Italy that tackles their ongoing economic woes from a place of shared values. We’re excited that Italian students have taken on a part of our brand of collective discussions and are using it to build something equally as empowering and exciting for themselves. Look for a Blueprint for Millenario Italia entro il 2014! 

Alan Smith is the Roosevelt Institute | Campus Network's National Policy and Program Director.

 

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Audacity, Audacity, Always Audacity: Why Obama and Baucus Should Push for a Carbon Tax

Apr 29, 2013Bo Cutter

A carbon tax would bring long-term rewards, but it will take leaders willing to make short-term sacrifices.

We are at an unacknowledged turning point for the economy and the environment. We could, right now, substantially reduce our debt and deficit projections, take a major step toward a better environment, create a simpler and fairer tax system, make job creation easier, and raise economic growth a bit. For all of these reasons, we could and should adopt a carbon tax.

A carbon tax would bring long-term rewards, but it will take leaders willing to make short-term sacrifices.

We are at an unacknowledged turning point for the economy and the environment. We could, right now, substantially reduce our debt and deficit projections, take a major step toward a better environment, create a simpler and fairer tax system, make job creation easier, and raise economic growth a bit. For all of these reasons, we could and should adopt a carbon tax.

Taking this step depends on two men: President Obama and Senator Max Baucus, chair of the Senate Finance Committee. Both men want to leave an important legacy, and both are in a unique political position: they still possess real political power, but neither will ever face another election. (Obama, of course, is limited to two terms, and Baucus has just announced that he will retire.) Acting together, the two of them could completely change the odds of enacting a carbon tax this year.

Right now, if you ask around, as I have, there are many across the ideological spectrum who agree that a carbon tax would help us solve a lot of problems, but they won't take a public step because they see no leadership support. My own gut feeling is that there would even be energy industry support for a carbon tax. President Obama and Senator Baucus could change this picture by making a carbon tax a priority and building bipartisan support for the project.

Why should we care? Let's look at four issues: federal revenues, the tax system, jobs, and – oh, yeah – the environment.

First, a carbon tax of $20 a ton would raise about $120 billion a year, or $1.2 trillion over a decade. Right now, everyone anywhere near the budget debates is in a convenient and delusional state of mind about revenues. The conventional wisdom is that we either do not need more revenues or they are easy to find. So here are some counter-assertions: (1) despite the right’s imaginations, we are not going to cope with the retirement of the boomers, the doubling of folks on Medicare, and our need for fundamental infrastructure investment without new revenues; (2) despite the speeches the left makes to itself, the problem won't be solved by taxing whomever the left decides is rich; (3) we aren't going to end the home mortgage and charitable deductions. There will come a point when $1 trillion in new revenue over the next decade that actually makes the economy and the world a little better will look pretty interesting, so why not try for it now?

Second, the tax system is a mess and more caught in a state of political gridlock than even the rest of the federal budget. The system is far too complicated, and it probably lowers economic growth and job creation. More practically, raising new revenues from this structure is next to impossible; the 40-year strategy of broadening the base and lowering rates (a strategy I agree with) has played itself out. With the carbon tax's $1 trillion, you could exempt low-income families, reduce the payroll tax, lower overall tax rates, and still bring down the debt and deficit. Sure, there would be fights about how to use the extra revenue, but those are fights the political system is supposed to have.

Third, jobs. We rely way too much on payroll taxes. They are very, very inefficient, and they directly and visibly add to the costs of job creation. Back when the U.S. economy was an unstoppable job machine, these taxes looked as though they were cost-free. Not anymore. I am optimistic about our long-term economic prospects, but I also think the jobs of the future will require much more education and training content than the jobs of the past, and therefore employers will be much more sensitive to other costs, i.e., taxes. Anything sensible we can do to make job creation easier and less costly is a step we should take.

Finally, the environment. A lot has been published recently about climate change and its sensitivity to greenhouse gases. Cutting through all of the models and the uncertainties, the net conclusion is that warming is probably a small bit less sensitive to greenhouse gases than we have thought. Climate change deniers have used this for the obvious purposes. But the actual end conclusions haven't changed much. At current rates, we will put half a trillion more tons of carbon into the atmosphere by 2045 and 1 trillion more by 2080. Because of this the Earth's temperature will probably warm about three-quarters of a degree in the next 30 years and 1.5 degrees over the next 50. (30 years may seem a long time to some of you; from my perspective, it's a blink of an eye away.) And the math keeps suggesting that the earth's sensitivity to extreme events is increasing more rapidly than global warming. So the future may be less hot but more dangerous.

