Dialog with Dean Baker

Dean BakerNOTE: I will update this post as more emails are exchanged. Following the Feb. 5 public forum on “Employment: A Human Right,” I sent Dean Baker, co-founder of the Center for Economic and Policy Research, an email that has resulted in the following thread. On pp 87-8 of Getting Back to Full Employment, he and his co-author, Jared Bernstein, in a section titled, “The need for a national jobs program,” argue, “If our central bank, a government institution, can be a lender of last resort, then the federal government can also be the employer of last resort.”

+++++

On 2/5/2014 9:12 PM, Wade Lee Hudson wrote:
Dear Dean, I very much appreciated your participation in the “Employment: A Human Right” forum and your lucid comments. Please find attached my transcript of the question and answers concerning human rights, which I plan to post along with a commentary on the event. If you want to correct or modify your comments, please let me know. Also, would you please clarify two points:
• Do you affirm a definition of full employment that is not tied to any unemployment rate?
• Do you believe that with the political will, we can handle any inflationary pressures that result from assuring that anyone who wants to work can find a living-wage job? Thanks again for everything, Wade
+++++
DB: Hi Wade, Full employment is used many different contexts and some of those are going to be tied to specific levels of unemployment. The second question is tautologically true. If you’re asking me whether I would sacrifice everything to else to meet your definition of full employment my answer is that I don’t know. If full employment depends largely on direct government employment then it is likely to be very unpopular politically and lead to political figures getting into power who don’t give a damn about unemployment. So I wouldn’t support it under those circumstances. regards, dean
+++++
WH: Thanks again for your reply. I believe it would be much less confusing, and help build a full employment movement, to consistently use the common sense understanding of the phrase “full employment.” That is a vision that could motivate people. I don’t see how the second question is a tautology. Many objectives could not be achieved even with the political will to try. An affirmative answer to the question therefore could be falsifiable. But if, in terms of the economics, you consider it indisputable that is reassuring. In terms of the politics, I know no one who is proposing that we depend “largely” on direct government employment. I certainly do not, for I assume most new jobs will continue to be in the private sector. And public opinion polls have consistently shown strong support for the proposition. For example, in a 2013 study funded by the Russell Sage Foundation, Page, Bartels, and Seawright reported that two-thirds of the general public in the United States believe “the government in Washington ought to see to it that everyone who wants to work can find a job.” So I hope you will consider whether a push for true full employment would be popular politically if the plan is not “largely dependent on direct government employment.”
+++++
DB: Hi Wade, Someone might be proposing that the a large share of the jobs would depend on government employment with the commitment you described. That may not be the intention, but that may well be the outcome. regards, dean
+++++
WH: Dean, Others might rely more on government employment than you or I would. I’m having a dialog with Phil Harvey on the subject, for example, and it seems we may have a difference of opinion, though with additional clarification, that may not prove to be the case. Regardless, I’d appreciate it if you would clarify your position. Since you and Bernstein affirmed using the government as the “employer of last resort,” I believe, it seems that we should not be that far apart. Do you affirm assuring that anyone who wants to work can find a living-wage job opportunity if that proposal is clearly presented so that it is clear that the proponents do not envision relying primarily on direct government employment to achieve that goal?

In terms of political viability, Benjamin I. Page, Larry M. Bartels, and Jason Seawright, reported that two-thirds of the American people believe “the government in Washington ought to see to it that everyone who wants to work can find a job.” The wording on this survey is important. As other surveys have done they did not ask people if they support a guaranteed job. Rather, they used the phrase “can find a job.” That formulation implies assuring a job opportunity. It does not assume that they can keep the job regardless of their effort. It does not guarantee a job unconditionally. Polls indicate the importance of the distinction. The Page/Bartels/Seawright study found lower support for “the federal government should provide jobs for everyone able and willing to work who cannot find a job in private employment.” Barely more than half supported that position. And a 2014 YouGov/Huffington Post poll asked, “Would you favor or oppose a law guaranteeing a job to every American adult, with the government providing jobs for people who can’t find employment in the private sector?” In that poll, more people supported that proposition, 47%, than opposed it, 41%. So support for each of these positions was weaker than with the “job opportunity” option. Still, however, a plurality supported both positions.

