Obama's stimulus plan is not doing enough to bring economic recovery, especially in the area of job creation. Among the explanations I have seen are these: most of the money has not been spent; the stimulus was too small; the depression is worse than expected; many projects were not, after all, shovel ready; and the recovery program was never meant to create or save more than 2 or 3 million jobs.
We do not know how many jobs the stimulus program is creating and saving. We do know that most of the stimulus money was not dedicated to job creation. For most of the job problem, the administration is really asking us to hold on until a general economic revival.
But how long do we have to wait and what will general recovery bring us? It is widely agreed that the return of prosperity will take a long time. History supports that view. In the Great Depression it took twelve years and big war-time budgets to bring full recovery. Even in the 2001 slump, a short one that ended in 8 months, jobs declined for 32 months, and it took another 16 months - a total of 4 years - for job levels to get back to pre-recession levels. That woeful job performance meant that the Bush recovery had only two or three years to expand the job base before the next economic slump began.
We need to add about 2 million jobs a year just to keep up with an expanding labor force. From January of 2001 through January of 2007 we added fewer than 4 million non-farm private sector jobs. So we were already behind millions of jobs when the financial meltdown began in 2007. In the current depression we have already lost 7 million jobs, and there are 9 million part-timers who want full-time work. The real unemployment rate is over 18% and a range of estimates about our short-term and long-term job deficit is between 15 and 30 million jobs.
What should we do? It is silly to expect "natural" forces (low interest rates and free markets) to do the job. This is Hooverism and it is still very popular in the Republican Party (check Bobby Jindal and many Republicans in Congress). Mostly it means little federal action except for tax cuts and telling people to work harder. Hooverism did not work well in 1929-1933, and, it has not been effective in the last three decades. There was good job growth and rising average wages in the late 90s, but that was unusual.
We have had a too many workers chasing too few jobs since the early 70s. That's one reason the real hourly wage is no higher than it was in 1973.
We need to put millions of people to work in regular jobs. We need programs that are flexible enough to expand during recessions because they are always under way, even during prosperous times. We cannot rely on business forces; even in time of prosperity many businesses are addicted to trimming their work forces and keeping the lid on pay and benefits. We need direct job creation by the federal government.
In a few years, committed and energetic federal bureaucrats, working with local governments and private groups, can get 15 million additional people working, or working at better jobs, or moving from part-time to full-time jobs. We do need a change in our governing ethos - fewer Brownies and Geithners - but it can happen. If the Civil Works Administration could usefully employ 4 million people in just a few months in 1933-1934, and if the WPA employed 2 to 3 million people every month for six years, we can do more, with our much larger labor force.
What kind of jobs can we create. Here are four suggestions:
-We need to build a lot of affordable housing; we need a major national commitment to build reasonably priced homes and apartments in pleasant surroundings.
-We need a new Civilian Conservation Corps""or something like-it to build and restore parks, to beautify our cities and towns, to expand the understaffed forest service, and so on.
-We need an environmental corps that works on labor intensive programs such as home insulation, tree planting, and installing alternative energy systems.
-If scholars are right about the payoff of investing in toddlers, we need a wider, deeper system of pre-schools. We ought to expand and upgrade Head Start, make it a model program, one whose employees have high ideals, professional skills, and esprit de corps, and one whose students make permanent advances in their skills and aspirations.
There is plenty to do. Businesses won't do much of what needs to be done. We need a federal program that directly creates millions of jobs all the time. We need it now, to serve as the job rich stimulus plan that we should have had in Stimulus I. But we need it later too. We finally have a chance to do something about three decades of lousy job markets. Let's not blow it. Let's not wake up in the midst of recovery, five years from now, to realize that average real wages are still, after 40 years, just where they were in 1973. And that 10 million people still need jobs.
Frank Stricker belongs to the National Jobs for All Coalition and the author of Why America Lost the War on Poverty""and How to Win It (2007). He is Emeritus Professor of History at California State University, Dominguez Hills.