Isn't it worth a small amount of political difficulty and a fairly small tax now to slow down these trends? Everyone in politics talks a lot about political courage – mostly their own. As far as I can tell, political courage normally consists of doing something your supporters love and your opponents hate and then bragging about it. But maybe the two leaders I mentioned at the start will realize that they can afford to change that definition and leave a real legacy.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic Presidents.

 

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What is the Crash Generation?

Apr 29, 2013Nona Willis Aronowitz

Down but not out, Millennials who came of age during the Great Recession could reshape the American economy and society.

The economy is personal. It colors our decisions about everything: when to have kids, what city to move to, who to vote for, who to sleep with. And nobody knows this better than the biggest generation in history: the Millennials. These 80 million Americans have come of age during the worst economic recession since the Depression, an experience that will have profound repercussions on our lives—and our political consciousness.

Down but not out, Millennials who came of age during the Great Recession could reshape the American economy and society.

The economy is personal. It colors our decisions about everything: when to have kids, what city to move to, who to vote for, who to sleep with. And nobody knows this better than the biggest generation in history: the Millennials. These 80 million Americans have come of age during the worst economic recession since the Depression, an experience that will have profound repercussions on our lives—and our political consciousness.

I call us the Crash Generation. For many of us in our twenties, 2008 was a period awash in exhilarating highs and terrifying lows. The words “depression,” “economic crisis,” “mass layoffs,” and “foreclosures,” along with “hope,” “change,” and “Obama,” all clogged the headlines and made their way into whiskey-fueled party conversations. Washington and the media had never been so frank about the cataclysmic proportions of a financial crash. And a candidate had never kicked young voters into such high gear like Barack Obama, who seemed to reflect the seismic demographic shift our generation was heralding. The mythic American dream-bubbles were bursting for young people at the exact moment we had begun to wield our political influence. That second half of 2008 was our JFK assassination. Our Vietnam. Our Great Depression. 

Study after study finds that Millennials are “materialistic” or obsessed with money. But really we're obsessed with the money we don’t have; put in political terms, we’re class-conscious. Thanks to Occupy Wall Street and Mitt Romney’s slipups, the concept of income inequality is finally part of the public conversation. The economic patterns of the past few decades, with the financial crisis as their crescendo, have yielded an atmosphere ripe for a youth-led social movement that hinges on our bottom lines. Because of our sheer numbers, we have enormous potential to transform waves into tsunamis, and we have already flexed our political muscle in two elections. Those of us who came of age when the bubble burst, particularly the downwardly mobile “privileged poor,” have a tangible common experience, a renewed indignation.

But too often, this indignation often has nowhere to go, and is enveloped in our frenetic lives of multiple jobs, demoralizing underemployment, or joblessness—the constant physical and emotional stress of keeping our heads above water. Years later, the status quo has not budged. We haven’t done much to shrink the income gap or encourage upward mobility. We haven’t gotten our leaders to address anemic state budgets, deregulation, unions’ decline, freelancers’ precarity, shrinking wages, student debt, or the insane cost of living in major cities. All those economic pressures have primed this era for an economic shift. Yet those same pressures limit our freedom to protest or push for policy changes. In other words, we’re pissed—but we’re paralyzed by the very forces we’re pissed about.

Right now, most of the permanent underclass feels politically frozen: When one missed paycheck means descending into poverty without a safety net, unions and political activism seem like a low priority. Educated young people are frozen, too—caught in the privileged-poor paradox. Our meager (or nonexistent) paychecks incite righteous anger—especially when we think of our middle class parents’ luck at their age—but they also choke our very ability to organize, create, and take risks. As our wages fall, our degrees lose value, prices of food and rent rise, and workdays expand, we have less and less time to read a book, to join a rally in the next town over, to hop a bus to Washington, to even have a hours-long discussion about politics with our friends. Most Millennials aren’t starving, Great Depression-style, but they are starved for a low cost of living and a baseline of economic freedom.