Moreover, we could propose federal revenue sharing for local jobs, not federal jobs. Still opponents would object to increasing the size of “the government.” I believe the first stage of a direct jobs program might boost government employment by four million workers, which would be less than a 20% increase in total government employment. Given the strong public support for the general principle, it seems that those specifics would largely be acceptable — especially if framed within the “opportunity” concept, which “conservatives” affirm. If we reached a 4% unemployment rate with other measures, at that point we might need to rely primarily on direct job creation to create 2-3 million more jobs. But it seems that would be politically viable and overall we would not be relying primarily on direct government employment to achieve our goal. So, as I phrased it above, do you affirm assuring that anyone who wants to work can find a living-wage job opportunity if that proposal is clearly presented so that it is clear that the proponents do not envision relying primarily on direct government employment to achieve that goal?

Thanks again for everything, Wade
+++++
DB: I am not sure that the government could guarantee a job for everyone at a living wage, as I said before. Any government job would be an effective wage floor. You could end up with very large numbers of people at government jobs (I don’t care about intentions) and this would be an economic and political disaster. The polling today on this point is meaningless because people are not looking at the situation.
+++++
WH: How does the “employer-of-last-resort” federal jobs program you and Bernstein recommend in Getting Back to Full Employment differ from what I’ve been proposing in this thread, which assumes an HR1000-type program that would require workers hired with HR1000 money to take jobs in the private sector when they become available
+++++
DB: It would not be open-ended. It would be limited and experimental.
+++++
WH: What limits would you impose and what would be the goal(s) of the experiment?
+++++
DB: I haven’t really thought it through that carefully. The idea is that it would be an experiment, presumably in a limited number of states, to see if people can be usefully employed (i.e. actually doing work, the programs are well run, limited cases of fraud and abuse) and then transition at high rates into other employment.
+++++
WH: Would you be willing to support an experiment that focused only on the first question: can people be usefully employed in well-run programs? The second question seems of limited value given the musical chairs dilemma. Also, you may be interested in A Dialog with Phil Harvey, which discusses some of these issues.
+++++
DB: I don’t see how the second question would not be of value. If found that people who entered a jobs program never got a job elsewhere, the implication would be that the program would be that we would either have to continually extend the time allowed in the program or end up with lots of people unemployed.
+++++
WH: If the experiment as you described it were successful, what would the next step be?
+++++
DB: expanding it
+++++
WH: Assuming it continued to be successful and expanded nationwide, in what sense would it serve as the employer of last resort?
+++++
DB: It would be there for people who could not get other employment.
+++++
WH: How many workers at any one time would likely be employed?+++++
DB: hopefully not many
+++++
WH: Considering that In January 2014, 20 million people were officially unemployed, employed part time for economic reasons or “marginally attached to the labor force,” and earlier, you told me , “There will be a limit as to how far you can go with just macroeconomic policy. At that point there will still be people without jobs. It will require other policies to get those people employed. I guess my view is that we’re about 9 million jobs from being in that situation,” can you estimate plus or minus one million the number who would be employed at any one time in the federal jobs program you envision (following a period of smaller experimentation that proved successful)?
+++++
DB: no, I can’t — i have no idea what that world looks like and  I can’t imagine a less productive thing to do with my time than to try to speculate
+++++
WH: Dean, You questioned guaranteeing living-wage job opportunities partly because it might involve “very large numbers of people at government jobs.”As an alternative you proposed a federal jobs program that “would be there for people who could not get other employment,” yet would employ “hopefully not many” workers.I fail to see how an employer-of-last-resort program would not employ at least three million of the eleven million workers who would remain unemployed or underemployed after we create the nine million new jobs you envision that we could create with macroeconomic policies.Do you consider three million “not many”? Unless you do, your position seems logically inconsistent, for it seems that if the federal government served as the “employer of last resort,” it would need to fund at least three million jobs.Clarifying this issue could help explain how your proposal differs from other proposals for an employer-of-last-resort federal jobs program that you have been unwilling to support. Greater clarity on this issue could help advocates decide what position to support. Thanks, Wade
+++++
DB: Just to be clear I am not advocating that  the government make a commitment that it will employ people who can’t find other jobs. I would support experiments with temporary government jobs.
+++++
WH: So you do not support the federal govt serving as the employer of last resort, correct?
+++++
DB: I do not support a guarantee of government employment, I am fine with the government acting as a limited employer of workers who cannot find other jobs.
+++++
WH: What time limit would you impose on those temporary federally funded jobs and if a worker were unable to find a job six months after the temporary job ended, could that worker get another temporary federally funded job?
+++++
DB: probably not
+++++
WH: Do you still believe it is accurate to use the phrase “employer of last resort” to describe the program you outline?
+++++
DB: yes
+++++
WH: Do you believe that those who are unable to find work for extended periods deserve to be unemployed? That they are to blame for their situation?
+++++
DB: No, but we need to have workable policies. It doesn’t do anyone Any good to lie to them, is that your policy?
+++++
WH: No, I do not want to lie, and yes, I do believe we can avoid creating a false or misleading impression by being transparent. Influenced by your experimentation frame, I propose that we take it step-by-step and be very clear from the outset that neither we nor anyone else can reliably predict the future on this point. So, though we would like to reach the point where everyone who wants to work can find at least a minimum wage job quickly and we believe that by increasing federal funding for temporary, minimum-wage, public-service jobs (including jobs with private non-profit agencies) we can help achieve that goal (along with other measures to boost private-sector employment), we aren’t certain that we can over time maintain enough public support politically to do so. And we aren’t certain about the impact on inflation. Therefore, we propose to experiment with a program that would increase federal funding for such jobs incrementally every two years. If the program worked well and continued to be popular, we would continue to expand it.

