Proceedings: A Bold Approach to the Jobs Emergency
The following are summaries of all sessions featured at "A Bold Approach to the Jobs Emergency: Setting the Political Agenda for 2014 and 2016," a daylong conference held in Washington, D.C. on June 4, 2013.
Click here for a full list of transcripts and video highlights.
Keynote Address, U.S. Senator Tom Harkin (D-IA)
Passing a policy agenda that ends sequestration, promotes public investment and protects labor rights will help immediately address the current jobs emergency, Iowa Senator Tom Harkin told an audience of two hundred at the Rediscovering Government conference in June.
“Without action our nation will continue to grow more and more unequal as wealth becomes more and more concentrated in the hands of a few,” Senator Harkin said.
The unemployment rate is currently 14% if people who dropped out of the workforce, the marginally attached, and part-time works are included. At the current pace of job growth, the US will not return to full employment until 2023, according to CBO numbers. Meanwhile, middle class wages, when adjusted for inflation have remained stagnant for 30 years, while GDP doubled.
Senator Harkin proposed several specific policy actions. “The most important thing we can do is end the filibuster,” Harkin said. Nine out of every ten filibusters are used to block progressive legislation. The modern filibuster was born out of efforts to protect segregation, he told the room.
A progressive policy agenda should end the government-imposed sequestration. Congress should invest infrastructure, manufacturing, clean energy, education and the other hallmark public investments tied to historical US prosperity. Improved labor regulation, including an increased minimum wage, and mandatory paid sick leave, and health benefits, would boost job quality. Finally, Harkin proposed employing trade policy tools like a Value-Added Tax, to support American jobs.
“The agenda I’ve just described is not radical. If you want to be radical, I can really get over there.” Harkin said. “But it’s the kind of responsible policymaking that a Republican like Ben Bernanke and a progressive like Paul Krugman have been advocating for a long, long time.”
Keynote Address, Alan Blinder, Princeton Professor and Former Vice-Chairman at the Federal Reserve
Alan Blinder agreed that current unemployment levels were a “jobs emergency,” as we titled our conference, and outlined the causes and consequences of the slow jobs recovery. While there are available policy tools to stimulate the economy, he was pessimistic the effective policies would pass Congress.
Current economic growth is paltry at best, said Blinder, in a speech titled, “What’s a nice economy like you doing in a place like this?” Five years after the recession began, GDP is growing at 2% and unemployment is down from 10% to 7.5%, mostly due to rising participation, not job growth.
“A well-functioning economy, and this is the history of America by the way, sort of zips out of a recession. That’s not a 2 percent growth rate,” he said. ”This is in danger of becoming the national model on economic performance, and it’s just not good enough.”
As the stimulus winds down, even the Fed has blamed fiscal drag, ie sequestration and lack of fiscal stimulus, for slowing the economy. “This is as close as the Fed gets to ‘the sky is falling,’” Blinder said.
For a true recovery, the US should forget the deficit, consider public sector hiring or a new jobs tax credit. None of this is likely in Washington, Blinder conceded. He proposed a possible bi-partisan fix that would allow businesses to repatriate profits in proportion to payroll increases. “This is something you can at least imagine Democrats and Republicans actually agreeing on. Now will they actually agree?” Blinder asked. “I don’t think so,” he added.
Panel: Getting Back to Full Employment
Moderator: Jeff Madrick, Roosevelt Institute
Dean Baker, Center for Economic and Policy Research
Alan Blinder, Princeton University
Josh Bivens, Economic Policy Institute
Diana Furchtgott-Roth, Manhattan Institute
In the first discussion of the day, panelists from both sides of the aisle outlined the extent of ‘America’s Jobs Emergency’. The percentage of “prime age” workers in the workforce remains well below the pre-recession average and at the current rate of growth, the US won’t return to full unemployment until 2020. “We are farther from economic recovery than we think,” Josh Bivens told the audience.
The Fed has hit the floor with interest rates and monetary policy tools are exhausted, said Mr. Bivens, who proposed a new $600 billion fiscal stimulus, acknowledging that a jobs bill of that size could not be passed by Congress.
Rather than just boosting demand, reducing individual work hours could increase overall employment, Dean Baker proposed. As an alternative to paying unemployment benefits, Germany uses a model in which employee hours are reduced by 20%, and the government pays half of the lost wages. A 5% reduction in working hours in the US would result in 7 million new jobs, Baker said. In addition, “you keep people at work. You don’t have them losing skills.”
