Some Guidelines for Finding a Liberal Member of the Federal Reserve

May 16, 2011Mike Konczal

Five guiding principles that need to be instated in selecting a progressive Fed member.

The second day of the Future of the Federal Reserve event co-hosted by the New America Foundation and Roosevelt Institute is viewable online at New America and C-Span.

Five guiding principles that need to be instated in selecting a progressive Fed member.

The second day of the Future of the Federal Reserve event co-hosted by the New America Foundation and Roosevelt Institute is viewable online at New America and C-Span.

Since I think it is important that Fed vacancies are filled, I've been trying to understand what a strong, liberal member of the Federal Reserve would look like. We know what a liberal on the Supreme Court should look like -- what about here?

Josh Bivens of EPI gave a five-point outline during the final panel at the event.  I'm going to summarize it as follows with my own observations; you should watch the video for the full thing.

1. Commitment to full employment

As Joerg Bibow reminded us in his talk, once you lose a full employment mandate it is that much harder to get the Federal Reserve to move on anything other than monetary austerity. Look at Europe.

Why full employment? Beyond wage growth, we want to see a stronger and more empowered workforce. This ensures that a fairer share of the surplus goes to workers and makes them freer from domination in the labor market. These important goals are more likely to be achieved when unemployment is closer to 5% than it is at 10%. Why the full employment mandate? Because it is necessary to balance out the conservative nature of having regional bankers represented on the FOMC.

We should ask potential candidates what their estimate of NAIRU is and how they go about understanding where NAIRU and the natural rate of unemployment is.

2. Higher inflation target

We need a higher inflation target to deal with the swings in the business cycle. We've had thirty years of increasingly lower inflation rates, and right now the Federal Reserve has little it is able to do to stimulate the economy.

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Brad Delong makes the case for a higher inflation target at the Economist and Ryan Avent moderates his points.

Alternatives involve setting a different type of target, including nominal GDP. (See herehere, and here for David Becksworth on this topic, Scott Sumner here.) Either way, we need a target that gives the Fed flexibility to deal with severe macroeconomic shocks. The costs of 2% higher inflation are meek compared to the lost output we currently have from this Great Recession.

3. Preemptively pop bubbles

There was a consensus that more needs to be done to tame bubbles that show up because of the financial sector. The hands-off approach was predicated on the ability to clean up afterward. Now we've learned that the Fed doesn't necessarily have that power and it also has political constraints on how aggressively it can try to boost employment.

4. Additional tools other than the short-term interest rate

One way to preemptively pop bubbles is through macroprudential financial regulation.  If you have two targets, you need more than one instrument. We need to bring tools like countercyclical capital requirements and financial regulations into play. Perry Mehlring and others have discussed needing the equivalent of the short-term target for the capital markets, as the interest rate reflects a financial system that no longer exists. And Joe Gagnon discussed how the regulatory side and the macroeconomic side of the Federal Reserve not only had bad communication, but also lacked a general language and worldview to work together. This is one area that needs a lot of work.

5.  Get out of the debates over the composition of fiscal policy

This was Josh Biven's pet peeve, but I think it is worth bringing up. The size of the federal budget and the size of the federal budget deficit are an appropriate thing for Federal Reserve members, particularly the president, to discuss. But Greenspan was too aggressive in commenting on tax cuts and assaults on the social safety net, things that are not appropriate for an independent Fed to take part in discussing.

If the Federal Reserve believes that the deficit is too large and it is affecting monetary policy, fine. But if it is suggesting closing that deficit by doing X, Y and Z, it has crossed the line into Congressional policy, using power and influence delegated for a specific responsibility to push political views. Under this requirement, the new conservative requirement that a Federal Reserve nominee can't support tax increases for Social Security is an invalid complaint as long as the nominee understands it is not their job to support one fiscal policy over another.

What do you think? What's missing, or needs to be taken out?

Mike Konczal is a Fellow at the Roosevelt Institute.

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When Faced with Floods, FDR Fought Back with Jobs

May 12, 2011David B. Woolner

FDR chose action to combat flooding and soil erosion that did much more than conserve land.

FDR chose action to combat flooding and soil erosion that did much more than conserve land.

The massive flooding that struck the Midwest in recent days has led a number of climatologists to argue that this event -- along with the occurrence of similar floods in Australia, Pakistan and elsewhere -- is further indication of the impact of the increase in greenhouse gasses in the earth's atmosphere. The warmer air associated with the increase holds more moisture, and the greater the moisture content, the greater the level of precipitation. Hence the record snowfalls for the upper Midwest this season and the extraordinary amounts of rain that much of the region received in April (Paducah Kentucky, for example, received 22 inches of rain in April, as compared to the average 5.4 inches it usually receives).

