The Lingering Great Recession: Jobs Needed

Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.
--Franklin Roosevelt, Inaugural Address 1933

Confronted with bread lines, soup kitchens, and nearly a quarter of Americans without work, President Franklin Delano Roosevelt knew on his first day in office in 1933 that America needed a massive jobs program. Although Roosevelt wanted private industry to hire workers, he understood the limits of capitalism and knew that, to create jobs in the short term, government needed to hire people. Roosevelt did not doubt the ability of Americans to respond to a national crisis. In a display of ingenuity and creativity not matched since, he proposed legislation establishing the Works Progress Administration (WPA), the Civilian Conservation Corps (CCC), and the Public Works Administration (PWA). Combined, these agencies funded tens of thousands of projects and put millions of people to work, building waterworks, post offices, bridges, prisons, airports, swimming pools, athletic fields, playgrounds, and railroad stations, many of which are still being used today.

• At a time when America’s needs seemed limitless, WPA workers painted murals on post office walls, delivered books to rural areas, wrote plays, composed music, and employed more than eight million Americans. Its accomplishments were stunning, as it built or improved 651,000 miles of roads, 19,700 miles of water mains, 500 water treatment plants, 24,000 miles of sidewalks, 12,800 playgrounds, 24,000 miles of storm and sewer lines, 1,200 airport buildings, 226 hospitals, and more than 5,900 schools. Among the WPA’s most famous projects were LaGuardia airport, the San Antonio Riverwalk, and the Timberline Lodge in Oregon.
• The CCC, Roosevelt’s favorite New Deal creation, was up and running within 37 days of Roosevelt’s inauguration. It put to work 500,000 young men (women were excluded from the CCC), who were taught skills in carpentry and masonry and performed useful work related to conservation and the development of natural resources. These young men, who lived in military style camps throughout the United States in national parks and forests, went on to plant more than three billion trees, erect 3,470 fire towers, and construct 97,000 miles of fire roads; they fought forest fires, built campgrounds, and implemented disease and insect control. By 1942, the CCC's projects positively affected virtually every state in the country.
• PWA’s workers built the state capitol building in Oregon, the highway linking the Florida Keys to the mainland United States, San Francisco’s Bay Bridge, the city hall building in Kansas City, Outer Drive Bridge in Chicago, Washington National Airport, the Grand Coulee Dam in Washington state, and Ellis Island Ferry Building. Between July 1933 and March 1939, the PWA funded over 34,000 construction projects, including airports, electricity-generating dams, and aircraft carriers. It also constructed seventy percent of the new schools and one third of the hospitals built during that time.

The investment in America’s infrastructure during the New Deal made possible the incredible economic growth that occurred after the end of World War II. Much of that infrastructure remains in use today, from bridges and dams to schools and sidewalks.

Although conservatives love to point out that New Deal spending did not end the Great Depression – it took American involvement in World War II and the mobilization of a war economy to do that – in reality, Roosevelt’s programs dramatically reduced unemployment. The unemployment rate dropped steadily from its peak at 24.9% in 1933 to 14.3% in 1937, when Roosevelt, eager to return to a balanced budget, raised taxes and cut spending. Not surprisingly, unemployment jumped back to 19.0% in 1938 and only the deficit spending of the war finally lifted the U.S. economy out of its doldrums more than three years later.

In hindsight, it is apparent that Roosevelt, whose conservative instincts precluded more radical measures, did not do enough to put even more Americans to work. Nevertheless, his jobs programs not only employed millions of American citizens – providing them with productive work and increased self-esteem – but also greatly enhanced the nation’s infrastructure. The New Deal employed millions of Americans at a relatively low cost and, while it did not end the Depression, it reduced the suffering of countless American families.

We could use a little of that New Deal spirit today. The unemployment rate in the United States is now at 10.2%, the highest it has been since the dark days of the Great Depression. It is even worse for African Americans and Hispanics, who face unemployment levels in their communities hovering above 15% and 13%, respectively. If you count the underemployed and those of all races who have given up looking for work (and who are not counted among the ranks of the unemployed), the rate exceeds 17% of the American workforce. We are indeed in the midst of a Great Recession. President Obama and Congress rightly responded to this latest crisis with a $787 billion economic stimulus package in the American Recovery and Reinvestment Act, but there is little evidence that these billions have been targeted to putting real people to work in real jobs. We bailed out the banks, gave modest tax credits to middle-class Americans, and plugged the leaking budgets of state and local governments, but we have done nothing approaching a Rooseveltian solution to massive job losses.