Here's the good news: For every 10 twentysomethings seized with frustration, there’s one pushing the conversation forward and coming up with compelling solutions, however flawed or nascent. This seething discontent signals the start of a major shift. The fizzling of Occupy Wall Street, for instance, shouldn’t depress us; Roosevelt Institute fellow Dorian Warren recently reminded me that if this is our civil rights movement, we’re only in 1957—a year after the Montgomery bus boycott. So far, our empty wallets and our denial have hindered our ability to meaningfully influence policy, but that doesn’t mean it won’t happen soon.

Some people think that entrepreneurship, not government policy, will save Millennials. The truth is, not everyone has the support and connections to launch their own business or score a job at a scrappy start-up. Besides, start-up culture and economic reform aren’t mutually exclusive. In a post-recession era, both social change and entrepreneurism stem from being able to live securely and cheaply. A 2008 study from the RAND Corporation found evidence of "entrepreneurship lock," where workers resist leaving firms offering health care due to the high premiums of the individual health insurance market. Compare this reticence to places like Norway: When journalist Max Chafkin visited the country in 2010, he reported on a spate of Norwegian entrepreneurs who not only were happy to pay high taxes, but attributed their penchant for risk-taking to a strong social safety net. (There are also more entrepreneurs per capita in Norway than in the United States. Same with Canada, Denmark, and Switzerland.)

Millennials are starting to realize that if their lives are going to improve, there needs to be policy that addresses unemployment, student debt, and income inequality. Young people like the ones striking outside McDonald’s in New York, or the students who won a minimum wage hike in San Jose, or the ones in Roosevelt’s Pipeline and Campus Network across the country—they’re all updating historic social movements (and the policies they’ve pushed) that have improved the lives of middle and working class Americans. 

The future movers and shakers of the Crash Generation have a modern sensibility. We’re Internet natives. We’re optimists. We believe in community and the “sharing economy.” We’ve all but settled the culture wars. But we also have faith in the idea of government, if not its current reality, and we’re not afraid to engage with successful historical models.

Nona Willis Aronowitz is a Roosevelt Institute | Pipeline Fellow. Join her tomorrow night at the Roosevelt Institute for a Crash Generation salon on "Why Millennials Should Care About Family Policy," with guest speaker Sharon Lerner of Demos. She will also be moderating a panel on paving the path to good jobs at A Bold Approach to the Jobs Emergency on June 4th.

 

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What's the Best Way to Help the Long-Term Unemployed? Full Employment.

Apr 24, 2013Mike Konczal

What's the best way to help the long-term unemployed? There's new concern about how difficult it is for the long-term unemployed to find jobs in light of an interesting study by Rand Ghayad, a visiting scholar at the Boston Fed and PhD candidate. Ghayad sent out resumes that were identical except for how long the candidate was unemployed, and the longer they were unemployed, the less likely it was they would get called back. Matthew O'Brien has a great writeup of the study here, and there's additional thoughts from Megan McArdle, Paul Krugman, Felix Salmon, and Matt Yglesias.

The impact of long-term unemployment on human lives is very real, and I think the government should be combating it using every tool it has. However, I want to push back on a few of the economic ideas that tend to hover in the background of these discussions; specifically, the idea that we should consider the long-term unemployed uniquely in trouble in this economy. Because, based on my interpretation of the evidence, the best approach to handling this problem is to aim for full employment.

It's well known that it is harder for those who have been out of the labor force the longest to find jobs. It would be weird if Ghayad hadn't found that result. There is a large debate in the literature about whether this is driven by employers or job candidates, and Ghayad provides a very useful study finding that employers are a key part here.

But let's look at the likelihood of finding a job in three different economic scenarios (2000, 2007, and 2012) by duration of unemployment:

But notice that when the economy is much stronger, as it was in 2000 when unemployment averaged 4 percent, the rate at which the long-term unemployed find jobs jumps up. Let's zoom in on the last category, the job-finding rate of those who have been searching for a job for 53 weeks or longer, and chart it back to 1995. (Since the data, provided by the BLS, is not seasonally adjusted, the number here is a 12-month rolling average.)