For the vast majority of scientists -- and for an increasing number of individuals and institutions in other parts of the world -- the potential impact of climate change is being viewed with growing alarm. But in Washington, just the opposite is true. The US House of Representatives recently rejected an amendment that would have put the House on record as acknowledging that global warming is occurring and that human activity is the major cause. In this milieu, and in spite of the overwhelming evidence to the contrary, there is almost no chance that we will see any significant climate legislation emerge from the current Congress.

Interestingly, 75 years ago the United States faced a very similar natural disaster in the form of the Great Flood of 1936. Unlike today, however, the death and destruction that struck much of the eastern United States as a result of the flood spurred Congress into action. It passed of one of the most significant -- though lesser-known -- pieces of legislation to come out of the New Deal: the Flood Control Act of 1936.

Recognizing for the first time "that destructive floods upon the rivers of the United States constitute a menace to national welfare" and that "flood control on navigable waters or their tributaries is a proper activity of the Federal Government in cooperation with States," the Roosevelt administration worked with members of Congress to pass the first piece of legislation to provide for national flood relief. The hundreds of reservoir, levee, and channelization projects that resulted from the 1936 act protected millions of acres of farmland, saved countless lives, and literally changed the face of the nation. Taken together, the projects that came about as a consequence of the act constitute one of the largest additions to our nation's economic infrastructure, on par with the development of the nation's highway system. Moreover, in keeping with the spirit of the New Deal, the construction of many of these flood control projects (which usually took place under the auspices of the US Army Corps of Engineers) also spurred local and regional economic growth and helped conserve one of our nation's most precious resources -- our soil.

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It was perhaps soil erosion, in fact, more than any other issue that drove President Roosevelt to support the passage of the flood control act. Having seen the dire consequences of the Dust Bowl, and as a great lover and believer in the restorative power of the land, FDR was deeply concerned about the long-term productivity of American topsoil. To combat erosion, he not only passed the Flood Control Act of 1936, but also established the Soil Conservation Service, which encouraged farmers to adopt more environmentally friendly practices; the Civilian Conservation Corps, which helped restore our nation's forests; and the Tennessee Valley Authority, which not only helped control erosion in the Tennessee River Valley, but also provided inexpensive hydroelectric power to an entire region of the country.

Most importantly, all of these programs helped create jobs and spur economic activity. And while today many environmentalists might take issue with certain aspects of the flood control work that came about as a consequence of the act (such as the channelization of rivers and streams), few would take issue with the spirit of conservation that inspired it.

The Flood Control Act of 1936 is but one example of the remarkable record of legislative achievements that came about in the 74th Congress. In response to the needs of a people in the midst of both environmental and economic crisis, members of Congress worked with the Roosevelt administration to pass not only this landmark piece of legislation, but also the Social Security Act, National Labor Relations Act, Banking Act of 1935, Soil Conservation Act, and the $4.8 billion Emergency Relief Appropriation Act of 1935, out of which came the WPA, among other programs.

It is perhaps the best testament to our current era that this Congress, facing a remarkably similar set of circumstances, has chosen not "action and action now," as FDR would put it, but rather to do nothing.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.

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The Myth that Banks are Solvent

May 12, 2011Marshall Auerback

If we keep pretending banks are just waiting for regulators to get out of the way, we'll keep implementing the wrong policies.

If we keep pretending banks are just waiting for regulators to get out of the way, we'll keep implementing the wrong policies.

Banks will likely have too much cash by 2019 as a result of the Basel III global banking rules, UBS AG Chief Executive Oswald Grübel said Thursday. "In the next 10 years, at the end of 2019, we will have overly liquid, overcapitalized banks," he said, addressing a business audience at a conference. "However this also means we won't have a lot of growth." Mr. Grübel was discussing changes in the global balance of power and what the possible consequences would be. The CEO has said that investment banking could shift to the U.S. and Asia if stricter capital requirements are enforced in the U.K. and Switzerland. The basic economic tenet, however, remains that "power goes where the money is," he said.

This is consistent with the fallacy that the banks are basically solvent and able and ready to extend credit if only these darn regulators would get out of the way. As James Galbraith has argued, the problem is said to be no more serious than some clogged plumbing. A bit of Draino in the form of government handouts and guarantees should be sufficient to get credit flowing again. Most major banks are not insolvent, this story goes, but rather have a temporary liquidity problem induced by malfunctioning financial markets. Time will allow market mechanisms to restore the true, higher value of "legacy" assets. Once the banks are healthy, the economy will recover.

Nonsense. Private debt loads remain too high, income and employment continue to fall, and delinquencies and foreclosures continue to rise. Assets are overvalued event at current depressed prices. Many financial institutions (probably including most of the big ones) are hopelessly insolvent, holding mountains of toxic waste that will never be worth anything.