Diana Furchtgott-Roth argued the private sector was the best agent to drive needed growth. Corporations are not investing in workers because “the increases in the costs of hiring are making them substitute capital for labor,” Ms. Furchtgott-Roth said. The US should lower the 35% corporate tax rate, allow companies to repatriate profits from abroad tax-free, reduce minimum wage and health insurance requirements.
Two concrete bi-partisan policy solutions were proposed by Alan Binder. First, the tax rate for the repatriation of corporate profits from abroad should be reduced in direct proportion to a firm’s increase in payroll. Second, he voiced support for a general new jobs tax credit that has yet to be passed by Congress.
Blinder’s proposals offered something to Keynesians and conservatives a like. “This is just to me a very natural way to forge a consensus if it were possible in modern America to forge a consensus, about which I’m not terribly optimistic,” he concluded.
Panel: The Many Roles of Government in Jobs Creation
Moderator: Michael Tomasky, The Daily Beast
Phillip Harvey, Rutgers University
Michael Likosky, The Century Foundation
Alan Tonelson, U.S. Business & Industry Council Educational Foundation
Maya Wiley, Center for Social Inclusion
In a panel on the role of government in job creation, participants proposed policies to boost job numbers including direct government employment, an infrastructure bank, and a more targeted trade regime.
President Obama’s stimulus boosted employment through 52 public-private infrastructure projects scheduled to last 10, 20, or 30 years, said Michael Likosky. An infrastructure bank, supported in Congress by Republicans and Democrats, is key to continued job growth, he argued. “This is an area where there’s great agreement on what to do.”
Maya Wiley supported infrastructure investment, but argued that the government must improve allocation of infrastructure dollars to include low-income communities. Capital investment whether in public transit, broadband, or renewable energy, is directly correlated to economic opportunity, Wiley said. “You can track a lack of investment that is deepening economic inequity in some of the fastest growing populations that are also the most poor.”
Philip Harvey argued a New Deal strategy of direct government employment programs similar to the CCC and WPA would be more effective than a Keynesian fiscal policy promoted by infrastructure spending. While the $575 billion stimulus spent on the ARRA created 1.3-3.5 million jobs, the same funds could have created 9.8 million jobs with a New Deal strategy, he said.
Trade policy provides government with an additional set of tools for job creation, said Alan Tonelson. “The trade agreements that this country has negotiated for the past roughly 20 years have inflicted serious damage on the US economy,” he said. In addition to specific policies enacting a US value-added-tax, FDI performance standards and Buy-America campaigns, Congress should pass legislation giving the government more tools to fight currency manipulation.
As the panel ended, participants re-asserted the government’s role in boosting job growth. As Harvey said, “We don’t expect the economy to provide all the health care we need. We assume the government’s gotta pitch in. We don’t expect the economy to provide all the education we need. We assume the government’s gotta pitch in. Why in the world would we think that the economy has to provide all the jobs that we need? It can’t. It won’t. The government has to pitch in.”
Panel: Wall Street: Job Loss or Job Creation?
Moderator: Mike Konczal, Roosevelt Institute
Rosemary Batt, Cornell University
Bill Lazonick, University of Massachusetts Lowell
Damon Silvers, AFL-CIO
In a discussion about the role of Wall Street in job recovery, panelists identify key ways in which increased financialization changes incentives and re-allocated business resources away from job creation.
Increased financialization, meaning the rise of a variety of practices from stock buy-backs to private equity deals, has resulted in some “firms sending money out of the firm quicker than it is making it,” Mike Konczal said. Money that could be reinvested in business growth to boost the whole economy is instead used for individual compensation.
“Why do we care about executive pay? It’s not just because it’s unfair. It’s because we rely on these people to allocate resources,” said Bill Lazonick. “The problem is that these companies are not creating the jobs that they could be creating if they were investing in the economy, if they were training workers, if they were keeping older workers, who have valuable human capital, employed.”
Executive pay, comprised in part of stock options, rose from 42 times the salary of an average worker in 1980, to 350 times average pay today. Further, over the last decade, US firms have spent $3 trillion on stock buy backs, a method of using company capital to boost profits for stockholders.
Private equity, another tool designed to finance business growth, can encourage investors to adopt risky practices as owners invest only 1-2% upfront but receive 20% of future profits. The results indicate that private equity-owned firms are more likely to lose jobs and more likely to go bankrupt than publicly owned firms, according to two studies cited by Rosemary Batt.
