Back to the Future
Back to the Future: Reclaiming
the New Deal’s Direct JobCreation/Employment
Assurance Strategy
Philip Harvey
Rutgers School of Law—Camden
pharvey@camden.rutgers.edu
June 15, 2011
Philip Harvey
Back to the Future
The Direct Job-Creation Strategy
• Think  New Deal programs like the WPA
• Government acts as employer
• Jobs as much like regular employment as
possible
• Provides temporary employment
Philip Harvey
Back to the Future
Advantages of Direct Job Creation Strategy
(Compared to Conventional Macroeconomic
Strategies Like the ARRA)
• Much less costly per created job
• Creates needed jobs immediately
• Easily targeted
• Can be used at the top as well as the bottom of
the business cycle
• Can be used to secure the right to work
See Harvey (2008, 2011)
Philip Harvey
Back to the Future
The Right to Work
• Modern claims popularized by New Dealers
• Embraced in international human rights law
• Four aspects of the right to work
–
–
–
–
Quantitative
Qualitative
Distributive
Scope
• Provides rights based argument for pursuing
direct job-creation strategy
• Key to securing other economic and social rights
Philip Harvey
Back to the Future
The Bad News  Like Keynesian Strategy,
The Direct Job-Creation Strategy Is Not
Suitable for Implementation by State &
Local Governments
1. Balanced budget constraint on state &
local governments
2. Cost-reducing revenue and savings
cannot be captured locally
3. Same true of multiplier effect of program
spending
Philip Harvey
Back to the Future
Are There Other Job Creation Strategies
That Can Work at the State & Local Level?
More Bad News  Yes, but only by taking
jobs away from someone, somewhere else
Philip Harvey
Back to the Future
What About Economic Development
Initiatives?
• May work to promote job growth in targeted firms,
industries or locations
BUT
• Will not reduce aggregate level of unemployment
unless strategy increases aggregate demand
– Not an easy task (everyone is trying)
– Cannot assess aggregate success based on whether job creation
occurs in targeted entities (because of displacement)
– Must assess strategy’s effect on aggregate demand (does it add
chairs to the circle nationally?)
Philip Harvey
Back to the Future
Figure 1
Job Wanters and Job Openings in the U.S. Dec. 2000 - May 2011
(in millions, except unemployment rate in parentheses)
35
30
Official Unemployment Plus Involuntary Part-Time & Discouraged Workers
Official Unemployment Plus Involuntary Part-Time Workers
25
Official Unemployment
20
15
10
5
0
Source: Author's Calculations From BLS Data
Philip Harvey
Job Openings
Back to the Future
Progressive Employment Policy
Keynesian Macro Strategy (1940s)
PLUS
Opportunity Equalizing Anti-Poverty Strategies (1960s)
Philip Harvey
Back to the Future
The Problem With the Conventional
Progressive Strategy
• Cannot achieve full employment (inflation barrier)
• Resulting unemployment borne disproportionately by
disadvantaged workers (Think  1960s)
• Opportunity-equalizing measures consistently
disappoint because they do nothing to close the job
gap (Think  1960s until the present)
• Faith in Keynesian strategy shattered in 1970s
– Progressives abandoned full employment goal
– Opportunity-equalizing measures continued to fail while
engendering resentment
• If it’s broke, fix it
Philip Harvey
Back to the Future
The Good News
• There is an alternative strategy
• The New Dealers got it right
– “Employment Assurance” for those who
can work (secured by direct job creation)
– Transfer benefits for those who can’t
– Securing human right to work & income
security
Philip Harvey