So why are we busy implementing policies that simply maintain a credit-based economy? All around the world, policymakers continue to foster the fiction that all we have a temporary illiquidity problem, not a problem of excessive leverage, excessive debt, and a legacy of assets that were vastly overvalued based on economic scenarios that had no chance of coming to fruition. Given the inappropriate premises under which policy makers in the U.S., the U.K., and the euro zone have dealt with the leverage of financial institutions, it's obvious that problems will continue to languish if the administration does not change its course of action. This will heavily constrain the global economy's capacity to recover and will lead to multiple Japanese style "lost decades" around the globe.

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The whole boom of the last 25 years was predicated on financial deregulation, massive fraud, and a huge build up of private debt as a consequence of inadequate fiscal policy to generate full employment and rising incomes. Growth was based on household borrowing and the continuation of negative saving trends (that is, household deficit spending). A good place to start recovery efforts, therefore, would be to change this method of economic growth by promoting employment, rather than capitulating to the siren songs of the bankers whose recklessness got us into this mess.

In a much saner world, we would be in the midst of a government-led investment push, much like the Space Race or the Manhattan Project, to drive new energy technologies forward by scaling up production and innovation, both apt to lower unit cost points. There would also be a concerted effort to establish the new infrastructure required. (After all, highways were constructed in part for national defense purposes, and railroads and canals had their share of public subsidization.) But with the ease of capture so visible, no such effort led by the government could be trusted enough to be supported, especially by a citizenry that has become one of fragmented (and anxious) consumers. Deficit austerians in government fail to understand that a budget deficit is essential for stable economic growth if the contribution of net exports (the difference between exports and imports) is not strong enough to sustain domestic demand while the private domestic sector is trying to save.

We need to put an end to these ridiculous policy responses. We not only require substantially increased supervision and regulation of the financial sector, but must also put a stop to the practices that brought on the crisis in the first place. If left alone to deal with the current problems, market mechanisms will push management and owners of insolvent institutions to ramp up losses and engage in yet more fraudulent accounting, leading to an even bigger crash down the road.

Marshall Auerback is a Senior Fellow at the Roosevelt Institute, and a market analyst and commentator.

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Dramatic Job Revisions Bust Structural Unemployment Myths

May 11, 2011

Anyone worried that workers are simply unsuited for jobs should start worrying about our weak recovery.

I just wrote a short paper titled Dramatic Job Revisions Bust Structural Unemployment Myths. Here is the abridged version:

"When the facts change, I change my mind. What do you do, sir?" - John Maynard Keynes

Key findings:

Anyone worried that workers are simply unsuited for jobs should start worrying about our weak recovery.

I just wrote a short paper titled Dramatic Job Revisions Bust Structural Unemployment Myths. Here is the abridged version:

"When the facts change, I change my mind. What do you do, sir?" - John Maynard Keynes

Key findings:

- The debate over structural unemployment that has taken place surrounding high levels of job openings and the Beveridge curve in 2010 needs to be reconsidered. Due to a pre-recession calibration of its birth/death model, the Bureau of Labor Statistics dramatically overestimated the number of job openings throughout 2010. It corrected the numbers for 2009 through 2010 in March 2011.

- On average, there were 172,000 fewer job openings per month in 2009 and 235,000 fewer job opening per month in 2010, reducing the job opening rate by an average of 0.18% over 2010 than had previously been reported. A quick and simple analysis shows that this BLS correction would have dropped estimates of increases in the NAIRU at the time from 1.3% to 1.0%.

- Since April 2010, when concerns about structural unemployment started to enter the debate, the Beveridge curve has almost entirely shifted leftward, with unemployment down roughly 1% and job openings up a meager 0.1%. Runaway unfilled job openings haven’t shown up in the data.

The Bureau of Labor Statistics reported that the number of job openings spiked in the summer of 2010. While this might normally be a cause for celebration, it actually worried a number of economists and policymakers. If an increase in the number of job openings co-exists with high unemployment, it means firms’ ability to find workers has decreased. If this signals that an economic model called a Beveridge curve has shifted outward, it means structural unemployment has increased and the ability of the economy to match workers and firms has decreased. In general, demand-based stimulative fiscal and monetary policy will do little to help the economy when it faces these kinds of problems.

That this increase in the number of job openings the BLS was reporting changed the nature of the debate on the job crisis is an understatement. The president of the Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, used the numbers to state that unemployment would be at 6.9% without structural problems and that "it is hard to see how the Fed can do much to cure this problem." Former President Bill Clinton told NPR and the David Letterman Show that “first time new job postings are opening up twice as fast as job hires….because of skills mismatch….[Without these problems unemployment would drop from] 9.6 to 6.9,″ echoing Kocherlakota's analysis. David Brooks used Kocherlakota’s analysis in a 2010 editorial about structural unemployment, noting, “One of the perversities of this recession is that as the unemployment rate has risen, the job vacancy rate has risen, too.”

