Creating State Level Jobs Programs: A Jobs Insurance Supplement

Note: this is a cross-post from The Realignment Project.

Introduction:

Even under the relatively optimistic economic forecast included in the 2011 Federal Budget, unemployment will remain at the 9.8% rate through the end of this year, dropping to 8.9% in 2011 and 7.9% in 2012.  In other words, after four years since the first stimulus, unemployment will remain at recessionary levels. To be fair, the passage of a jobs bill – and the promised efforts to pass further stimulative elements (aid to states, highway money, public works, etc.) – lends some slight hope that this catastrophe might be averted.

However, as we’ve seen with the jobs bill, it’s incredibly hard and slow to get even the smallest elements of a jobs bill through Congress; this makes it highly unlikely that sufficient actions will be taken to bring down the unemployment. However, I do think that it is possible to push through more aggressive jobs measures at the state level in heavily Democratic states that aren’t hamstrung by the Senate’s rules and the Blue Dog Caucus. As I’ve discussed in my 50-State Keynesianism and Job Insurance series, I believe that it’s possible to reform state governments to be successful anti-recession institutions, complementing Congressional action.

Today, I’ll take California and New York as two heavily Democratic states that are also large enough to have a significant impact on the national economy.

 

Job Creation at the State Level:

As I’ve discussed in previous segments,  it costs roughly $35 billion to create 1 million jobs,  assuming a modest living wage of $24,000 (enough to keep a family of four out of poverty) and 30% non-labor costs (a conservative estimate based on the WPA’s historical 20% non-labor costs). Interestingly, my estimate (which I’ve taken some flak for in the past as too low) was recently echoed by no less than three economists: Alan Blinder of Princeton, Kevin Hassett of the American Enterprise Institute, and Larry Mishel of the Economic Policy Institute. When you see economists from the AEI (a very right-wing think tank) and the EPI (a very left-wing think tank) agreeing on how much it would cost to directly create jobs, that’s a pretty good indication that your numbers are on the right track.

For the Federal government, $35 billion is a relatively trivial sum. For state governments, it’s much harder to raise those kind of sums on a much smaller tax base and without the power to deficit spend. On the other hand, state governments only have to wrestle with a portion of the overall unemployment burden. For example, California has a total of 2.125 million unemployed workers; New York has only 700,000. This means that state governments can make a significant dent in unemployment with a smaller number of jobs, and thus a smaller outlay.

California:

California’s 2.125 million unemployed workers give it an unemployment rate of 12.1%. A one-million strong jobs program would cut that rate roughly in half at a cost of $35 billion dollars. In the face of declining revenues and a budget deficit of $20 billion, at first glance it would seem impossible for the state to afford that kind of jobs program.

However, as I’ve explained in previous segments, there are two ways in which such a program could be brought back down into the realm of the possible. To begin with, a jobs program established as a system of social insurance funded by a payroll tax could generate significant new revenues, thus decreasing the overall “hit” to the General Fund. For example, a monthly premium of 1% of payroll split between workers and employers (or its equivalent from a different source of revenue) levied on the 16 million workers currently employed (assuming an median weekly earnings of $748) would raise about $5.7 billion a year – which is a substantial sum that could create a $35 billion reserve in six years, such that future interventions could be self-financed. For the present, the second step is for the new California Works Administration to take out a loan for $35 billion to bring down the up-front costs of hiring a million workers, either from the Fed (see here) or from a state reserve bank (see here), using the premium revenues to pay it back in a little over five years.

A longer loan term or partial state funding could allow the CWA to pay back its loan and build up a reserve. A ten year loan, for example, would allow the CWA to pay back the original loan while also banking $22 billion towards its reserves; a partial contribution from the state general fund could accelerate both the rate of repayment and the rate of savings.

New York:

New York’s 721,000 unemployed workers give it an unemployment rate of 8.8%. Notably, this means that New York’s jobs measures are much less onerous. A 360,000-strong jobs program would cut New York’s unemployment rate in half, and would cost a relatively modest sum of $12.6 billion. This is still a tough lift for a state that’s also facing declining revenues and a budget deficit of $8.2 billion, but as we can see from the California example, there are ways to deal with this.

The same monthly premium as above would net New York $2.7 billion a year, enough to create a $12.6 billion reserve in roughly four and a half years. If the New York Works Administration could take out a loan to spread out the $12.6 billion up-front costs of running the program, they would be able to pay back the loan in three and a half years. Similarly, a longer loan term or partial state funding would allow the NYWA to both pay back the loan and build up a reserve.

Results of State-Level Job Creation:

Even if the state government was able to reduce its overall costs in the fashion described above, a wary state politician might ask what the benefits of such a radical departure from conventional economic policy might bring them. Luckily, the benefits of a robust jobs program are sufficiently impressive that I think they could persuade ambivalent legislators.

