Ronald Reagan and Franklin Roosevelt are often quoted as saying that “the best welfare program is a job.”
They were right.
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That’s why we need to do what FDR did in the 1930s. We need to create a new Works Progress Administration and make the government the employer of last resort.
Right now, Republicans in the Senate are blocking every attempt to extend unemployment benefits. Yesterday, conservative opposition killed two separate bills to extend benefits, leaving approximately 1.3 million out-of-work Americans without a way to make ends meet for the third straight week.
Republican refusal to extend unemployment insurance is nothing less than a crime. The economy just isn’t good enough yet for people to reliably find work.
Although the unemployment rate has now dipped down to 6.7 percent, the lowest it’s been since President Obama took office, the amount of people actually working and actively looking for work is shrinking.
Workforce participation is now at a 36-year low of 62.8 percent – something many economists say is the main reason the unemployment rate has dropped. People have just given up trying to find work.
To make matters worse, the demand for jobs far outpaces the supply. According to the Economic Policy Institute, there are now three jobseekers for every one job opening.
As a result of all this, approximately four million people have been without a job for 27 weeks or longer and the long-term unemployment rate is now the highest it has been at any time since World War II.
Thanks to Republican opposition to extending unemployment insurance, many long-term unemployed people will tonight have to worry about whether they will have enough money to pay their rent, heat their house, or even just find a way to get to a job interview.
It is unacceptable that in the richest country in the history of the world that anyone should have to worry about such basic needs as food and shelter, especially when you consider all the freebies the government gives to big oil and big banks.
But there are economic as well as moral reasons to extend unemployment insurance.
Moody’s Analytics estimates that every dollar spent of jobless benefits generates $1.55 in economic activity and that refusing to extend benefits will cost the economy $39 billion in spending this year alone.
This makes sense. Giving people money to spend when they wouldn’t otherwise have money to spend generates economy activity that otherwise wouldn’t exist. Unemployment insurance has what economists call a “multiplier effect.”
Of course, despite all the evidence showing that giving out-of-work Americans money to spend is good for the economy, many conservatives say that unemployment insurance creates a culture of laziness. “Get a job,” they scream, “you can only get ahead by pulling yourself up by the bootstraps!”
Studies do show that people on unemployment insurance work harder to find a job than people who aren’t on unemployment insurance, but that’s another debate for another time.
But there’s something that works even better than unemployment insurance and that’s government directly putting people to work.
If Republicans were actually serious about helping unemployed people “get a job,” as they put it, they’d do one simple thing: revive New Deal era programs like FDR’s Public Works Administration, Works Progress Administration, and the Civilian Conservation Corps.
During the New Deal, unemployed people were put to work building bridges, roads dams, and tunnels – you name it. The WPA alone was responsible for building 122,000 bridges, 572,000 miles of rural roads, 1,000 tunnels, and 19,700 miles of water mains.
Thanks to programs like PWA, WPA, and CCC, the unemployment rate dropped from 25 percent when FDR took office to 9.6 percent by the time he was elected to a second term in 1936.
Unemployment shot back up during the mini-recession of 1937-1938, but it quickly got back on target.
Not surprisingly, the surge in employment helped out the economy. GDP grew at a rate of 9 percent per year over FDR’s first term and grew as high as 11 percent per year later on his presidency.
GDP growth slowed during that mini-recession of 1937-1938, but, like the unemployment rate, got back on track after the recession ended.
By the way, many economists, including Nobel Prize winner Paul Krugman, say that that mini-recession of 1937-1938 was caused by the government drawing back successful New Deal programs.
Of course, as many conservatives argue, the real thing that brought the U.S. out of the Great Depression was World War II. But what was World War II if not the biggest government spending program ever?
Right now our country is still mired in the aftershocks of the worse economic downturn since the Great Depression. Although unemployment is nowhere near as high as it was right after Wall Street crashed the economy, that number is deceptive.
Many people have just given up finding a job, and so the unemployment rate looks better than it actually is. And without unemployment insurance, millions of people are now living on the edge of total poverty.
Congress needs to extend unemployment insurance, but it should go even farther than that and listen to what FDR and Reagan said about welfare.
The best welfare program actually is a job and that’s why Congress needs to revive the New Deal programs that worked so well for Franklin Roosevelt 80 years ago.
Capitalism is a cyclical economic system; boom and bust cycles are inevitable. That’s why the government needs to step in and serve as the employer of last resort like it did in the 1930s.
It’s time for a new New Deal.