A large debate broke out among economists, with one side saying that the rise in job openings showed deeper problems in the American workforce and another side saying that the rise in job openings was a natural part of a cyclical downturn and that we'd see circular motions in the Beveridge curve. Conferences were held, panels convened; Peter Diamond spent part of his Nobel Laureate lecture discussing these issues. Both sides took for granted that the 2010 job opening rates had increased to the extent that the BLS reported they had.

In March of 2011, the Bureau of Labor Statistics revised its numbers for job openings from 2006 through 2010, dramatically reducing the number of job openings for the last months of 2008 and the entirety of 2009 and 2010. The revisions are in Figure One below.

(Full revisions, 2009 revisions, 2010 revisions.)

On average, there were 172,000 fewer job openings per month in 2009 and 235,000 fewer job opening per month in 2010 than had previously been reported. This reduced the job opening rate by an average of 0.18% over 2010. The average number of job openings in the pre-correction data was over 3 million during 2010; in the new data, the number of job openings only reaches 3 million once. This is a massive shift downward from the previously reported number of job openings.

Why Did this Shift?

Why were the revisions so dramatic and entirely downward? As people from BLS explained, JOLTS samples from data in their sampling frame, and there's a year lag between establishments entering their sample. As such, they can’t sample from businesses in their first year while they are outside their sampling frame. A lot of hiring and job activities happen in the first year, so it is important for BLS to estimate this figure.

In order to compensate for this, the BLS JOLTS team created a birth/death model (for births and deaths of business establishments) in 2009 to help gather numbers related to jobs. This model forecasts hires and separations of businesses in their first year. It was inserted into BLS numbers in 2009 and used values from 2000 to 2007 to populate the model. It then projected those values forward. Given that the 2000 to 2007 calibration didn't feature a recession as deep as the one that occurred post-2008, this biased its birth-death model toward higher numbers.

So the birth model didn't include data from the recession. The model wasn't updated in 2010. In March 2011, it updated this birth/death model with additional data from the recession of 2008-2009 that then became available. Before it had used data through 2007 forecasted into the future, and now it uses data through 2009 forecasted into the future.

Now the birth model takes the recession into account. The difference is obviously dramatic, and when it went back and did a revision it drove down all the rates from 2009 and 2010. Since unemployment was much higher and business activity more depressed in 2008 and 2009 than in the seven years before, the previous projections forward were too optimistic. This is why the job opening rates were revised downward.

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As Figure 2 shows, this has important implications for an economic model called a Beveridge curve, shifting the curve downward during the recession and subsequent period.

What Does This Downgrade Mean For Structural Unemployment?

In order to estimate how much this downward shift would change our estimates of an increase in structural unemployment, I created a quick and simple regression on the Beveridge curve using data from JOLTS for 2001 through 2009 (see Figure 3). For the year 2009, I used the average between the corrected and uncorrected data.

I then projected how far out the unemployment curve has moved for the values of the year 2010. To take an example, in October 2010 the unemployment rate was 9.7%. The uncorrected job opening rate was 2.5, which corresponds to an unemployment rate of 6.29%. The corrected job opening rate was 2.2, which corresponds to an unemployment rate of 7.25%. With the corrected job opening rate we see less of a shift of the unemployment curve.

The Federal Reserve Bank of San Francisco argues that “Credible estimates of the natural rate over these earlier periods suggest that it may have changed about half as much as the horizontal shift in the Beveridge curve.” Using this rule of thumb, I found that my estimate gives an increase in the NAIRU of 1.30% when I use uncorrected job openings, findings similar to other estimates, including the Federal Reserve Bank of San Francisco. This leaves a lot of cyclical slack with unemployment at 9%.

With the corrected job openings data, we see the estimate of an increase in NAIRU drops to 1%, which means using the corrected numbers should drop the estimate of NAIRU 0.30%.

What has Happened Since Summer 2010?

Policymakers have worried that structural unemployment would stifle the recovery. The implication is that job openings would continue to rise while unemployment stayed high.

In both the corrected and uncorrected version of the job openings data, job openings peaked in April of 2010. What has happened to the curve since then? Figure 4 shows what has happened to the curve over the past two years.

There has been a straight decrease in the unemployment rate with virtually no increase in the job opening rate. The number of jobs available has remained flat and unemployment has fallen roughly one full percentage point. Those who were worried that any decrease in unemployment would happen alongside a runaway rise in the job opening rate should shift their concerns back toward low job growth.

The numbers guiding policymakers and experts are subject to revision, and job openings, a key component of any recovery, have turned out to be much lower than anyone had expected during 2010 when the debate over structural unemployment started.

Even before this, there was considerable evidence that there is tremendous slack in the economy and room for monetary and fiscal stimulus. With this correction, the story of an economy held in check by a weak labor force rather than weak jobs is harder to justify, and the argument for doing more is stronger.

Mike Konczal is a Fellow at the Roosevelt Institute.

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Gas Prices Up, Wages Down, Americans Caught in the Middle

May 11, 2011Bryce Covert

With soaring gas and commodity prices and falling income, what are working Americans supposed to do?