California:

In California, the direct result of the jobs program would be a sudden fall in unemployment from 12.1% to 6%, a massive sea-change in the labor market. Indirectly, the wages of suddenly employed workers would be instantly spent on consumer goods (unemployed workers having a very very high “marginal propensity to consume” ) – injecting $24 billion into the economy. Using a standard Keynesian multiplier effect of 2.0, that should result in a total stimulus of $48 billion (or 2.59% of California’s GDP).

At the same time, one of the things that’s often forgotten when debating the virtues of public job creation is that American workers’ labor is valuable – the average worker in California produces $119,000 a year in goods and services. One million average California workers could produce up to $119 billion a year in goods and services;  a return of up to 340% on the original investment.  In addition to lowering the unemployment rate and boosting consumption, California’s job program could boost the state’s GDP growth rate by 6.4 percentage points.

New York:

In New York, the numbers tell a similar story. Unemployment would suddenly fall from 8.8% to 4.4% – getting close to full employment. $8.75 billion in wages would be dumped into consumer spending, with a multiplier effect that works out to $17.5 billion worth of stimulus (or 1.8% of New York’s GDP).

Since the average New York worker produces $132,000 a year in goods and services, 360,000 newly employed workers could create as much as $47.52 billion a year in goods and services – a return of up to 377% on the original investment. That works out to a boost of 5 percentage points to the state’s GDP growth rate.

In both cases, the up-front cost of running a jobs program would be off-set by the economic impact of the program on the state’s revenues. Unemployed people who get jobs through a Job Insurance project would pay the same Job Insurance premium as any other worker, lowering the ultimate cost of the program by $240 million a year for California and $86.4 million for New York. The added consumer spending would result in an increase in sales tax revenue: California would see an increase of $4 billion a year and New York an increase of $700 million a year. Additional revenue would flow in the form of increased corporate income tax from retailers and other businesses who receive the custom of newly hired workers, as well as increased property taxes from more valuable businesses and increased individual income taxes from new hires and increased hours from businesses who expand to meet increased consumer demand. Moreover, the production created by the state’s jobs program could also have a positive effect on the state’s budgets in a variety of ways.

On a final note, the hardest benefit to quantify is the impact of jobs programs on what Keynes called “animal spirits” or what today we could call economic behavioral psychology. When unemployment is high, people hold back from spending and investing, even if the government tries to make up the difference because people are extremely risk averse to losing their job or taking a loss in their investments and unemployment is extremely visible in the economy – layoffs make the front page, businesses see their customer base drying up and their orders from other businesses dwindling, and individual workers and consumers see people in their communities lose their jobs and their homes. The reverse is true for sudden spikes in employment – when all of the sudden newspaper headlines blare “1 million new jobs created!” and businesses see newly-hired workers bringing their paychecks to make all the purchases that had to be put off when they were unemployed, suppliers see their orders shoot up as inventory stocks decline, and individual workers and consumers see their neighbors going off to work, that’s something that really grabs people’s attention and should have a significant impact on consumer spending and investment.

Conclusion:

The practical politics of actually doing this are more difficult than theory would allow. In the case of California, we have a Republican governor who would veto a job insurance bill in a second. Luckily, because the premiums for a social insurance program are most definitely fees not taxes, a job insurance bill could be passed with a simple majority – bypassing the insanity of California’s 2/3rds rule for raising revenues. We still need to elect a Democratic governor in 2010 (and put pressure on Jerry Brown to not veto the bill when he gets nominated), but that means that a jobs insurance bill could be passed in early 2011.

In the case of New York, we have a temporary crisis of leadership. David Paterson is unlikely to last much longer, and even if he does, his credibility has been so damaged by recent scandal that it’s unclear that he could muster any support for the legislation. On the other hand, New York has the advantage of a majority-vote system in the state legislature and an activist Working Families Party that has had success in similar ventures. In 2009, the Working Families Party successfully pressured the state legislature into balancing the budget through progressive taxation rather than regressive budget cuts – even though Governor Paterson was initially opposed to such a strategy. Likewise, the Working Families Party was able to push through a green jobs bill later that year – showing that the muscle is there for jobs programs.

In the end, Democrats have little choice in the matter. Enacting cuts-only budgets and refusing to raise taxes isn’t going to bring about recovery, and will only alienate their political base without assuaging a fundamentally opposed Tea Party fringe and a Republican Party that’s eager to have it both ways by denouncing Democrats no matter what they do. Given that Democrats are going to be attacked by the right for spending and taxing anyway, we might as well do what we believe to be right – and leverage the positive economic impact of jobs programs by framing the election as between the party of jobs and economic recovery and the party of austerity.


 

Meta: 

Comments

What kind of jobs?

The AAM has each job costing $55k. AAM infrastructure/direct jobs study, but a key element in their study is they have the production chain 100% domestically sourced and they also have the workers required to be U.S. citizens, Americans. (Hire America). They also went and looked at the actual projects selected as the ones which will add most to the economy over the long term (public works) and those jobs are more advanced and would provide on the job training in skills.

Mishel, on the other hand, is suggesting "busy work" jobs...

(and note Blinder, with the lowest estimate is still using a $40k estimate).....