Paul Krugman, the award-winning economist of the New York Times, correctly noted in a November 12, 2009 editorial that the United States does not have a jobs policy, but a GDP policy. Our policymakers believe that stimulating overall spending will make GDP grow faster, thus inducing the private sector to stop laying-off workers and to start hiring again. Americans are justly proud of our economic system, which has historically produced goods and services and created wealth at rates far exceeding anything ever before seen in history. The standard of living of most Americans has steadily increased over the past sixty years, with America the envy of the world. Although the industrial nations of Europe and Asia have largely kept pace with, and in some cases exceeded, the growth and productivity of the American economy, Americans have generally prospered. We have benefited from an expanding and increasingly educated workforce, until recently a stable financial system, and a legal and regulatory scheme designed to promote free and fair trade while checking corporate excesses. Due to progressive reforms instituted during the New Deal and after, the elderly (social security and Medicare), the poor (aid to families with dependent children and Medicaid), and children (children’s health insurance programs, mandatory education, school lunch programs) are generally protected by government programs designed to provide a social safety net. Yet cracks remain, and have grown increasingly larger, as the ranks of the unemployed have swelled.

While long-term unemployment is at its highest level since the 1930’s, the bankers – bailed out with government largesse – thrive; it was recently reported that bonuses at Goldman Sachs, Morgan Stanley, and JPMorgan Chase, among others, are up 60% from last year, with over $30 billion scheduled to be paid out this year. The growing inequality of American society continues to present ethical and moral challenges to the defenders of a free enterprise system that enforces a callous form of social Darwinism. Thus, unemployment is on the rise at the same time that productivity, as measured by the GDP, is up by an impressive 3.5% this past quarter, and 80% of the S&P 500 reported better than expected earnings.

Why such a disparity? The United States permits employers to hire most workers "at will" which allows employees to be fired without cause at the whim of an employer. The American corporation, upon the first signs of difficulties, cuts costs by cutting people; it is how companies become more “efficient.” Unemployment thus continues to rise while the corporate bottom line improves. Unlike Germany and some other European Union countries, which have strong employment protection legislation, in the United States we fire employees and let them fend for themselves, while those untouched by layoffs continue to prosper.

Imagine if you were a farmer with a large family. One year, due to a drought and bad weather conditions, you have a very poor harvest. Your accountant advises you that, due to declining revenues, you can make ends meet if you simply evict three of your seven children. This cost cutting measure will permit the rest of your family to maintain its present lifestyle. Do you accept the accountant’s advice? Would anyone accept as ethical the farmer who implemented such a cost saving measure? Of course not, as we naturally expect the farmer to have his family make do on less until next year’s harvest. Why do we treat our economy differently? We bail out the banks to shore up our financial system – rewarding risky behavior motivated by greed – rather than ask the rich to make do with less to prevent the increased depravation suffered by recession’s victims.

It is past time to borrow a page from the New Deal and use a significant portion of the stimulus money to put people to work. It is not as if we have a shortage of needs in this country. America’s core infrastructure – roads, bridges, sewers, airports, trains, mass transit – is outdated and crumbling. While poor road conditions cost us billions of dollars in repairs and countless hours of delays, China opens a new subway system every year and Europeans travel on modernized, high-speed rail systems from Paris to Frankfurt. Our cities have an epidemic of broken pipes, dilapidated and vacant buildings, and sinkholes – just look at Camden, Philadelphia, Newark, and most any Northeastern city for examples. One-third of our schools are rundown and in need of repair. Add to this the fact that our addiction to oil has prevented any serious consideration of transitioning to smaller, more fuel-efficient cars, renewable energy development, and expanded mass transit systems, and we have a recipe for a long-term decline.

Economic relief without jobs makes no sense and has a devastatingly negative affect on the psyche of millions of Americans. Workers who have been unemployed for a long time find it difficult to re-enter the labor market even after economic conditions improve; and the hidden costs of long-term unemployment – the emotional damage, for example, to children and families when parents are unemployed – are immeasurable. As Krugman argues, “We need to start doing something more than, and different from, what we’re already doing. . . . [I]t’s time for a policy that explicitly and directly targets job creation.”

Most economists acknowledge that, historically, spending on public works has a far greater effect on the economy than tax cuts, as more money is spent and jobs created at home than abroad. Let us put Americans to work where the nation’s needs are greatest – retrofitting schools and public buildings, repairing our highways and sewer systems, expanding the nation’s broadband capacity, and improving our cities and landscapes. President Obama understands this; he has put Vice President Biden in charge of a team that is making certain that federally financed projects are targeted to meet real needs, are smart investments in America’s future, and are not wasteful. But Obama, like so many Presidents before him, is caught in that great Congressional power hold that is Washington. Although $152 billion is earmarked for infrastructure investment, it constitutes only 20% of the total stimulus package. And much of that money has yet to be spent, caught in a system of earmarks and legislative trading, which leaves far too much discretion in the hands of individual state governments on how to spend the money.

Although we spend hundreds of billions of dollars on supporting a corrupt regime in Afghanistan and putting at risk the lives of American soldiers, we somehow consider the concept of employing Americans with public money to be dangerous and subversive activity. How is spending public money to create jobs and re-train workers a bad thing, when unemployment hovers at 10.2%? Do we wish to have economic and social policies that protect and look out for the general welfare of our citizens, or policies that protect the haves at the expense of everyone else? I do not have all of the answers, but I believe that looking to the New Deal and adjusting it to today’s needs is a place to start.