On the macro-level, increased financialization has resulted in reduced lending to small and medium-sized businesses, Damon Silvers said. Despite government loans to US financial institutions, the number one challenge to growth cited by 49% of New York small business was access to capital, in a recent survey.
The panel briefly outlined policy recommendations to reduce incentives for extreme leverage, risky behavior and asset stripping.
Panel: Paving the Way for Better Jobs
Moderator: Nona Willis Aronowitz, Roosevelt Institute | Pipeline
Annette Bernhardt, National Employment Law Project & Roosevelt Institute
Ellen Bravo, Family Values @ Work
Sarah Bloom Raskin, Governor, Federal Reserve System
Dorian Warren, Columbia University & Roosevelt Institute
The post-recession economy has been characterized not only by a decrease in employment, but also by a deterioration in the quality of jobs available. The average wage for new hires has declined since 2010, and nearly 8 million people who would like to be employed fulltime are working part time, Sarah Bloom Raskin told the audience.
“Clearly we know that there’s a hollowing of the middle,” she said. While policy makers often point to education as the solution to financial hardship, Raskin cited the high levels of student debt and encouraged panelists to offer alternative policy solutions to tackle this decline in middle class jobs.
Proposed solutions focused on labor regulation and unionization of lower-income jobs. “We absolutely have to strengthen labor standards,” said Annette Berhardt advocating for an increased minimum wage, improved health and safety standards, and responsible contracting practices, among other policies.
Both Bernhardt and Ellen Bravo argued that paid sick leave and family leave were key to “good” jobs. “Not a footnote, not plank number 27, central to the good jobs conversation,” Bravo said.
The current political landscape makes it difficult to pass the type of progressive labor standards advocated by the panelists, said Dorian Warren. The last thirty years witnessed an increase in the political capacity of business with a corresponding decline in the power of labor organizations on both the state and national levels. “Those most affected by bad jobs are least likely to participate,” Dorian said. “We need some movement strategies, to win on any of these policies.”
Panel: Is Education the Answer?
Moderator: Felicia Wong, Roosevelt Institute
Brink Lindsey, Cato Institute
Ai-jen Poo, National Domestic Workers Alliance
John Schmitt, Center for Economic and Policy Research
The panelists debated the role of improved education and training in tackling the jobs emergency. Moderator Felicia Wong, President and CEO of the Roosevelt Institute, proposed two questions, first whether lack of adequate skills is the cause of the current slump in US unemployment and second, whether the skills gap would become increasingly problematic in the future.
Brink Lindsey argued that a combination of educational and cultural factors is hollowing out the opportunities for workers. Because job growth is focused in the high skills or low skills sectors, a college degree is increasingly critical to good job prospects, he said. Further, children of parents without college degrees are decreasingly likely to graduate from college. The solution is to improve K-12 education, Lindsay said, “Unless we can have thorough, deep restructuring of the way we educate children in America, I don’t know that we’re going to overcome this skill gap or that we’re going to brighten the prospects for ordinary working Americans to enjoy the opportunities for interesting, challenging, and remunerative work.”
While John Schmitt supported investments in education, he said the current decline in quality jobs is a result of the decline in bargaining power of labor more than it is inadequate education. As a result, workers face limited employer-provided healthcare, stagnating wages and a reduction in retirement safety nets. “Education can restore an individual’s bargaining power relative to other workers,” Schmitt said, “but it is not something that, especially in the short term, is going to make a difference to increasing the bargaining power [of workers as a group].”
Ai-jen Poo struck a middle ground, citing her engagement with home care workers to highlight the role of training in increasing bargaining power and improving pay. Training helps professionalize the sector and improve standards, while also allowing previously isolated workers to organize for improved compensation. “We’re developing training that’s not only about preparing the workforce, but preparing consumers as employers to be able to be the kind of employers that support dignified, quality jobs,” Poo said.
Panel: Good Jobs in Practice
Moderator: Dorian Warren, Roosevelt Institute
Gar Alperovitz, The Democracy Collaborative
Denise Fairchild, Emerald Cities Collaborative
Joseph Geevarghese, Service Employees International Union (SEIU)
Madeline Janis, LAANE
Four community leaders described effective programs to boost quality employment, and common strategies included targeting the most disadvantaged communities, working with diverse stakeholders, and accessing existing funding streams.
A number of organizations are working to ensure that government funds are supporting quality jobs. Madeline Janis told the panel, “Fundamentally, it's how do we take major areas of public spending and turn that into a real economic prosperity tool.”