Sure, busy work jobs are cheaper, but as an investment...
so?

ok, great, some trash is picked up, some houses are clean but that doesn't add, long term to critical infrastructure upon which the modern economy relies. The I for investment is really missing from some of these proposals.

Blinder's post, now I think everybody on this site at least and myself included were/are all for a direct jobs program but there must be two elements for it to work and that is a requirement the worker be an American and the means of production, all of it, domestically sourced.

Then on "job insurance", well, firstly one needs to match workers based on skills, including giving them skills as did the CCC as well as the WPA. Secondly, one MUST have a lock on labor supply and that means no illegal immigrants, no guest workers, no offshored and assuredly do not make this a magnet to have sudden labor supply influxes through immigration. A guaranteed job is one hell of a magnet, so that's just not practical because we have so many literally trying to twist even labor economic theory upside down due to their political agendas. You're going to also create an even more massive underground economy with that. Work will be by contract 1099-misc as well as good ole fashioned cash under the table and even more temp....to avoid paying yet another tax when hiring a worker (insurance premiums).

You must have performance criteria, efficient management...
I mean this is just not a good idea, I'm sorry, the models of the WPA, CCC, even things like Voc. Rehab. all of them had performance metrics AND provided education, on the job training AND seriously limited what kind of workers could even apply. The military gets away with this in terms of age and criteria.

If you're going to do this by states, well, each state should probably be at least worker domestically sourced. I do not think it's possible to have the means of production, goods of production state sourced, but it should be a "preferred" type thing.

So, why keep promoting things that actually will be a drain on the national economy when there are so many good things, already proved things out there which truly will give the most bang for the buck?

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Well

Starting from the top:

1. Blinder's estimate is $30-40k.
2. I don't think our only choices are construction on the AAM model or busy work. There's a lot we can do with providing social services that's very cheap to run.
3. As far as investment vs. busy work goes, I'll point out that the WPA was using primarily unskilled workers, basic handtools, and the simplest possible methods of construction, and still made quality infrastructure with very low non-labor costs. Finally, I'd say that while investment is important, so's the value of labor power that gets wasted when workers are unemployed.
4. Skill matching, performance criteria, and efficient management I'm down with. Ditto education and job training.
5. The kind of underground shenanigans you describe are easily avoided through the fact that the government is directly hiring and managing - not contracting out.
6. You're more into the illegal immigration thing than I am, but my vision was that in an ideal system eligibility is based on paying premiums through a payroll tax, similar to current UI system.

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I'm into the reality on the ground thing

Well, firstly, I think you need to plain trash the entire talking point of a guarantee of a job. The reasons are not that the idea itself cannot be implemented efficiently and successfully, it's because of the skewing, manipulation into things that will be economic disaster by "certain political forces".

You can in essence, create such a thing that indirectly does that, with some of the points above.

I'm not into the illegal immigration thing per say, more aware of labor econ and reality on the ground. There is a massive underground economy going on, then use of contractors to subvert paying any employee taxes as it is (so of course they attack the real contractors and ignore the use of contractors to deny pay....i.e. they attack the STEM professionals and ignore the Janitors)...

That's Blender's low ball but he too is talking about real busy work, more of a social services program. I'm saying, forget that social services crap, this is the kind of thing and how liberaals get labeled as bleeding hearts, budget busters, spenders based on special interest groups, yada, yada..

I'm saying there is a better way, which is to not only provide work, but to meld it with critical national economic investments, a long term economic strategy, a manufacturing strategy, a trade strategy.....and to also tie in the U.S. workforce into the U.S. Macro economic future. i.e. instead of just throwing stones at the bird, I'm saying one can create an AK-47 with various policies to wipe out the entire flock of problems.

Also, the focus is wrong. People do not want, do not need a "hand out"....what one needs to put together is an enabling, an empowerment, an investment....for the U.S. labor force.

Instead of looking at say subsidized child services for workers who need cheap day care for example, one might look at this as the total lose of income, productivity, lifetime earnings that goes on when one cannot work because they need to take care of a child...because they have no societal supports.

The WPA used unskilled workers???? Firstly that was 1934, a lot has changed, but this isn't so, they would train them, so unskilled soon became skilled...this is true also for the war effort...a host of people had no friggin' clue on how to make a warship or airplane, so they simply trained them, on the job.

But on some projects, the Hoover Damn and the Golden Gate bridge, now those workers were high skilled quite often because of course they need them....

so, again, it was hiring criteria, at the same time no one was so crazy in 1934 to think people could not be easily trained and thank God, if they had the attitudes I see today we would have lost WWII!

Same can be done for infrastructure projects. Don't know how to operate a crane? Well, that's about a 2-4 week training program. Don't know anything about mySQL databases? Well, you can put someone through a course intensive and they will have that skill in 2-4 weeks. This is esp. true of college graduates in STEM, part of that degree was to obtain the lifetime skills to learn new technologies rapidly.