As you can see, it's much easier for the long-term unemployed to find jobs when there's a tight labor market, like there was in the late 1990s. This rate collapses in a recession, and with years of 7+ percent unemployment, it has stayed depressed.

A lot of people are drawing conclusions that something has broken in long-term unemployment based on a previous paper by Rand Ghayad, where he disaggregates the Beveridge Curve by unemployment duration. I've been critical of that paper. I think, strictly speaking, that the disaggregation just tells us that the long-term unemployed have become a larger percentage of the unemployed, which we knew. Meanwhile, the labor market is depressed for everyone, even short-term unemployed (also see SF Fed for more evidence of this). As the long-term unemployed are less likely to drop out of the labor market than in normal times right now, the dramatic increase in the long-term unemployed hasn't turned into a large drop in labor force participation like many worry about.

We should do things that are smart policies that target the long-term unemployed. Amy Taub of Demos has done convincing work on why ending credit checks as part of the job interview process would be a good idea. Extending unemployment insurance is also important. But the idea that we should change course away from boosting the general economy strikes me as a bad idea. The long-term unemployed experience the worst impact of a generally weak economy. But its that weak economy that is doing the damage. If unemployment was actually brought down, which we could do with more expansonary policy, then employers couldn't afford to be so choosy.

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What's the best way to help the long-term unemployed? There's new concern about how difficult it is for the long-term unemployed to find jobs in light of an interesting study by Rand Ghayad, a visiting scholar at the Boston Fed and PhD candidate. Ghayad sent out resumes that were identical except for how long the candidate was unemployed, and the longer they were unemployed, the less likely it was they would get called back. Matthew O'Brien has a great writeup of the study here, and there's additional thoughts from Megan McArdle, Paul Krugman, Felix Salmon, and Matt Yglesias.

The impact of long-term unemployment on human lives is very real, and I think the government should be combating it using every tool it has. However, I want to push back on a few of the economic ideas that tend to hover in the background of these discussions; specifically, the idea that we should consider the long-term unemployed uniquely in trouble in this economy. Because, based on my interpretation of the evidence, the best approach to handling this problem is to aim for full employment.

It's well known that it is harder for those who have been out of the labor force the longest to find jobs. It would be weird if Ghayad hadn't found that result. There is a large debate in the literature about whether this is driven by employers or job candidates, and Ghayad provides a very useful study finding that employers are a key part here.

But let's look at the likelihood of finding a job in three different economic scenarios (2000, 2007, and 2012) by duration of unemployment:

But notice that when the economy is much stronger, as it was in 2000 when unemployment averaged 4 percent, the rate at which the long-term unemployed find jobs jumps up. Let's zoom in on the last category, the job-finding rate of those who have been searching for a job for 53 weeks or longer, and chart it back to 1995. (Since the data, provided by the BLS, is not seasonally adjusted, the number here is a 12-month rolling average.)

As you can see, it's much easier for the long-term unemployed to find jobs when there's a tight labor market, like there was in the late 1990s. This rate collapses in a recession, and with years of 7+ percent unemployment, it has stayed depressed.

A lot of people are drawing conclusions that something has broken in long-term unemployment based on a previous paper by Rand Ghayad, where he disaggregates the Beveridge Curve by unemployment duration. I've been critical of that paper. I think, strictly speaking, that the disaggregation just tells us that the long-term unemployed have become a larger percentage of the unemployed, which we knew. Meanwhile, the labor market is depressed for everyone, even short-term unemployed (also see SF Fed for more evidence of this). As the long-term unemployed are less likely to drop out of the labor market than in normal times right now, the dramatic increase in the long-term unemployed hasn't turned into a large drop in labor force participation like many worry about.

We should do things that are smart policies that target the long-term unemployed. Amy Taub of Demos has done convincing work on why ending credit checks as part of the job interview process would be a good idea. Extending unemployment insurance is also important. But the idea that we should change course away from boosting the general economy strikes me as a bad idea. The long-term unemployed experience the worst impact of a generally weak economy. But its that weak economy that is doing the damage. If unemployment was actually brought down, which we could do with more expansonary policy, then employers couldn't afford to be so choosy.

Follow or contact the Rortybomb blog:

  

 

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