Planning for Jobs

       By Mike Koetting              April 15, 2018

My last post returned to the evolving nature of the labor economy and continued to argue that we needed to change the overall framework in several respects.  This post continues that line of discussion.

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In theory the American economy is at one of its lowest percentages of unemployment in recent years. But there’s an appropriate reluctance to celebrate too much. It doesn’t feel like America is at full employment because we know that simply having a job is no guarantee of making a sustainable wage, that a material number of people have withdrawn from the labor force, and that there are imminent threats to automate or offshore more jobs.

One can think of incremental responses to each of these issues separately but the problem may be more fundamental. Why should we expect that the economic framework that got us to this situation is likely to get us out of these concerns?

The current jobs framework rests on the assumption that left to its own devices, the “invisible hand” of the market will create enough jobs for the population. This idea, used first to justify the Industrial Revolution, has been important in economic growth. But we have also seen the uncaring side as it has been used to justify enormous inequality, the increasingly difficulty of offering fulfilling employment to the entire population, and existential threats to our environment from unbridled production.

Dilbert Robot

Dilbert by Scott Adams

To be clear, markets do work and do lead to impressive efficiencies in the distribution of production reserouces. Generally speaking, market economies have performed much better than so-called “planned” economies. So, even as we recognize market shortcomings, there are plenty of reasons to want preserve most of this framework.

Moreover, while skepticism about the American interpretation of “market economy” grows, there is no widespread enthusiasm for replacing it with something else, not even much political appetite for materially constraining it. So what is a politically realistic agenda?

One starting spot I could imagine is a projection of what jobs the current economy is likely to produce in, say, 5, 10 and 20 years under various circumstances. Note this is not just the number of jobs but the actual nature of these jobs and, separately, how that would translate into income distribution. Many of the pieces are surely out there, maybe the entire package. Somewhere.  But it hasn’t been reduced to a politically digestible level. Maybe some foundation could fund this effort. It’s a lift, but it’s not impossible and one can imagine that if it were thoughtful, it would get some attention.

  • This would create some sense of how many jobs we would still need to get to (real) full employment. That, in turn, would create an actionable context for thinking about what steps would be necessary to get there. Even without such an analysis, I will guess that infrastructure—particularly an expanded definition that included such things as environmental retrofitting and creating affordable housing—would be a major alternative. A second line of exploration would be many socially based jobs that are currently underfunded, such as more care for the elderly, community involvement in preventative health care, expanded mental health services, the expansion of pre-school and strengthening of K-12 education.
  • A second outcome could be to sharpen our focus on the resulting level of inequality. We know American incomes have been getting more unequal. There are multiple reasons for this, but it shows up in the shift of jobs from unionized, stable, solid-benefit jobs to service jobs and, particularly, jobs in the “gig” economy, most of which are unstable and provide few benefits. (Economist Alan Krueger and colleagues have shown that virtually all net job growth since 2009 is in the “gig” economy.) The growing number of people simply falling out of the work force adds to the inequality. So far, documentation of increasing inequality has not created real policy responses, but perhaps projections of where it is going will generate more energy.

I am not so naïve as to believe simply putting this data together in a relatively accessible form is by itself going to create a new jobs framework.  A new jobs framework requires a deeper discussion about rewiring the nature of our society.  But the kind of analysis I suggest might improve the odds of conversations about the economy that are more rational than our current “trickle down” foolishness. If it were done right, it might also create context by which efforts on specific aspects could be pursued without the sense that they are random shots in the darkness. Several of these efforts strung together might make a real difference.

My pie-in-the-sky fantasy is the creation of a CJO—a Congressional Jobs Office—that would act in the same manner as the CBO does on budget. That is, it would score all relevant proposals with regard to the impact on jobs, both number and type, and on income equality. It couldn’t have quite the same impact as the CBO, which gets a lot of its power from scoring how a specific proposal reduces or increases the deficit. But politicians spend a lot of time talking about what does and doesn’t produce jobs, so devoting visible and shared public resources to grounding the discussion in some version of reality will create dividends. The CBO has shown that, even beyond the power of “scoring” the budget, it exercises leverage from several perspectives:

  • It is possible to create a mechanism that the public is willing to consider non-partisan, and, as such, get a special hearing.
  • The fact that are clear measures, even if only quasi-objectively derived, can drive conversations. It was interesting to see the significance of the CBO’s estimates of how many uninsured would be created by various health care proposals. While there was some modest debate about the methodology of those projections, it was the projections themselves that impacted the political discussion.

Such a mechanism would, of course, create some other issues. For instance, it might sometimes show that certain environmental proposals would reduce jobs and possibly increase inequality. But that is fair. Having a consistent set of information to evaluate all proposals increases the richness of public discourse.

All that being said, the above are very modest proposals given the degree of problem we face. We know that the lack of available high-quality employment and the resulting inequality is already a threat to democracy. Without material change, the trends are in the wrong direction. Large swaths of the population are getting really pissed off and it could get worse, particularly if more people turn to crude nationalism as a remedy for their frustration. My proposal is, in essence, not much more than measuring the scope of the problem. Ultimately we need to make real changes.

But better problem-measuring may be the most we can get for now and could conceivably point the way to broader scale changes. Sooner or later as a society we will need to come to grips with the fundamental fact that for many people the invisible hand is all too visible and is giving them the finger. We will have to create a new economic framework for society, one that moves even further from laissez-faire capitalism. Consider how different it would be if we treated employment not as a consequence of GDP but GDP as a consequence of employment.  This would not render markets less important but it would push them more in the service of people than the other way around.

To the extent this is a gradual evolution, the results will be better and more sustainable. Which is why proposals such as the above may be useful. It is hard to imagine the current trajectories will continue indefinitely without some major consequence. Moving away from these trajectories is a measured way is more likely to have a better outcome than any sudden changes. Big upheavals are often over-corrections and sometimes lead to even worse backlashes.

But as long as we pretend that contemporary society can come to full and more equitable employment without very significant government involvement, we are courting disaster.

Author: mkbhhw

Mike Koetting’s career has been in health care policy and administration. But it has always been on the fringes of politics. His first job out of graduate school was conducting an evaluation of the Illinois Medicaid program for the Illinois Legislative Budget Office. In the following 40 years, he has been a health care provider, a researcher, a teacher, a regulator, a consultant and a payor. The biggest part of his career was 24 years as Vice President of Planning for the University of Chicago Medical Center. He retired from there in 2008, but in 2010 was asked to implement the ACA Medicaid expansion in Illinois, which kept him busy for another 5 years.

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