People are not born with skills and even with college degrees, most skills are learned on the job....why this has disappeared or it is acted like people cannot learn rapidly and get those skills quickly is a little beyond me.

What you are missing on government is the political end. Sure they could verify and have requirements that only U.S. citizens, LPR (existing green card holders) can get the jobs...but you would be amazed and how currently they do not verify this. Over and over again members of all sides of the political spectrum have tried to get this through and the administration and other bought and paid fors in Congress block it. It's worse with the states....

I mean pretty incredible a lot of cities literally used taxpayer dollars for day labor centers...well, that's all under the table, cash, temp and illegal labor....

so not only will they not stop it, they are busy trying to enact policies to increase it...

and ya know, look, this subverts U.S. labor law as well as the ability to make sure all labor are hires, i.e. W-2 wages, FICA, workman's comp and so on.

This goes for guest workers esp.....we have cities and states right now firing U.S. teachers and replacing them or hiring foreigners on various guest worker Visas instead.
Pretty incredible and states, cities consider paying for say a few courses to get someone certified? Of course not.

We literally have governors making deals with body shops to get even more state contracts....when these offshore outsourcing companies do not even hire local Americans! They of course provide jobs to their own citizens and bring them in on guest worker Visas! Seriously, 10k employees in the U.S. and you might find a few, often less than 100 who are U.S. citizens. I mean just incredible and I'm wondering why there is no class action against these body shops for discrimination. I mean most FCDC (Foreign Controlled Domestic Corporation) at least do domestic hires...i.e. Toyota has U.S. workers, plants here, Nokia hires Americans at it's facilities and so on...but not these cats! So, instead of pouring U.S. taxpayer dollars to create U.S. jobs, literally states are giving money to these foreign companies whose entire business model is to offshore outsource the jobs and/or import workers through the L-1 (unlimited amount) guest worker Visas.

So, bottom line, thinking our government would actually enforce or require workers to be the U.S. labor force is not at at all what is happening on the ground.

I forgot Katrina, a host of illegal labor instead of local, Halliburton and others given contracts and guess what happened beyond the use of illegals....they stiff them on top of it, seriously denied and stiff on their meager pay...meanwhile all of those local businesses in that area, wiped out...couldn't get a dime of Fed/State reconstruction money.

What is good about the AAM is to pick projects based on GDP multipliers for future economic development. Pick upgrading water processing plants. Some in the U.S. are over 50 years of age. No clean water, no water supply, no economic growth. Bridges - No bridges, no transportion, no cheap supply chain....no economic growth.

Levies - broken levies are an economic disaster, but also...no efficient water management of farmland, no increases in farming production, more people, less food, less economic growth.

No manufacturing plant for wind turbines, other nations with subsidized manufacturing get a lock on the market, learn as the produce, improve their process....zero manufacturing EVER for the U.S. in that product sector....no economic growth.

So, in other words, one needs to look at these work projects, not just as some sort of worker babysitter (Oh poor baby you're broke) deal and realize that labor is an economic powerhouse and to put money where one is going to get the best national economic growth....

and simply train people, on the job, through short courses if they do not have the skills to do that project.

So in terms of estimates, ok, let's get real and say each job costs $60k in expenditures...BUT....let's look at total GDP multipliers, long term for that investment.....so instead it becomes more like putting your money in the bank, ok, you put in $60k but you get out of it.....$70k....wala, the initial labor costs and spending costs become justified...

(just don't lie about it as if Iraq Oil would magically pay for things after you give the oil back and away via open bid auctions! ;))

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Ok

1. It's incredibly insulting to call social services crap.
2. 70% of the WPA were unskilled workers and worked in unskilled capacities - there was education and training, but we shouldn't oversell it. The point is that the WPA could do construction at low cost with unskilled workers - so can we.
3. All I care about is if the worker in question is a taxpayer.
4. Even if we take $60k per job, that still gives us $90k per job in labor produced.

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This is an econ blog

not a social engineering site. I will call social services "crap" to amplify the point that over and over again the point is truly missing and I find offensive so many who have never been on food stamps themselves or anything close, many with millions in fact, coming up with plans on how to help "those people". "Those people" are perfectly capable, they simply need a ladder out...but instead we get these sorts of agendas, which in fact will keep them forever "down". Giving people jobs to pick up trash, instead of a way truly out is keeping them down. They will never get a good paying job by learning how to pick up litter. Why it's a community service mandated court punishment.

You're never going to get a single mother out of welfare when one demands they work at McDonalds and don't even offer child services....that person could be working at home, telecommute AND earning an online degree...

but hell no, they won't support that.....because that would mean that Single mother might just escape long term poverty. That would be too efficient, too useful.

I've seen this attitude all over, including government...

I mean "retraining" people as if they are lumps of idiocy, when those very people have Bachelors degrees, Masters Degrees, PhDs and have been working, pulling their own weight all of their lives?

That attitude I personally find very offensive.

That is the point of my comments, that the way to look at this is for $60k of one time input, one will get $90k, or $120k (or whatever the multiplier is) of output...