Working in cities across America, LAANE advocates for public transit vehicles, purchased with public money, to be built for fair wages in America. Similarly, the Emerald City Collaborative is targeting $659 million in infrastructure investment available over the next seven years for green infrastructure and good jobs, organization President Denise Fairchild said. “We want to make sure that these jobs are union jobs, and we want to make sure low income communities of color get to play and get a piece of that,” Fairchild said.
The Democracy Collaborative has successfully developed quality jobs in a declining Detroit neighborhood where unemployment hit 40%, the organization’s founder, Gar Alperovitz told the audience. The group incubates worker-owned companies that can serve the billion dollar demand from local universities and hospitals. Thanks the employee equity model, the businesses have “high retention and high morale and high productivity,” and can outcompete competitors, Alperovitz said.
Joseph Geevarghese reminded panelists that, in the 1930s, successful unionization required both community efforts and leadership from President Roosevelt. SEIU is organizing low-income federal contract workers to advocate for fair pay. After a May 21st strike of Federal contractor workers, SEIU secured a commitment from the Obama administration to reduce federal contract CEO compensation to $400,000, the same rate as the President’s salary. “I would say we’re 50% of the way there,” said Geevarghese. He called on the President to pass an executive order ensuring fair pay for all government contract employees.
Keynote Address: Representative Jan Schakowsky (D-IL)
In the afternoon keynote address, Democratic Congresswoman Jan Schakowsky outlined specific benefits of her proposed jobs bill and a path toward its future passage.
The political push to create good jobs “is the seminal battle of our time, a battle for our economy, a battle for fairness, a battle for the heart and soul of our country,” Representative Schakowsky said.
As a member of the Congressional Progressive Caucus, the Congresswoman produced a “Back to Work Budget” that would include public investment to create jobs and stimulate the economy. Enacting the proposal would tackle the jobs deficit, which she calls the ‘real deficit’, by creating nearly seven million new jobs. First, the resulting jobs would offer a living wage of $19 an hour, benefits and retirement plans, allowing individuals and families to succeed. Second, the budget would reduce inequality, rectifying the post-recession trend that has seen income of the top 1% increase by 11.2% while income of the 99% decreased by 0.04%.
Additionally, a comprehensive jobs budget would boost overall prosperity by increasing spending. The biggest concern to business these days is not tax rates, but inadequate demand, Congresswoman Schakowsky said.
Finally, she computes, the “Back to Work” budget would reduce the deficit by $4.4 trillion in ten years by increasing the number of working tax-payers and by spreading the tax burden more equitably.
Congresswoman Schakowsky acknowledged that there was not the political will to pass her budget at this time. A sustained campaign is required to discredit austerity arguments and enact these policies, she said.
“We can’t let austerity politics be seen as more viable or more courageous or more fiscally responsible or balanced and all of those words that they like to use – than investments in good jobs and again, the evidence is entirely on our side.”
Panel: Creating Momentum for More Good Jobs
Moderator: Taylor Jo Isenberg, Roosevelt Institute | Campus Network
Deepak Bhargava, Center for Community Change
Richard Kirsch, Roosevelt Institute
In the closing panel, a political path toward progressive employment policies was outlined by Deepak Bhargava and Richard Kirsch.
An optimistic and inspiring vision is key to progressive social movements, both speakers said. The push for “good jobs” is the ‘defining moral issue of our time’, Bhargava told the audience. “[We need] a big, animating vision that is so compelling that millions of people who are not paid to do this for a living decide to devote a huge amount of their life energy to accomplishing it.” Kirsch called for progressives to put “good jobs” at the center of every policy debate. In later comments, Alan Blinder cited the success of the LGBT movement and suggested framing “good jobs” as a human rights issue.
With a vision to mobilize the population, the speakers each outlined strategies for action. A first step requires tapping into the energy of those suffering most, the underemployed and unemployed. “Eventually, the energy is catalytic and spreads from that constituency,” Bhargava said.
The campaign for quality jobs should start at the state and local level, both speakers said. Referring to effective local initiatives presented at the conference, Kirsh emphasized that “the success of these policies will be much more visible to people than anything the federal government does, and the lessons learned in building popular support for those policies will be transferrable to other places and to the federal level over the time.”
Both speakers emphasized that success may be years, or even decades, away, but that progressives should be optimistic. Situating the current battle on a timeline with labor rights, civil rights, LGBT rights, immigration rights, Bhargava reminded listeners that the history of progressive movements is making the “impossible possible.”
The current economic crisis is threatening Americans’ historic optimism, Kirsch said, “Our job is to rekindle that optimism and to make it a powerful force for change.”