This week's credit check: Median income fell by $5,261 in the past decade. The average price of gas is up 80 cents per gallon.

With soaring gas and commodity prices and falling income, what are working Americans supposed to do?

This week's credit check: Median income fell by $5,261 in the past decade. The average price of gas is up 80 cents per gallon.

When picturing people who are so far into debt they can't get on top of their bills, many likely see images of flat screen TVs, Escalades, and giant, unnecessary houses. But the sad truth is that one of the biggest reasons Americans carry $796.5 billion in revolving debt is that wages have stagnated while the cost of necessities rose. That's particularly true now, at the end of a decade where wages actually dropped, 13.7 million people are unemployed, and prices are through the roof.

Gas prices are soaring. The average price is up 80 cents per gallon since January, up to $3.96. With Americans consuming about 140 gallons per year, that's an extra $112 billion over the course of 2011 that consumers will have to shell out at the pump.

So is rent. It is too damn high. A new study came out recently that showed the level of renters spending more than half of their income on rent is the highest in half a century. That's not just low-income people, either. "About 26 percent of renters -- or 10.1 million people -- spent more than half their pre-tax household income on rent and utilities in 2009," the Washington Post reported. Under ideal circumstances, renters aren't supposed to spend more than 30% of their income on housing.

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Not to mention buying food. Restaurants are now considering raising prices due to rising commodity costs. Prices for purchased meals and beverages rose almost 2% between March 2010 and March 2011, the biggest increase since November 2009.

And health care is still unaffordable for too many of us. Last year, four in 10 Americans struggled to pay their medical bills and 40% had to forgo needed care due to high costs.

What do Americans do when we can't afford the necessities? What we've learned to do over the past 30 years as our wages stagnated: use credit cards to plug the gaping holes. Only this time it's worse, because wages have actually shrunk over the past decade, with the median family's earnings falling from $52,388 a year in 2000 to $47,127 in 2010. We still have 9% unemployment. And 27% of Americans had no personal savings as of February this year, up from 22% 18 months before that.

Meanwhile, access to credit is flowing less quickly than it was before the recession -- and when it does flow, it comes with overpriced fees and interest. While banks are getting back into lending to riskier, lower-income consumers, it's a slow trickle. Most card mailings are targeting the wealthy, with only 17% going to borrowers with dinged credit scores -- compared to 39% in 2007. And the cards those consumers are offered come with higher fees and interest rates. The NYTimes reports, for example, "Capital One... is offering low-end cards that carry interest rates of 18 percent or higher and annual fees of up to $50."

The ability to cover up our income inequality and wage stagnation with easy credit is coming to end. So now what are workers supposed to do when they can't afford life's basics?

Bryce Covert is Assistant Editor at New Deal 2.0.

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Our Problem is Bigger than "Structural" Unemployment

May 10, 2011Mike Konczal

The fact that college students and women are also suffering from high unemployment points to something larger.

David Brooks brings up structural unemployment in his editorial today:

The fact that college students and women are also suffering from high unemployment points to something larger.

David Brooks brings up structural unemployment in his editorial today:

Americans should be especially alert to signs that the country is becoming less vital and industrious. One of those signs comes to us from the labor market. As my colleague David Leonhardt pointed out recently, in 1954, about 96 percent of American men between the ages of 25 and 54 worked. Today that number is around 80 percent. One-fifth of all men in their prime working ages are not getting up and going to work...

Part of the problem has to do with human capital. More American men lack the emotional and professional skills they would need to contribute. According to data from the Bureau of Labor Statistics, 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree.

Matt Yglesias and Jamelle Bouie both responded, noticing how the Great Recession is missing from this narrative.

I would throw in two things. As for "human capital," here's the employment rate of 20-24 year-old college graduates that Charlie Eisenhood dug up:

Around 5 percent more college graduates ages 20-24 are not getting up and going to work. It's difficult to argue that they need to go to college, because they did. It's difficult to argue that they can't move to new jobs (since they're unlikely to be homeowners) or suffer high health care costs (doesn't health care reform allow employers to push health costs for young adults onto their parents' employer?). Unless we think that the graduating class of 2008 is fundamentally worse than the graduating class of 2006, I don't see a technology problem.

Also for fun, the graduating classes post-Recession have increasingly large student debt loans, which should lower the reservation wage they'll accept due to liquidity pressures. So the idea that everyone 20-24 is on vacation is harder to accept compared to earlier years.

There's also an argument that 20 to 24-year-olds are waiting longer for their first job since income and career paths are determined by one's first job. But that begs the question as to why they are waiting and amplifies the misery this extended period of joblessness is causing for people.

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As for the FatherBringsHometheBaconEconomics of the Brooks piece, before we declare permanent gynohegemony over the labor markets can we mention that women have also lost 1.6 million jobs in the recession?