See the above comments for what is "unskilled"....I think U.S. policy makers believe "unskilled" is some dead body on a slab, vs. two weeks of training. Even general labor construction, they are getting on the job training. You have to learn how to push a wheelbarrow, you had to learn how to even use a hammer, put a nail in straight...never mind moving to large manufacturing equipment operation as well as large construction equipment operation...

so, all of that said, yeah, the WPA did hire the "unskilled" but their definition at the time was realistic, current definition acts like an unskilled can only ever learn "do you want fries with that". In the WPA the "unskilled" were busy flying around on ropes about 1000 feet from the ground...jack hammering dynamite into canyon walls and such, doing forest fire fighting, building roads...well, you know the list.

Same general people, very different government/policies attitudes towards people.

Also, today's workforce is skilled, they are underemployed...so all of these people need to be enabled to utilize those skills and that is also "bang for the buck" for jobs.

There is no reason to focus on the "unskilled" if one looks at the unmployment rates, they are across the board!

Also, you can't do "the taxpayer" because you'll get all sorts of claims of "we pay taxes" from various fractions, which always ignores everything from how much they get back to total net loss it is per overall costs. (yet another highly politicized rallying cry where even statistics are manipulated per political agendas). Have to be on immigration status (i.e. U.S. citizens, current green card holders)....and the reason for this is the forces grabbing U.S. contracts, jobs, industries, even remittances comes into play from various political forces...all of this ....is a truly global agenda, not at all like the conditions in 1934. Additionally there are a host of international programs to deal with payouts of SS and other taxes back to the home country, which is always ignored in these rallying cries because they have a different agenda...

so, it might be the above and not "the taxpayer", you're opening the door to political agenda=further economic disaster.

You'll also get the radical right breathing down your neck...about how all of those people never paid any taxes in their lives...therefore shouldn't quality and so on (it will be from all directions!).

Finally, structurally the economy needs to change. There is no way one will have that many construction jobs...unless one wishes to inflate another bubble..
and frankly the financial sector seriously needs to shrink, it's now 63% of GDP, which is incredible. So, there is a host of skilled workers who need to segue into other areas.

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tell

The 1.8 million members of SEIU and the 1.4 million members of AFSCME that what they do for a living isn't real work. Social services isn't a dirty word - it's helping people get food stamps or a CalWorks grant, it's running food banks and helping to care for children, the disabled, and the elderly, etc. It's a huge and growing part of our economy - health care and social assistance services generated $455 billion in revenues in 2009 (3.25% of GDP) and employ 16 million people.

Regarding the skill issue: obviously, there are skilled unemployed and unskilled unemployed. Most WPA hires had been manual laborers before they got jobs with the WPA - they were still able to produce good public works.

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you are missing my point completely

obviously and that is not true on the WPA, they hired all sorts of people, made a point to hire a broad range of occupational skills. Claiming health care generates GDP is really not a wise point on this site. It is the for profit health care sector strangling the U.S. economy in a large part, which of course is assuredly not caused by nurses assistants and so on, but it doesn't make much of a point.

As far as the SEIU or the AFSCME goes, I don't think they have much to do with government welfare, which is now labeled social services.

My point is there are so many better plans on direct jobs that have way stronger short term and long term GDP multipliers additionally give workers skills and even can bloom new industry sectors with a national strategy.

Do you have some sort of issue with Americans getting advanced skills or something? That is a key to getting the U.S. back to #1 economically, so my points on a strategy which involves that is clearly critical.

Ya know, a Nurses aid can actually become a Tool & Die machinist, that is simply not impossible, so I have no idea why you are so threatened by the idea of getting people skills, which should eventually also lead to higher wages and more economic stability.

None of that implies some idea that Janitors or whoever be paid less than nothing and not offered health insurance and benefits...has nothing to do with my points...which are on a macro econ scale, the focus of this site.

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It's a question of proportions

Look at the Final Report of the WPA. The numbers are right there. Obviously they hired a broad variety of people, but the bulk was still unskilled manual laborers.

My point is that public services - of which social services is a large chunk - is a big part of our economy, and getting people jobs and training in that sector isn't any worse an idea than getting them jobs and training as a machinist. I'm not against training people by any means, my point was that we can do relatively inexpensive construction with unskilled labor - which is why I don't buy the $60k per job figure.

And of course SEIU and AFSCME have something to do with social services - which goes way beyond just cash assistance. Who do you think represents the case workers, the clerical staff, the aides, etc?

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on what planet is this?

social services are a cost. You cannot magically turn economics upside down and try to claim welfare is the great economic engine of the future!

There is no way you can build up the U.S. as a #1 economy promoting unskilled labor, unskilled occupational sectors. There is no way the U.S. will survive with everybody "picking up trash" as an occupation.

Picking up trash simply does not generate new industries and trying to act like Welfare is a GDP generator...please....

I'm pretty much a believer social safety nets, including universal single payer but no way am I going to promote some fiction as if a welfare state is going to grow an economy.

