Author: Gordon Lafer

Direct government job creation as a response to the crisis: political and policy challenges in the US.

I am an Associate Professor at the University of Oregon’s Labor Education and Research Center.  Beginning in September 2009, I took a leave of absence from the university to serve as Senior Labor Policy Advisor for the United States House of Representatives’ Committee on Education and Labor.  At the time of the ILPC conference in April 2010, my work with the House of Representatives will be ended and I’ll be back on the University of Oregon faculty.  This proposal reflects issues I have worked on in the U.S. Congress.

Direct government job creation as a response to the crisis: political and policy challenges in the US.

 

 

In the U.S., the economic crisis of 2008-09 coincided with record budget deficits in nearly every state and local government.  This latter problem was the product of long-term policies that increased the burdens and decreased the funding of local government; but the long-term trend came to a head when the broader economic crash dramatically reduced government revenues and thus exposed the underlying fiscal crisis.

 

Due to this combination of crises, as the U.S. government in 2009-10 looked to ways to quickly put people back to work and reverse the downturn, one of the most promising policy directions was to restore and expand positions in state and local government, and in non-profit organizations providing services to those governments.  This approach was embodied, in the U.S. Congress, in a piece of federal legislation titled the Local Jobs for America Act, which was supported by a majority of Democrats in the Congress but failed to win sufficient support to be enacted into law.  The author of this paper was the primary Congressional staff person responsible for that legislation.

 

The proposal that the national government directly create jobs at the local level was a return to policies not seen in the U.S. in more than thirty years, or perhaps not since the 1930s – but was deemed warranted by the current crisis.  In policy terms, it provided the quickest and most cost-effective means of creating jobs; restored much-needed services to middle- and working-class communities; and offered the prospect of employment for long-term unemployed without university degrees or specialized qualification.

 

The bill was vigorously supported by mayors and governors across the country, as well as by the leading labor, community and civil rights organizations in the country.  Powerful business lobbies were strongly opposed to the proposal, as were those out to undermine public sector unionism.  Ultimately, however, the swing votes that doomed the bill were those of legislators wary of advocating more public spending at a time of widely publicized deficits.  This inclination ran counter to the advice of economists from across the ideological spectrum; but this was a political rather than policy decision.

 

This paper will analyze the successes and failures of the effort to pass such legislation, and discuss lessons to learn regarding strategies for progressive job creation policies in an era of fiscal constraint.