The Public Option for Jobs Creation

Dad's and my column / also published in the Senior Spectrum

It is strange, but critics don't seem to remember that President Reagan's family members were willing participants in one of FDR's social programs. President Reagan's father, Jack, was a salesman, usually of shoes, in the state of Illlinois. A volunteer in Roosevelt's 1932 presidential campaign, he was rewarded for his Democratic activism by being named the local director of the WPA, a federal agency created by Roosevelt to provide work for jobless Americans in 1936. His job was to distribute food and scrip that could be exchanged for groceries to the jobless, some of them his friends and neighbors. Neil Reagan, President Reagan's brother, was also employed by the WPA. Virtually all who praise Reagan and as well as those who complain about his social and economic programs, have kept quiet about the Reagan connection to the WPA.

The level of joblessness that confronted Roosevelt 76 years ago that led him to set up the WPA and other social agencies, was undeniably deeper and more ominous than the situation President Obama is facing today. Yet, according to economists and historians, there are similarities and lessons to be learned from the experience of the Roosevelt years in the 1930s. Two-thirds of emergency spending between 1933 and 1939 went to public works. Even so, though the unemployment rate fell somewhat due to Roosevelt's WPA efforts and others, it remained stubbornly high during his era, averaging more than 17 percent for the decade.

One lesson from the 1930s, economists say, is how difficult it is to set in place a recovery when an economy has spiraled down as far as it had by 1933. Swift and effective steps early in a downturn, they say, can enable an economy to avoid further slippage and joblessness. Since the start of the current recession in December of 2007 the number of unemployed persons has increased by 7.6 million. Employers shed 190,000 jobs in October alone; 15.7 million workers are now officially unemployed and the nation’s unemployment rate has jumped to 10.2%. The October report from the Department of Labor underscores the continuing severity of the employment crisis, as the average duration of unemployment has hit a record high of nearly 27 weeks – more than half a year – and 35.6% of the unemployed have been out of work even longer.

President Obama will convene a White House summit early next month to explore ways to reverse the soaring unemployment rate, and he'll be getting plenty of ideas from business and political leaders. "We all know that there are limits to what government can and should do, even during such difficult times," he said in a recent interview, alluding to the concerns about the soaring budget deficit. "But we have an obligation to consider every additional, responsible step that we can to encourage and accelerate job creation in this country."

Obama said he would gather chief executives, small-business owners, economists, labor leaders and others to discuss ways to create jobs and grow the economy. The move comes as Senate Majority Leader Harry Reid, D-Nev., told colleagues this week he planned to push a job-creation bill in the coming weeks, as soon as the Senate finishes debating and voting on health care legislation. Whatever ends up in the bill, the two most important principles identified by the Daily Kos include: (1) that the bill is ambitious enough to create enough jobs to put people back to work and (2) that the bill is exclusively focused on creating jobs.

Maybe what is needed is another WPA. Paul Krugman, Nobel Prize winning economist and columnist for the New York Times, has raised that very question. In a November 6 editorial, he asked the question: “why not a WPA?” He points out that a pretty good case can be made for employing a lot of people directly, WPA style, and it would be a lot more cost-effective than less direct methods of job creation through new jobs tax credits and the like. He notes that the WPA and CCC (Civilian Conservation Corps) cost surprisingly little given the number of people put to work.

The current situation is stark. When people say there are no jobs out there, it's true. According to the Bureau of Labor Statistics, the ratio of job seekers to job openings was 1.5 to 1 when the recession began. Now six unemployed workers chase every available job. Time Magazine characterizes the situation as a brutal game of musical chairs in which a great many people lose and spiral downward economically with disastrous consequences, not only for themselves and their families, but also for communities that were once productive and prosperous. Economists expect the job picture to remain bleak well into 2010.

Krugman asks why we aren't responding to such a dire job market with a WPA-like effort. He answers his own question: Politics, of course: government is seen as the problem ever since President Reagan coined that phrase in his first inaugural address. A Rasmussen Reports telephone survey taken earlier this year showed that the basic views of the American people support this perception: 59% of voters still agree with Reagan’s inaugural address statement. Only 28% disagree, and 14% are not sure. This is the case even in light of the current job challenges facing the country.

Be that as it may, the recovery efforts from earlier this year rescued the financial economy from what has been termed a mini-depression, and helped bring some stability to an economy on the brink of catastrophe. Given the severity of the economic downturn policymakers inherited, a bold, ambitious jobs bill could make a huge difference -- the recovery plan got the financial system moving again; a new job creation effort could help us revitalize economic growth. Putting Americans back to work is the key to a full economic recovery. And so it really is worth asking: shouldn't we try to include what Paul Krugman calls, a public option, in the spirit of WPA, in a jobs creation bill?