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What?

Social services aren't a cost - they're a service, same as any other. As you saying that the service sector doesn't exist?

Again, picking up trash != social services. Child care, health, and nursing aides = social services. Administrative jobs = social services. Hell, librarians = social services. These people do jobs that people want them to do and pay them for.

There's no reason why we can't turn the service sector - both the public and private sector - into a high-wage unionized industry. Back in the 1930s, unskilled and semi-skilled factory jobs were NOT good wages. I actually worked it out - unskilled factory workers in Ford plants made // modern minimum wage. It was unionization that made industrial jobs good jobs.
There's no reason we can't do that in the service sector today - btw, most of these jobs are un-exportable.

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social services is welfare

that's not a job sector. The service sector, occupational categories is not the same as social services, which is welfare, that's food stamps, housing vouchers, Medicaid, etc....these are state and government programs and of course a cost, a huge cost. Look at any state or federal budget report and see it. Sorry but thems are the numbers and of course it is a cost.

On top of denying these are a net loss, they are a major cost and it's a real good idea to get people working and not using them, not only for their own economic welfare but the nation too....

Again, the service sector occupational areas is simply not government programs of social safety nets, that's a distinction that obviously needs to be made here repeatedly.

No, those jobs are not offshore outsourced (except the management and administration which currently is in large part), so they do the opposite, which is insource...which is when they cannot offshore the job to cheap labor they bring the cheap labor in to do the job.

Right o, I'm sure China will not just walk all over the United States who is busy trying to make garbage men and nurses aids the new economy, nope not a problem there...

after all, that Communist country assuredly understands how creating a nation of unskilled labor doing menial tasks will enable them to dominate the global economy, even Russia understood that one....
no major industrial or mercantile agendas with those guys...of course not....

I can assure you the U.S. is not magically going to grow economically creating a nation of Janitors or Nurses aids...or by giving everyone in the nation a welfare check.

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what I want to know

and why I'm not uprating this because frankly I suspect this is some sort of SEIU agenda item you are promoting...

EP is about what makes sense by the numbers, not promoting some special interest agenda. There is no way I'll put on this site some economic fiction and I don't care if it came from my best friend....I despise spin, especially equation spin to advance some political agenda. That stuff is the same as big pharma or big oil biasing drug studies or climate change per their agenda...it's corrupting Science and objectivity.

I'm really wondering where this agenda is coming from and why it seems so hostile to the AAM....for me, this is really disturbing because increasing U.S. manufacturing is a key need to grow the U.S. economy and since manufacturing is fairly union membership heavy, I'm very surprised that over and over this agenda (which I will call it) is being promoted instead of the very well crafted, with GDP multipliers, with strategic project selection, AAM proposal.

I could care less what the SEIU has to say and in fact some of their promotions would seriously damage the economy and the middle class and that's coming from someone who knows the history of labor organization and believes can be an economic leveler, protect labor against exploitation.

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I'm actually not with SEIU

I'm a member of UAW 2865, representing academic student workers at the University of California.

I'm not spinning anything - I disagree with you that it has to cost $60k to create a WPA-style construction job. I think the AAM is too conservative in their estimates both on the cost side and the employment side, probably because they're assuming that construction jobs will be done via contracting and standard construction methods. I also think that the AAM's focus on "strategic project selection" mirrors uncomfortably the Public Works Administration on "self-liquidating projects" that hamstrung its ability to lower the unemployment rate.

I'm a fan of increasing BOTH manufacturing and services. I think increasing manufacturing is an important lever for growing the economy - but I think increasing services is also a good way. Relying on just one strategy is a bad idea.

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Aha!

Well, I recommend more econ course work....you're reading like a SEIU sock puppet in some of these posts...

I personally could care less about construction, at least in Residential and CRE for the moment...

but I do not believe the fact the WPA focused on long term investments that obviously did add significantly to U.S. long term economic growth is a bad thing...

if anything hamstrung the 1930's unemployment rate it was....the Supreme court.

I'll bet you have a dart board with Milton Friedman's picture on it since he is the one who coined the concept "natural rate of unemployment".

Anywho, the idea of choosing, selecting critical projects that are strategic, focus in on same an advanced emerging sector the U.S. wants to grow and get into (say algae alt. energy production as an example), or bridges, supply chain infrastructure, and esp. manufacturing plants, advanced manufacturing is way more bang for the buck...

this is precisely what China and other countries who are kicking our economic ass do....and we need to do this badly.

I'm all for sharing the wealth and what not, but come on...first you have to generate some!

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doing as much as I can

But I'm a historian, not an econ grad student.

Here's the thing about the WPA - they did do long-term investments, but unlike the PWA, it was never their first priority. The WPA focused first on reducing unemployment, and then on using the people they hired to build stuff that was useful. And this part is important - unlike the PWA, they didn't mandate that projects had to be "self-liquidating" (i.e, produce revenue to pay off the cost of construction). Hence, they did a lot of projects which minimized non-labor costs. Building a schoolhouse with handtools probably doesn't add as much to GDP as Hoover Dam, but you can get away with limiting non-labor costs to 20% of the project. So the ethos for my proposed program is to focus on the jobs first, then figure out what we can build/make/service with the labor we've hired.