We might begin with funding for one million workers and increase it with funding for an additional one million workers each two years as needed and if still feasible. Since we currently have about 20 million government employees (7% of the total population), an increase of one million every two years would not be a shock. How many such minimum wage jobs would be needed is hard to predict. It would depend on what happens in the private sector and how many people seek those jobs.

If we were clear and open about all this, I do not see that we would be misleading anyone. If the jobs were temporary jobs that would involve providing assistance to current workers and were obtained through the local unemployment office with the requirement that those workers would have to take jobs in the private sector when available (as is the case now with UI benefits), and they were funded with federal revenue sharing funds that would not substantially increase the size of the federal government, and the material benefits of enhancing those services became clear, I believe we would maintain political support for it.

Any risks that might be involved seem well worth taking. The risks involved in maintaining the status quo seem far greater.
+++++
DB: I’m afraid that I am not confident that we do an increment of 1 million to start, especially since the unemployment is not evenly spread. I’d be more comfortable around 200k-400k and my goal would not be to continually increase the number.
+++++
WH: Do you rule out any scenario that would result in any worker who is able and willing to work but unable to find a regular job being able to work at a federally funded minimum-wage provisional job that would require workers to accept regular jobs for which they are qualified when available? The scenario I just described tried to avoid proposing a definite “goal.” Rather, it merely affirmed that “we would like to” reach that point if the experiment worked. Stipulate whatever parameters you like. Begin with 400k. Then if the program is successful without damaging the economy and the public supports it (as they do Social Security), expand it incrementally periodically at whatever level and pace you prefer. Are you unable to envision supporting any such plan?
+++++
DB: I certainly hope we would get there.
+++++
WH: That’s good to hear. So I wonder if we can outline an experiment that you would support. Let me modify my last email with that aim in mind.

We begin with distributing revenue-sharing federal funds to hire 400k minimum-wage workers who serve as assistants to current public-service workers. They are referred to those jobs through their local unemployment office, which helps them find permanent employment for which they are qualified. When such jobs are offered, those workers are required to accept them. Since most of those jobs pay more than minimum wage, these workers are motivated to seek and take those jobs. When they find such work, the workers they were assisting revert to their prior situation, providing services as best as they can.

If and when it becomes clear that this jobs program is: 1) helping to improve the quality of our public services; 2) is not damaging to the economy; and3) is popular politically, and 4) we still have unemployed workers who are unable to find work, we expand it by some yet-to-be-determined increment.

If after some yet-to-be-determined period of time, those same four conditions are met, we expand the program by some additional yet-to-be-determined increment.

We then continue expanding the program until everyone who is able and willing to work but unable to find a regular job can find work at a federally funded minimum-wage provisional job that would require workers to accept regular jobs for which they are qualified when available.

Would you support that plan?
+++++
DB: that sounds reasonable

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.