This chart, which has been bouncing the around the internet the last few days, is a sharp reminder that all this “green shoots!” talk is still very preliminary. As is, in fact, the idea that the financial crisis is behind us, when the US banking system is actually sitting on a $1 trillion of commercial mortgages that might turn out to be–in the words of the decidedly un-alarmist Wall Street Journal–a financial “time bomb.” (Love the Steve McQueen pic, guys!)
The red line on the graph represents falling employment in our current recession. You’ll note, of course, that it continues to plunge downward into terra incognita below the job loss trajectories of every other post-war recession. While the angle seems to be moderating, these things tend to zig and zag a bit, so we’ll have to wait and see if it holds.
The chart particularly caught our attention in the context of a new report on stimulus jobs from the House transportation committee. That report says that infrastructure-related stimulus spending has directly “created or sustained” more than 76,000 jobs. Now, there’s been some controversy over how these jobs are being counted — including counting the same job multiple times — so that number might even be overstated.
In any case, it’s not very many in the scheme of things. We wonder if anyone in the West Wing or Congress is quietly developing a worst-case scenario job creation program, along the lines of what FDR did — that is, a structure for putting statistically meaningful numbers of people to work. Say what you will about the stimulus, but it certainly hasn’t done that and there’s no indication that it will.
The CCC, by contrast, put 3 million Americans to work at a time when the country had only about 125 million people. On day one, it brought in 300,000 unemployed men, doing work ranging from building air strips to planting forests to controlling mosquitoes. It was among the most popular of FDR’s New Deal programs, with off-the-charts approval ratings.
Of course, times have changed and it’s not likely the government will set up tent camps and barracks for Americans willing to work for $1 a day (with most of that being sent back to dependents). If that were to happen, cynical jackasses like Glenn Beck and Alex Jones would get on the air and tell millions of people that it was a secret Muslim, socialist, fascist plot to enslave red-blooded Americans. So we wonder–without really having any answers–if Henry Blodget and other pessimists are correct and that red line does keep heading downward and something kinda dramatic has to be done in a year or two, what would Obama’s and Congress’s equivalent to the CCC look like?
It’s probably old-fashioned, but we imagine the only answer would be another massive public works program. Refurbishing thousands of miles of disused rail rights of way? “Completing” urban streets around the country? Grunt work for massive solar thermal farms in the desert? Building switchgrass or algea or tree farms to sequester carbon? It’s certainly a harder proposition today to design programs that might keep large numbers of anxious, angry, unemployed Americans busy creating structures of lasting value. The mechanics would be tricky indeed… but still maybe worth thinking about.
September 8th, 2009 at 4:04 pm
There are many obvious job creating projects. Some can create jobs directly, such as public works projects like street and highway maintenance and repair, new government facilities that are not too engineering intensive, and contract work for things like habitat restoration, fire prevention, landscaping, etc… Organizations like The SCA - a national service group - could ramp up very quickly if given relatively meager appropriations. Boosting the number of Americorps awards with stipend money available would have a similar effect. While they don’t create the highest paying jobs, most of the program costs go to labor and the work force tightens, spurring investment. Furthermore, they create long-term returns by investing in better community health, education, and parks for example, as well as building the work experience of the inexperienced working population who is most vulnerable right now.
White collar work is much less cost-effective for job creation. The best idea here is stimulate demand indirectly with cost-effective marginal measures. This includes paying for more new low-income college graduates who can’t afford to go to grad school to go, especially for technical disciplines - engineering, economics, finance, basic science. The labor force is tightened and investment picks up. When these people graduate with a masters in a year, they are much more prepared than if they hadn’t gone to school at all and remained unemployed or underemployed or in a job for which they’re overqualified. America benefits by having in-demand engineers. And the program can be cost-effectively managed by a bureaucracy already in place. Universities who wish to participate will receive the tuition for all students who qualify. Since you’re only paying for students who would not otherwise attend school or be employed (say 90% of participants if you limit the program to those whose unemployment has expired and those who qualified for low-income loans and just graduated and have been unemployed 6+ months), you’re getting a heck of a good bang for your buck.
Direct measures won’t help most of us in services as cost-effectively and don’t create the same long-term returns unless they are well-targeted, labor intensive projects. Mostly this means construction and related industries. A sample list:
Forest restoration to reduce forest fire risk in highly vulnerable areas, building an intercity bike path network in highly populated regions, trail and habitat restoration on public land, reconstruction of aging sewer and water systems, street and highway repair, construction of major utility lines, investment in government IT, and the list goes on.
Further measures could include tax incentives for more savings - this slows consumption and growth in the short term, but boosts asset values and long-term growth. Also, demand-side measures are important because they fuel long-term growth. There has been lots of recent focus on re-regulation, but deregulation is also an important tool that spurs the kind of investment to create economic and productivity growth. Expand the open skies initiative to increase international aviation competition, change regulations to speed investment in residential data networks so that more home get better broadband, and increase standardization of construction materials and design to increase productivity in that sector.
September 8th, 2009 at 5:55 pm
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September 8th, 2009 at 10:16 pm
Send ‘em down here to New Orleans… we have plenty of work that needs to be done, preferably as cheaply as possible - levees, floodwalls, road rebuilding, demolition, historic renovation, replacement of all manner of public facilities, the list goes on.