To that extent, sure, we should absolutely use the labor we've hired to fix up bridges and highways and rails and plants and houses, and build new infrastructure (alt. energy certainly, broadband WiFi too, mass transit, etc.). But we also need more child care providers, teacher's aides, etc.

Ah, NAIRU. Yeah, that's utter hogwash. Not a big fan of Friedman, either.

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WPA, CCC, NRA, etc.

Economic history is not only appropriate on EP, we all love it! I don't know if you've caught midtowng's labor history posts and then myself, I love it too. Francis Perkins is one of my heroes. I don't think either Friedman has too many friends on this site. ;) Some monetary policy I think is valid and then on NAIRU, I do believe with increased mobility and transitions that can be somewhat true, but and this is where I might be more amenable to your policy push (which I'm obviously seriously differing, abet not the overall concept of a direct jobs program), dropping workers on dime to reduce costs should be made nationally just unacceptable.

Anyway, if that's what your focus is, economic history, I know this site has avid readers.

One activity I went through (haven't written anything on it though) was the history of slave economics...OMG so taboo! Really had to go digging to find out that one, despite it being the basis for a large part of the U.S. economy for so long as well as throughout history.

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do you mean TAs, RAs, graduate students?

If so, I applaud your efforts frankly. This is so beyond belief absurd. If you are a EU member and thus can get into EU universities, you are treated like a civil servant, with full pay, benefits when being a gradual student as well as adjunct to Post Doc...

here in the U.S., not only even when one obtains the coveted full scholarship and stipend, still living in a cardboard box, below the "you must be dead to qualify" poverty level...

they love their slave labor and extend (ahem, delay) obtaining the PhD sometimes up to 8 friggin' years and honestly I do not believe this is because someone's dissertation sucks.

I think I read adjuncts were making below minimum wage and if you're a gradual student, I don't have to mention that one for TAs (who I think get the worse working conditions) and even RAs...

With all of the talk about advanced skills and education, to me, even with top tier feathers, fellowships, scholarships and so on, it's impossible for someone to obtain a PHD without major hardship and lord help you if you do not have financial support elsewhere (SO, family money and so on)....and we haven't even gotten to the 6 figure debt when they offshore outsource your career 5 years into it and student loans.

Also, you should be aware, this site wrote a series of scathing pieces when labor was under attack in the big 3 auto bail out debate...

We know that labor costs, even legacy costs are not the huge problem, yet they will continually attack labor instead of attacking say...China's tariff schedule on trucks.

So, just because I'm giving you a hard time on this particular topic, exposing Academia for it's many abuses is almost non-existent! I don't think we've had a post on here on that one, although I'm obviously aware of it.

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I've got a real simple jobs program

Offshore outsourcing is currently a $150 billion a year market with a 5% projected growth rate.

I'm trying to find out what exactly is the percentage of Federal and State contracts (U.S. taxpayer dollars!) going offshore but look at this link! Just one offshore outsourcer has 1700 Federal, State and local contracts.

There are 1.5 million foreign guest workers currently working in the U.S. That's 1.5 million U.S. jobs, which should be going to Americans.

If you want an immediate direct jobs program, demand those offshore outsourced contracts are immediately canceled and put a freeze on guest worker Visas.

This is already U.S. taxpayer dollars and I think all should be horrified at some of the jobs States offshore outsource..and what is that?

Telephone support for those on food stamps, processing unemployment checks....think all of this requires incredible skills? No and in fact the U.S. workers who were fired have those very skills already.

Talk about violation of Keynes, this is it. That's public expenditures paying for jobs....in foreign country, and add insult to injury....jobs which support the U.S. unemployed!

Then, we just had $1.7 billion dollars of Stimulus money given directly to.....ya got it, foreign countries with $450 million on just one project to China...this is ridiculous, all that does is give China a leg up on alternative energy manufacturing....guaranteeing even further the U.S. will lose in developing it's own technology and manufacturing base.

Ugh. I'm looking for the total tally on Stimulus funds being used for offshore outsource jobs, use foreign guest workers, etc. but with just the focus on green jobs and this discovery, you know these funds, supposedly to Stimulate the U.S. economy and hire Americans...provide jobs...are just flowing offshore.

I.T. is not some magic skill or rare. Well, it does take a lot of training but the reality is we have hundreds of thousands of unemployed American workers with those very skills.

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That Would Be An Immediate Low Cost Stimulus

Actually no cost to the taxpayers and low cost to companies who bring the jobs back here. But they have to maximize profits and thats that.

Towards the end of 2008 HP announced almost 25,000 layoffs here because of the EDS merger.

http://www.infoworld.com/t/business/hp-announces-24600-layoffs-in-wake-e...

