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We’ve had job growth for five years and the official unemployment rate is around 5%. But 6 million part-timers want full-time work, 8 million people are officially unemployed, and another 6 million also want jobs. That’s 20 million people and 12% unemployment. Some experts think we’re at full employment, but if we were, employers would be raising pay faster to attract workers. But they don’t have to. Last fall Chipotle had 60,000 applicants for 4,000 positions. In Los Angeles, a licensed vocational nurse could not find work and sold her blood to pay the bills.
Recently I had the relatives over for a dinner. I cooked for my father, whom everyone calls Grandfather, for Uncle Joe and his wife, my sister, Aunt Isobel, and for their kids, Bert and Ernie.
Joe agrees that the economic situation isn’t good. But he blames Obama and the liberals. He heard Marco Rubio say that we need to liberate capitalism and innovation. Get government out and we’ll get millions of jobs.
I remind him that since the 1970s, conservatives and business leaders have campaigned to destroy unions and limit regulations. The result? Less unionization, stagnant wages, and a wealthier 1%. Turns out capitalist innovation often means super-exploitation. Wal-Mart and Amazon use whizzy logistics systems, but they pay poverty wages. Uber has a clever APP, but classifies employees as independent operators to avoid paying for Social Security, Medicare, unemployment benefits, and workers’ compensation. Innovation or sleaze?
Aunt Isobel still thinks we should use tax cuts for businesses and investors. But tax credits for each unemployed person hired often reward employers for what they would do anyway. Ditto for general Hail-Mary tax cuts that gift businesses and the rich in hopes that they will create more jobs. The Bush tax cuts brought no bump in job creation. There are too many things companies and individuals can do with their money. They can invest overseas, stash the money in foreign tax-havens, build mansions in the Caribbean, and invest in companies like Instagram that have few employees.
If tax cuts for the rich don’t work, and if the Federal Reserve wants higher interest rates, we are left with direct government job creation. It worked in the 1930s. The Civilian Conservation Corps enriched young men’s skills and gave the country more parks, picnic grounds, and trees. The Works Progress Administration employed people on everything from road repair to theater performances. The Public Works Authority funded dams, airports, bridges, schools, post offices, and fire houses in 3000 counties. Today, there’s much work to be done. For example, Head Start can be expanded and our infrastructure is a mess. The American Society of Civil Engineers gave it a D+.
And so we argue on through a leisurely dinner. Here are more guest arguments and my responses.
1) Assertion: Government screws up everything. The private sector always works better.
Answer: Really? After all we have seen in the last ten years? Government stumbles but many programs work. As in other large organizations, there are problems due to the complexity of the tasks, weak administrators, lazy employees, and incompetent private contractors. But programs work. Sometimes the more socialistic, the better. Every month 58 million retirees, dependents, survivors, and disabled people receive Social Security payments.
2) Assertion: We don’t have the money. Our kids will spend all their income paying off the debt.
Answer: Politicians can find money when they want to. They’ve spent billions on bad wars and tax cuts for the rich that don’t trickle down. We can raise $300 billion a year by taxing the rich more, and taxing financial transactions and carbon emissions. And we can borrow. Deficits for job creation are good. And more jobs, especially good ones, increase tax revenues and money for Social Security and Medicare and reduce spending on food stamps and unemployment benefits. That will cut the deficit a little. (If people are still really worried about deficits, they can support a tax-the-rich, cut-the-deficit program.)
3) Assertion: Grandfather says, “Trump has a job plan. Get tough with foreigners. Put high tariffs on imports.”
Answer: Trump’s a racist but he’s on to something. He and Bernie Sanders have broken with the rock-hard elite consensus that “free trade” is always good. Free trade means cheaper prices but it has not brought a higher American living standard.
Trump blames job losses on free trade, gullible American leaders, and wily foreigners. He promises to increase tariffs on imports. Bernie partially agrees. This is new. Every modern president has supported treaties like NAFTA and the Trans-Pacific Partnership. The result is more cheap goods, but lousy wages. You cannot live on Wal-Mart alone. Modest tariff increases could help, especially against producers who violate basic workers’ rights. But they won’t create many good jobs. We should press for direct government job creation. (By the way, Dad, Trump isn’t serious about good jobs. A Vegas hotel with his name won’t bargain with workers who voted for a union. And Trump does not support the $15 minimum wage.)
4) Assertion: If we get close to full employmentBsay 3% unemployment–inflation will soar. When workers are in high demand, employers raise wages, and, the nephews say, they must they raise prices. There is a Philips Curve that means we cannot have low inflation and low unemployment together.
Answer: Truly full employment should bring substantial wage increases. That’s one reason we want it. But we can devote resources to anti-inflation programs that don’t require high unemployment. Bert and Ernie cannot remember if their econ professor talked about that. Some countries with strong unions and a stronger sense of WITT (We=re in This Together) have had success with softer solutions. Anyway, must companies raise prices when employees get raises? Why can’t owners and CEOs take less? Do the Waltons need $100 billion?
5) Assertion: Where=s personal responsibility? Uncle Joe says that people who need jobs should get off their butts and search.
Answer: People must take responsibility for themselves; some don=t. But millions who try hard don=t get much in return. Some give up. National policy should help the majority that is striving and not getting ahead. We’ve had lousy wages for forty years. There’s always more job seekers than vacancies. And it’s obvious that the ups and downs of unemployment are caused by economic factors, not by people getting more lazy or less lazy.
6) Assertion: Bert asks, “Must We Be Idealistic? We work hard sometimes. Why worry about other people? YOYO (You=re on Your Own) is a more realistic way to organize society than WITT (We=re In This Together).”
Answer: Kids, you are not on your own. You are living at home because you cannot afford to live elsewhere. And some day you may be out of work and unable to pay the bills. We need better jobs to make success possible for more people. Success requires individual effort, support structures, and luck. YOYO is not a full description of the way the world works. The robber barons use laws, police, politicians and media hacks to defend them as they fleece the public and their workers. They use all kinds of government subsidies.
7) Assertion: Isobel and Ernie are warming to a good-jobs program, but they think that the politics are daunting.
Answer: This is a tough one. Conservatives have power in Congress and liberals are timid. But people have been taking action and, for example, local minimum wages are going up more rapidly than anyone predicted. History is full of unexpected turns, for example, the emergence of the women’s liberation movement in the 1960s.
8) Assertion: It’s dessert time and Joe is losing patience. Americans don’t like big government. Self-reliance and hatred of welfare–that’s what makes America great and greater than European countries.
Answer: The job program is not welfare. Full-employment supporters should not badmouth government handouts, but the job program is about work. Also, Americans are not so anti-government. They support food stamps, unemployment insurance, Social Security, and infrastructure projects. Grandpa loves his Medicare. Joe and Isobel needed food stamps when Joe was laid off from Ford. My nephews both have Pell Grants.
Currently, two presidential candidates are big-government guys. One is a racist demagogue named Trump. The other is a socialist named Sanders. Yes, Joe, there’s anti-Washington sentiment out there, but many people want stronger political leaders who can fix the economy. I hope they choose someone with policies and programs that can actually change people’s lives for the better.
Oops…Isobel and family have to leave. No time for dessert. Next time dessert for sure, and we can argue about the kind of jobs our country needs and what we can do to bring more good jobs.