It's worth noting that men are adding jobs right now, while women are staying steady and have actually lost jobs over the past few months. Normalizing the employment numbers to January 2010 for people over 20, we see that the anemic job growth of the past year and a half has gone to men, who have added 2% more jobs since then:

Welcome to the recovery.

**For more evidence against the idea of structural unemployment, check out a working paper I co-wrote with Arjun Jayadev, "The Stagnating Labor Market."

Mike Konczal is a Fellow at the Roosevelt Institute.

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Opt-in Movement Great for Upper-Middle Class Moms. But the Rest Need Options, Too

May 9, 2011Naomi CahnJune Carbone

working-mother 150Balancing work and family has even more challenges for low-wage workers, but policy rarely takes that into account.

working-mother 150Balancing work and family has even more challenges for low-wage workers, but policy rarely takes that into account.

On Mother's Day, the Washington Post published an article, "Movement to keep moms working is remaking the workplace". The article celebrates women who are part of the "opt-in movement," in which "many mothers are willing to give up income if that means taking control of their schedules, and, perhaps most important, doing meaningful, challenging work in their chosen professions rather than what they see as the less interesting work of the often-stigmatized ‘mommy track.'"

For many women, however, giving up income for flexible work hours is not an option. Instead, the real need to keep moms working is not simply for upper-middle class, well-educated moms, but for mothers with less education, fewer opportunities, and less supportive communities. Those with the most education are the most likely to be labor force participants and the least likely to be unemployed. They are also the least likely to quit work after having a child. Consider the following statistics from 2009:

For women age 25 and over with less than a high school diploma, 34 percent were labor force participants; high school diploma, no college, 53 percent; some college, but no degree, 62 percent; associate degree, 72 percent; and bachelor's degree or higher, 73 percent.

The Washington Post article is representative of much of the work in this area: while the headline would lead one to believe the story would focus on all working mothers, the article is really about a select group of women who are highly educated professionals. The news media show a disproportionate interest in professional women who leave the workforce to become full-time mothers. This article adds a new twist on the old story; it focuses on women who leave, but then re-enter on terms that respect their goals for work-family balance.

More generally, issues of work-family balance are often addressed only in terms of the interests of those same women. (Men are less likely to leave the workplace.) The most frequently mentioned proposals -- creating more and better part-time work, shorter work hours, and greater workplace flexibility -- are proposals that are most useful for those who are financially able to trade off money for family time.

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As is perhaps too obvious to mention, most women are not professionals; they are not lawyers, executives, professors, or others with advanced degrees. The median weekly wage for women in 2009 was $657. The most common profession for women is as secretaries or administrative assistants, followed by registered nurses, elementary and middle school teachers, and cashiers.

Of course all women and men, including high-paid professionals, benefit from improved recognition of the need to balance their work and family demands and from new strategies designed to facilitate this balance. Yet our focus, along with out policy proposals, should be on those who have fewer options and resources, not just those with the most.

Indeed, what flexibility means for low-wage working women is profoundly different from that available to women in higher paying jobs. First, they can little afford to trade off income for family time. Second, they are subject to both "schedule rigidity and schedule instability," according to a 2011 report from the Center on WorkLife Law at the University of California Hastings College of Law. They must be at work during their scheduled hours, but those hours may change on a weekly basis. Arranging for child or elder care thus becomes even more difficult with schedules subject to constant change. In fact, women with less than a high school diploma are the least likely to report having a flexible work arrangement.

The economic case for flexibility and accommodation in work scheduling for hourly and low-wage employees is strong. Many employers, ranging from Kraft Foods to the US government, are already implementing some form of workplace flexibility for hourly workers. More employers should. Evidence about practices that include flexible work schedules and more employee control over formal scheduling as well as unscheduled absences for family reasons shows that both employers and employees benefit.

Developing compressed work weeks, promoting job-sharing, requiring employees to be present only during core times of the day or week, and establishing clear policies on family leave time with adequate back-up support are all potential strategies that can provide any employee, ranging from receptionists to cashiers, with a more family-friendly workplace. Attention to the needs of lower wage women must also go beyond reforming the workplace to include policies such as paid family leave and restructured school days.

June Carbone is the Edward A. Smith/Missouri Chair of Law, the Constitution and Society at the University of Missouri-Kansas City.

Naomi Cahn is the John Theodore Fey Research Professor of Law at George Washington University Law School. She is the author of numerous books and law review articles on gender and family law.

Cahn and Carbone are the co-authors of Red Families v. Blue Families.

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Bringing the Invisible Triumphs of the New Deal to Light

May 6, 2011Gray Brechin

fdr-we-need-you-150Criticism of one of the nation's most important programs can be stopped in its tracks by exposing how it improved our lives.

fdr-we-need-you-150Criticism of one of the nation's most important programs can be stopped in its tracks by exposing how it improved our lives.