What these layoff announcements never mention is that they are simply outsourcing many of these jobs.

http://milkyminx.wordpress.com/2009/02/07/are-layoffs-tied-to-offshoring...

Unless this is stopped by law it won't stop till the costs here are deflated or slowed and overseas costs match ours. Housing, education and medical costs will have to be dealt with for that to happen.

We had a golden opportunity to deflate the economy and allow the housing collapse but instead we have done everything possible to perpetuate the former model while making things worse on working people.

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New Tier 5 Unemployment Insurance

Email your 5 politicians in less than 1 minute.

Our battle has just begun.

We need more Tiers and/or more weeks added to existing Tiers.

Neither H.R.4691 or H.R.4213 will help the 15 million unemployed who have already exhausted all Tiers.

WE NEED EVERYONE'S HELP to get more Tiers added and/or more weeks added to existing Tiers.

Please keep calling and emailing your congressmen and senators to finish the job.

I suggest increasing existing Tiers to 26 weeks each.

And, those who exhaust all Tiers should be able to get food stamps AND cash assistance even if they don't have any kids, when applying for public assistance.

Go to the following links and modify your closings as I have or in any way you see fit.
Links automatically send emails to Prez, V-Prez, your Senators and Rep.

http://capwiz.com/iamaw/issues/alert/?alertid=14697101
Your Closing:
Increase existing Tiers to 26 weeks each. Sincerely,

http://capwiz.com/iamaw/issues/alert/?alertid=14697026
Your Closing:
And cash assistance for those without kids. Sincerely,

My e-mail messages were sent to:
President Barack Obama (D)
Joseph R. Biden Jr. (D)
Senator George LeMieux (R-FL)
Senator Bill Nelson (D-FL)
Representative Mario Diaz-Balart (R-FL 25th)

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Congressman Miller proposes

Local Jobs for America Act. This is a lot more aggressive than the Jobs Bill and much more direct.

I know it helps states and cities with those damn social service and government workers. But those workers have families, pay taxes, have mortgages/rent and contribute to the economy.

Now if we can get a direct jobs program.

EPI Applauds Local Jobs for America Act

RebelCapitalist.com - Financial Information for the Rest of Us.

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devil in the details

Need the bill #, title and then after that, of course what kind of disaster it turns into, if it was passed.

Ex. what kind of "local community organizers"....that is very suspicious to me, but I think giving some major incentive, tax credit, even a kick back if private employers hire someone and do meaningful on the job training and keep that person at least 3 years would be effective. Corporations used to do and provide on the job training routinely, including all the way to PhDs in some cases and now they dump all training and skills obtainment onto the individual, which is beyond belief costly and often doesn't even result in the right kind of jobs skills.

So devil in details and I will also note, I see very "union heavy" agendas in these Stimulus bills, not that it's that awful but most of the U.S. workforce is not a union member and they are getting very neglected, then in terms of overall GDP multipliers, that too is being ignored, again due to union political clout fighting for there members and we have no lobbyists simply fighting for jobs for all, which make the most sense long term on a national economic/macro economic view.

That is NOT an anti-union statement here, union jobs are better than no jobs, but it's not often the most bang for the buck.

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H.R. 4812

Here is the text of the bill

"Union heavy"? I don't see any where in the text of the bill that money should go to "union" only workers. In fact, I haven't seen in ARRA that money should only go to only "union workers". The only reference to union is that workers hired under program have to comply with existing collective bargaining agreements.

If we can save and/or create jobs - union or otherwise - that is what will help the economy.

RebelCapitalist.com - Financial Information for the Rest of Us.

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And what are essential services?

This is targeting essential services in gov't. I would imagine teachers, firefighters, police and certain state and city employees are essential.

I know people like to demonize certain unions but the bottom line is that these are jobs. If we don't want to save state and city jobs because we don't like unions - give me a break - there are still a lot of gov't jobs not unionized and that just means more and more people on unemployment.

RebelCapitalist.com - Financial Information for the Rest of Us.

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no, you are misinterpreting

essential services are heavily unionized. Look at the union percentages on any of these areas and this has nothing to do with demonizing anyone. Remember, this is an economics site, and I'm looking at the big picture on overall GDP multipliers and bang for the buck on government expenditures.

Just reducing the unemployment rolls, while a great goal, is not the ultimate power of Keynesian stimulus, it is to boost up GDP not only through temporary gov. expenditures, but also investment, not just C, or consumption per the GDP equation.

Here are the largest unions from 2003 data.

EP is an economics site, so from a macro economic viewpoint is all that I am referring to. That is the point of this site, to discuss data, statistics, bills, legislation, policy from a macro economic view as well as financial analysis view.

I am fairly pro union, demonstrated over and over again in posts on this site, but that is not going to have me put blinders on the fact these bills target union jobs.

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it's a good bill

A lot of the money goes to supporting existing services, and a lot of it goes into retention of existing workers, and the fact that we're talking about jobs that pay more like $50-60k a year means that it's more expensive than my model, but it's a step in the right direction.

I certainly see the two ideas as complementary.

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