Philip Harvey on “Full Employment”

pharveyIn a comment on “If You Care About Inequality, Fight for Full Employment,” an essay by Roger Hickey, Philip Harvey offers another reason to sign the Guarantee Living-Wage Job petition. If you haven’t signed the petition yet, please reflect on his analysis and consider signing it. To sign it, click here.

In his essay, Hickey, co-director of the Campaign for America’s Future, a prominent activist organization, urges Democrats to remember that “the number one issue on the minds of voters is jobs.” And he criticized Obama’s strategy: “Have patience. The jobs are coming back.”

As an alternative, Hickey states, “Only the Congressional Progressive Caucus (with help from the Economic Policy Institute ) has put out a comprehensive proposal – the Back to Work Budget – to achieve the kind of job growth this economy really needs.”

Referring to the Republican stranglehold on the House, Hickey argues:

The way to break that conservative majority is by talking about Democratic ideas for job creation – from infrastructure spending to universal preschool education. And then you campaign, like Harry Truman, against the “Do-Nothing Republicans” who refuse to do what America needs to revive growth and create jobs.

Hickey says, “We must also expand our crusade for jobs…. And if we are serious about addressing inequality, we must fight for jobs for all.” Referring to Getting Back to Full Employment, Hickey comments, “economists Jared Bernstein and Dean Baker forcefully remind us that the fastest and most effective way to reduce inequality is to revive economic growth to the point where everyone who wants a job can find one.” He concludes, “If you care about inequality, you have to fight for full employment.”

In his comment following that post, Philip Harvey, Professor at Rutgers School of Law, who authored Securing the Right to Employment: Social Welfare Policy and the Unemployed in the United States in 1989 and served as a consultant to the Campaign to Abolish Poverty (which I founded), offered some cautionary words about Hickey’s essay. He may have overstated his case when he wisely warns about accepting the conventional wisdom about “NAIRU,” or the “non-accelerating inflation rate of unemployment,” a questionable term widely used by economists. But his warning is important to keep in mind.

Harvey posted:

Right diagnosis, but faulty prescription. The return to “full employment” Roger is promoting and which the “Back to Work budget” is designed to achieve would not in fact insure that “everyone who wants a job can find one.” What Roger and the others he cites as supporters of a return to full employment mean by the term is actually a return to the NAIRU. Their claim that this would insure the availability of enough jobs to provide work for everyone who wants it is unambiguously contradicted by the empirical evidence. We progressives rail against conservatives who continue to argue points that are clearly contradicted by the facts, but progressive economists are guilty of the same willful blindness when they refuse to recognize and acknowledge that the “full employment” policies they have been promoting since the end of World War II are incapable of achieving the kind of full employment goal they claim to be pursuing–the availability of work for everyone who wants it. The “bait and switch” rhetoric of calling for a return to full employment when what they really have in mind is a return to the NAIRU serves no useful purpose. In fact it’s counterproductive, because it tends to close off discussion of strategies that actually would achieve genuine full employment. And it really is possible to achieve that goal–notwithstanding the inflation problem that limits the effectiveness of the supposed “full employment” strategy most progressive economists are currently promoting. Rep. John Conyers’ “Humphrey-Hawkins Full Employment and Training Act” (HR 1000) illustrates the most effective of these alternative strategies. Check out the bill, and if you’d like background information on the direct job creation strategy on which it relies, and how it differs from conventional Keynesian policy interventions, you can find it in two reports I wrote in 2011–one for Demos and the other for the Big Ideas for Jobs initiative funded by the Anne E. Casey Foundation. See “Back to Work: A Public Jobs Proposal for Economic Recovery: and “Securing the Right to Work at the State and Local Level with a Direct Job Creation Program.”

I don’t know if Harvey is right when he says that Hickey accepts NAIRU as the definition of full employment, but he’s right that many progressives do. And I agree that Hickey is weak when he says, “Only the Congressional Progressive Caucus (with help from the Economic Policy Institute) has put out a comprehensive proposal – the Back to Work Budget – to achieve the kind of job growth this economy really needs.” That budget only talks about reducing unemployment to “near 5%.” And Hickey relies too much on costly, slow-to-implement infrastructure jobs, in contrast to public-service jobs that are less costly, can hire more people, and be implemented more quickly.

So I agree that we need to be clear. We should aim for what Harvey calls “genuine full employment.” That’s why I’ve been inclined to talk about increasing funding until living-wage jobs go begging due to lack of qualified applicants, which prompted Nancy Pelosi to laugh when I offered that definition in response to a question from her. She apparently considered the idea utopian.

Not everyone would take advantage of such opportunities. Some would first need to complete a substance-abuse program, for example. Others would be unreliable and not show up for work on time. But those would be few in number and they would know that when they get their act together, there would be a meaningful job waiting for them.

Personally, when I read the Baker and Bernstein book, I thought they handled the issue rather well. They did not, it seemed to me, blindly accept NAIRU, while acknowledging that moving toward full employment might create inflationary pressure. And they do clearly affirm assuring that everyone who wants to work should be able to find a job. So I believe Harvey was too harsh with his implied criticism of Baker and Bernstein.

But Harvey’s “Back to Work” report which he wrote for the Demos think tank is excellent. He discusses the issues thoroughly and convincingly. I highly recommend it.

Regardless of what Hickey, Baker, and Bernstein think, Harvey is right that we need to be careful to not use “full employment” as a euphemism. Hopefully the phrase “Guarantee Living-Wage Job Opportunities” covers the point and you will sign our petition, if you have not already done so.

 

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