Even those who remain unanimous in their hatred of what FDR accomplished unwittingly use and enjoy what he left behind. They can't avoid it; that legacy is as inescapable as it is indispensable. Before they succeed in wrecking it completely, we should learn at least to see it. For to do so will demonstrate what democratic government at its best can accomplish for all the people, rather than just those who can afford to buy it at discount.

The University of Chicago swamis whose neoliberal theories have wrought such havoc don't drink their own sewage because the Public Works Administration rebuilt their town's water system. Congressmen unalterably opposed to government spending and the K Street lobbyists plying them fly in and out of Reagan National Airport unaware that it -- like most of the nation's airports -- was built by the WPA (which also saved its namesake's bacon). Even the capital city itself is largely a New Deal creation. Those who enjoy the national parks, forests, and monuments threatened with closure by the GOP use lodges, trails, roads, and historic shrines built or improved by CCC "boys." If Amity Shlaes' children enjoy Central Park's playgrounds or zoo, or if they visit the Statue of Liberty, they owe a debt of gratitude to the New Deal workers who improved them seventy-five years ago.

That New Deal critics like Shlaes do not know they are using its legacy is hardly surprising: little of it -- like the thousands of mature trees that arch over my hometown's streets -- is marked. Nor would FDR's enemies want to acknowledge it, let alone what those creations did to rescue millions from despair, suicide, and crime. To do so would deal a body blow to their most cherished fantasies. It is far easier to repeat the mantra that "the New Deal didn't end the Depression, the war did" than to examine the falsity of that declaration, as my colleague Richard Walker and I have done. Nor would it buttress their argument to admit the extent to which federal investment during the Great Depression helped win the war and paid huge dividends when it was over.

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Take, for example, the public education that, we are told, the world's richest country can no longer afford. Many New Dealers had extensive experience in social work and shared the conviction that it is far cheaper and better for a society to uplift than to punish. The WPA and PWA therefore built thousands of modern schools and few prisons. They erected magnificent academic buildings and athletic facilities at the nation's public universities, and they constructed entire community college campuses. They built public libraries and museums as well, while WPA workers preserved and indexed collections for use today. WPA artists embellished many structures, such as Brooklyn College's library, with art exhorting students to match and surpass the achievements of the past. Their inscriptions continue to advise us: "Enter to Learn, Go Forth to Serve" and "Education -- The Defense of the State."

Meanwhile, over three million young men -- many of them down-and-outers -- received education in thousands of camps when they were not toiling to repair what unbridled market forces had done to the nation's land. Today in their 80s and 90s, many of those veterans credit the three C's with giving them an invaluable start in life.

We all stand today on the shoulders of giants who, unlike the veterans of our wars, have rarely been acknowledged for what they did for us. No museum exists for New Deal accomplishments, and only a few statues of "Iron John" remind visitors to our parks of the debt they owe to the men of the CCC.

For six years, I have been working with others to map what the New Deal's public works agencies did for California. Now based at the U.C. Berkeley Department of Geography, the Living New Deal inventory is going national in an effort to engage thousands of Americans in a collective act of rediscovery. In the process, we will learn once again what enlightened governance can accomplish when it sets out to build not Dodge City but a civilization worthy of the name.

Gray Brechin is an historical geographer, visiting scholar in the U.C. Berkeley Department of Geography and founder and project scholar of California’s Living New Deal Project.

*Read about how the CCC brought editor Lynn Parramore's grandfather something he always appreciated: a 'two-seater' toilet!  'Of Agee, Oil and Outhouses'

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Bold, Persistent Experimentation vs. Bold Persistence

May 6, 2011Robert McElvaine

fdr-profile-serious-150FDR knew that even when an idea failed, he had to keep trying.  Republicans think that if they keep trying the same thing, they can't fail.

fdr-profile-serious-150FDR knew that even when an idea failed, he had to keep trying.  Republicans think that if they keep trying the same thing, they can't fail.

It would be difficult to imagine a better illustration of the stark difference between the political and ideological aftermaths of the economic collapses of 1929 and 2008 than the statement made on Thursday, the eve of the anniversary of the inauguration of the WPA in 1935, by House Speak John Boehner.

“Nothing is off the table except raising taxes,” Mr. Boehner declared when addressing negotiations on raising the debt ceiling. “I believe that raising taxes will hurt our economy and hurt job creation in our country.”

What we are seeing yet again is a clash between faith-based economics and fact-based economics.

Mr. Boehner and most of his fellow Republicans are people of faith. Their faith, though, is not in God, but in the Market. Their devil is the government. They know the Truth, and facts and evidence will not shake their faith.

