Bernstein on Full Employment and His New Book
In his latest post for the New York Times’ Economix blog, CBPP Senior Fellow Jared Bernstein announces that, with support from the Rockefeller Foundation, he’s “leading a year-long project” to analyze and build support for his and others’ ideas to restore full employment.
He also outlined five ideas to help reach that goal that he developed with the Center for Economic and Policy Research’s Dean Baker for their new book, Getting Back to Full Employment: A Better Bargain for Working People.
“Economists like me, who stress the importance of full employment,” Bernstein wrote in his blog,
have a bad habit. We go on and on about the problem of slack labor markets — their negative impact on the living standards of middle- and lower-income families, their persistence in recent decades — and then we stop without saying what might be done about it. . . .
In my recent public speaking I’ve been striving to correct that, by . . . [discussing] five robust solutions to the problem. . . .
Better Fiscal Policy. Austerity is to full employment as leeching is to healing. Yet it has become the go-to response by governments around the globe. . . .
Direct Job Creation. It’s widely agreed that the Federal Reserve is the lender of last resort and that having such a function is essential in modern economies. Well, here’s what should be equally essential: the government as employer of last resort. . . .
Honey, I Shrunk the Wrong Deficit! . . . [R]educing the budget deficit right now hurts growth and jobs, but taking aim at the persistent trade deficit, through which the United States exports a lot of labor demand, would help a great deal, particularly regarding manufacturers. . . .
Work Sharing. Instead of laying people off in downturns … why not … spread [the impact of weak demand] around in the interest of keeping people on the job, but for fewer hours. . . . Germany used this approach to great effect during the recent deep recession. . . . [W]e actually have a work-sharing policy right here in the United States! It was passed by Congress in early 2012 and numerous states use it. But it is not nearly as well known as it should be, and participation rates are too low.
Infrastructure Investment. This relates closely to the fiscal recommendation above, of course, and the need to upgrade public goods is widely recognized. . . . [U]nder certain conditions, fiscal policy will come very close to “paying for itself” and those conditions are all met right now. . . .