New York Times economics reporter Jim Tankersley has a useful piece out Tuesday morning on jobs programs. He makes two important points I will summarize in a moment, but some of the critics he cites are mistaken in a fundamental way about this idea. I will try to correct that below.
The first point is that a large number of Democratic policymakers have proposals in this space, which I consider to be an excellent development. Even as the U.S. labor market closes in on full employment, there are significant pockets of weakness, suggesting it will take more than even very low unemployment to reach a non-trivial group of people and places.
Here is Sen. Chris Van Hollen (D-Md.), pointing out Republicans have no plans to help those left behind, beyond hurting them further by taking away government support:
“It’s a strong argument in many parts of the country that, for folks who are out there committed to finding a job, we should create this transitional program to help them get on their feet. You have a lot of Republicans right now who say they want to help people who are out of work by taking away their health care or other benefits, but are doing nothing to help them find a job.”
Second, Tankersley takes you through the continuum of policy proposals, from the most to the least interventionist. Job guarantees tend to be the most ambitious, as some models create permanent, public sector jobs that pay decent wages and benefits for anyone who wants one. The plans introduced by Van Hollen and Rep. Ro Khanna (D-Calif.) are less interventionist, targeting the long-term unemployed with a job that is subsidized for a specified period. (Full disclosure: I have advised these policymakers, as well as the authors of the most prominent job guarantee program.)
The critiques come from two old friends of mine, Anne Kim of the Progressive Policy Institute and Larry Kudlow, formerly of CNBC and now the director of President Trump’s National Economic Council.
Kim views the guaranteed jobs program as a “ … very large hammer in search of a nail. And it’s the wrong nail. We really should be searching for solutions to the wage stagnation problem.”
Kudlow similarly argues there is no jobs problem, so why go there? “I don’t know if the Democrats have noticed, but jobs are doing very well,” he said, noting “the administration would oppose such plans.” No surprise there.
What they have got wrong is that while these policies are called “jobs programs,” they are also wage programs. The job guarantee is explicitly conceived as a way to end working poverty by ensuring workers earning poverty level wages can do much better, by fiat. That is, the beneficiaries of the job guarantee are not just seeking jobs; they are seeking jobs that are much better, compensation-wise, than the jobs they hold.
In fact, it is this characteristic that has led me (and economist Dean Baker) to worry about the feasibility of this idea. The public sector would have to massively expand to accommodate the guarantee. As I see it, if there is a problem here, it is not that the big hammer is hitting the wrong nail. It is that the hammer is too unwieldy. That is why I support Sen. Cory Booker’s (D-N.J.) idea to try the guarantee out as a pilot in 15 places before trying to go national.
The same point holds regarding Kudlow’s jobs critique. This is not just about jobs but, in the targeted programs, jobs for people who are long-term unemployed or out of the labor force. Yes, these folks need employment — and many need training, health interventions, child assistance and more as well — but their joblessness also creates slack in the job market that puts downward pressure on wages for millions of working people.
At any rate, should the pendulum swing, sending my pal Larry back to CNBC and Democrats into the majority, I am confident we will see a jobs program, perhaps in their first budget reconciliation bill. That jobs program will also be a wage program.