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The same difference between policy based on faith and on facts was the greatest one between Herbert Hoover and Franklin D. Roosevelt. The former was an ideologue, the latter a pragmatist. In 1932, FDR exemplified the fact-based approach when he famously called for “bold, persistent experimentation” and said, “It is common sense to take a method and try it; if it fails, admit it frankly and try another. But above all, try something.” For his part, Mr. Hoover, like most people in his party today, was oblivious to evidence. His position (and, far more, that of today’s full-blown believers in the Market God) was: Take the Method (as they see it, there is only one) and try it. If it fails, deny its failure and try it again -- and again . . . and again . . . . But, above all, keep trying the same thing.

Low taxes on the rich, little government regulation, and concentration of wealth and income at the very top led to the Great Depression. When they were reinstated during the administration of George W. Bush, those policies produced the Great Recession. In between, when President Bill Clinton proposed a modest increase in the top marginal tax rate as part of his 1993 budget proposal, “conservative” economists predicted disaster and, basing their positions on received dogma, every Republican in Congress voted against the Clinton budget plan. It was followed by a period of sustained prosperity and a budget surplus.

Those facts make no impression on ideologues of the right. Nor does the fact that such government programs as the WPA substantially mitigated the ill effects of the Depression for millions of its victims and that similar programs would do the same today.

The difference boils down to this: Bold, persistent experimentation versus bold persistence.

Robert S. McElvaine is Elizabeth Chisholm Professor of Arts & Letters and Professor of History at Millsaps College in Jackson, Mississippi and the author of ten books, including The Great Depression: America, 1929-1941.

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The WPA that Built America is Needed Once Again

May 6, 2011David B. Woolner

Begun 76 years ago today, the WPA brought America into the modern age. Our times call for a repeat of this effort.

Begun 76 years ago today, the WPA brought America into the modern age. Our times call for a repeat of this effort.

More than three quarters of a century ago, President Franklin D. Roosevelt declared that the "demoralization caused by vast unemployment is our greatest extravagance. Morally it is the greatest menace to our social order." He also insisted that he would "stand or fall" by his "refusal to accept as a necessary condition of our future a permanent army of unemployed." On the contrary, he said, "we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then take wise measures against its return. I do not think it is the destiny of any American to remain permanently on relief rolls."

To put people back to work, FDR launched a series of programs designed to protect America's environment (through the CCC reforestation programs and creation of the shelter belt in the Midwest to bring an end to the Dust Bowl) and build America's economic infrastructure. The most famous of these was launched seventy-six years ago today: the Works Progress Administration or WPA. Between 1935 and 1943, the WPA literally built the infrastructure of modern America, including 572,000 miles of rural roads, 67,000 miles of urban streets, 122,000 bridges, 1,000 tunnels, 1,050 fifty airfields, and 4,000 airport buildings. It also constructed 500 water treatment plants, 1,800 pumping stations, 19,700 miles of water mains, 1,500 sewage treatment plants, 24,000 miles of sewers and storm drains, 36,900 schools, 2,552 hospitals, 2,700 firehouses, and nearly 20,000 county, state, and local government buildings.

Conservatives critics charged that the WPA was a "make work" program, but its accomplishments, which touched nearly every community in America, continue to make a mockery of this charge. The WPA put millions of skilled and unskilled laborers back to work -- it was a requirement of the program that all those involved in the projects, from the architects and engineers down to the construction laborers, be hired by WPA dollars. It provided the critical economic infrastructure needed to bring the United States into the modern age.

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Sadly, many of the conditions that led to the creation of the WPA are once again with us today: high unemployment and a crumbling economic infrastructure that is rapidly rendering the United States less and less competitive in the global economy. This sorry state of affairs is detailed in a recent article in The Economist, which notes, among other things, that the United States' public spending on transport and water infrastructure has fallen steadily since the 1960s and now stands at a paltry 2.4% of GDP. Meanwhile, Europe spends on average 5% of GDP on infrastructure and China is spending 9%. In fact, the United States, according to the article, does not spend nearly enough just to maintain, let alone expand, its existing transport and water systems. The result is that today the US ranks 23rd among the nations of the world in overall infrastructure quality, according to a recent study by the World Economic Forum.

A new and even modest stimulus package would help alleviate this critical problem and provide millions of skilled and unskilled jobs, but the deficit hawks in Congress will have none of this. They insist that such a use of government is contrary to the American way.

To this, FDR's would no doubt reply:

[T]o those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources...

In our efforts for recovery we have avoided on the one hand the theory that business should and must be taken over into an all-embracing Government. We have avoided on the other hand the equally untenable theory that it is an interference with liberty to offer reasonable help when private enterprise is in need of help. The course we have followed fits the American practice of Government -- a practice of taking action step by step, of regulating only to meet concrete needs -- a practice of courageous recognition of change. I believe with Abraham Lincoln, that "The legitimate object of Government is to do for a community of people whatever they need to have done but cannot do at all or cannot do so well for themselves in their separate and individual capacities."

Isn't it time we rebuilt our nation and put people back to work? Time for a new WPA?

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute.

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