Obama Administration Comes Back to Liberal Wonks for Job Creation Ideas
The White House wants you to believe that the American Jobs Act is loaded up with bipartisan solutions once preferred by Republicans. And to some extent, that’s true. But there are a number of Easter eggs in here, policy ideas that originated with liberal policy groups. The White House may be touting the bipartisan bona fides on the top line. They may have frozen out the liberal policy shops for years. But when the time comes to save their bacon with jobs programs, they come back to the liberal wonks.
Here are some examples. First of all, there’s FAST, the $30 billion program aimed at modernizing American public schools and community colleges. 35,000 public schools and thousands of community colleges would be affected, and the design is to improve classrooms, make emergency repairs, make schools more energy efficient, remove asbestos, and upgrade technology with new science an computer labs. This sounds like a great thing to dump $30 billion into, with a lasting policy component. It would have green benefits as well as benefits for public health and probably student achievement.
It came from the Economic Policy Institute, and was part of their jobs plans going back years, most recently in their American Jobs Plan at the end of 2009. This reportedly would have been in the stimulus package if it wasn’t for Susan Collins. More recently, Jared Bernstein has taken up the mantle for this idea.
Then there’s a job creation tax credit. I’m more skeptical on this one, but it was taken from another design by EPI, with a tax credit for firms that increase their hiring next year, or firms that give wage increases. That acts as a wage increase in some places, as a job subsidy in others. Again, I don’t know if it’ll work, but it does have a liberal wonk underpinning.
Perhaps the most refreshing part of the bill comes further down the fact sheet:
Work Sharing: UI reform to prevent layoffs. Preventing layoffs in the first place is a win-win for workers and businesses. The President‘s plan – consistent with proposals championed by leaders like Sen. Jack Reed (D-RI) – calls for work sharing that would let workers receive pro-rated UI benefits as compensation for a reduction in hours at businesses that would otherwise lay workers off.
• Work sharing programs currently operate in about 20 states.
• According to an OECD paper, during the recession, work-sharing programs in Germany, Italy, and Japan reduced the drop in employment from 2008 to 2009 by between 0.5 and 1 percentage points.
• Dean Baker (the co-director of the Center for Economic and Policy Research) and Kevin Hassett (Director of Economic Policy Studies at the American Enterprise Institute) wrote that “work sharing could work for us… there is one [policy] that clearly dominates in terms of impact and cost-effectiveness: work-sharing”
Baker has been working on this for some time. There may not be a ton of funds devoted to it – it’s a bit hard to say – but basically you have the government make up the difference for a reduction in hours, and therefore pay. That way, to get the same work done, the company can reduce hours and keep more workers, rather than laying someone off. If it reduces involuntary layoffs by 20%, that’s 400,000 layoffs avoided a month. Even at 10%, it’s still 2.4 million jobs per year. And it adds flexibility and quality of life to people who would otherwise be unemployed and depressed.
Baker’s statement on the inclusion of work-sharing is glowing:
It is encouraging to hear that President Obama included work sharing as part of his jobs agenda. This is a job creation measure that both has been shown to be successful and has the potential to break through partisan gridlock.
The basic logic of work sharing is simple. Currently the government effectively pays for workers to be unemployed with unemployment insurance. Rather than just paying workers who have lost their job, work sharing allows workers to be partially compensated for shorter work hours. Instead of 1 worker getting half pay after losing her job, under work sharing 5 workers may get 10 percent of their pay after their hours are cut by 20 percent.
This situation is likely to be better for both employees and employers. It allows workers to maintain their jobs and continue to upgrade their skills. It avoids a situation where workers may end up as long-term unemployed and find it difficult to get re-employed.
It is encouraging that President Obama was willing to step outside the box and try a new approach. If the Republicans cooperate, this policy could make a big difference to millions of workers and their families.
Again, it takes a liberal economist – Baker did get conservative support for it, but he was the main developer, importing it from Germany and the Netherlands – to come up with the idea.
Maybe those liberals are worth listening to, after all. More from David Roberts.