Last week, the Congressional Budget Office projected record-breaking growth in 2021, but it is premature to celebrate this rosy macroeconomic projection because the rest of their report contained the alarming prediction that the U.S. labor market will not fully recover until 2024. Also last week, the Labor Department’s January jobs report revealed anemic job growth of less than 50,000 and nearly 800,000 Americans filed new claims for unemployment insurance.
Avoiding another jobless, stagnant recovery that leaves millions of Americans unemployed must be a top priority for policymakers at every level of government.
The Biden-Harris administration has inherited an economy with ten million fewer jobs than a year ago. Unemployment is close to double the 3.5 percent level of December 2019 and nearly 18 million workers are collecting unemployment insurance.
Workers suffering the greatest economic harm in the current crisis include minorities, low-wage earners in the service sector, women and individuals with lower education levels. The pace of job creation has slowed. High unemployment and labor force dropout rates could persist and spawn a repeat of the “lost decade” that followed the Great Recession.
Americans learned a hard lesson from the last recession and now overwhelmingly support strong and sustained government responses to the economic crisis.
A national, representative survey of 800 Americans conducted by the Heldrich Center for Workforce Development at Rutgers University in late 2020 found that they want government intervention to solve the economic crisis. When asked whether individuals, employers or the government are primarily responsible for helping laid-off workers, one in two Americans said the government is responsible for providing assistance. This is the largest percentage who think the government has a primary obligation to help the unemployed since the Great Recession.
There is widespread support for direct job creating programs from those who support both Democrats and Republicans. More than 9 in 10 (94 percent) respondents support government funded infrastructure projects; more than 8 in 10 (85 percent) support a federally funded temporary community service jobs programs. Other strategies earning widespread approval include sending aid to state and local governments to avert public sector layoffs (86 percent), extending unemployment insurance payments (79 percent) and financing education and training for laid off workers (74 percent). Eight in 10 say it’s very important for Democrats and Republicans to work together to strengthen the economy, yet only six percent say that is very likely to happen.
Government action is required to avoid the tragic experiences of the Great Recession-era, when millions remained jobless for years, defaulted on loans, lost homes and fell into poverty. Unemployment soared to 10 percent in 2009 and did not return to four percent until 2018. During the entire decade, unemployment rates for Blacks and Latinos were nearly twice the rates for white Americans. Before the pandemic, in 2019, nearly one in four Americans had no more than $400 in savings, making it impossible to pay medical bills or repair their cars, according to the Federal Reserve Bank’s Survey of Households. The pandemic recession made matters worse for those already struggling to afford food and housing.
Sharp declines in state and local government revenues combined with mounting expenses forced state and local governments to shed over a million workers. In June, Federal Reserve Board Chair Jerome Powell warned during congressional testimony that continued government layoffs and cuts to essential services “will hold back the economic recovery.”
Americans need not suffer through this painfully slow recovery while hoping that private employers generate enough new jobs. Without expansive government funded jobs programs, millions will become long-term unemployed or drop out of the labor force entirely. Extended unemployment insurance is a necessary, but insufficient cure for the nation’s deep economic crisis. Not everyone is eligible and benefit amounts and duration vary widely from state to state.
Ambitious, federally funded job creation programs are essential for building a stronger and fairer labor market. The Biden-Harris Build Back Better plan calls for robust, job-generating investments in the country’s infrastructure for upgrading roads, bridges, ports, schools, housing and enhanced broadband access.
These additional recommendations will get jobless Americans back to work:
Create jobs for those most in need: All job creating investments should give priority to the long-term unemployed and those who are most disadvantaged in the labor market, including people of color and the nation’s oldest and youngest workers. People who live in rural areas, those with disabilities and formerly justice-involved individuals should be included.
Fund temporary community service jobs in addition to infrastructure projects: Large and complex infrastructure projects require significant capital investments — and many months, if not years, to get underway. Community service projects can begin within weeks and require minimal expenses for equipment and supplies. They not only provide income, but also build valuable skills and experience for idle American workers who face long odds for returning to work. And they will benefit a wide range of communities and employ workers who were hit hardest by the recession — people with limited skills and education. Community service jobs programs are the most direct, cost-effective strategy for getting Americans back to work. They have been effective during other economic crises in America — during the Great Depression they created approximately 9 million government-funded public service jobs for the unemployed. During recessions in the 1970s, community jobs programs initiated by Presidents Richard Nixon and Jimmy CarterJimmy CarterWas US-China engagement premised on Chinese political liberalization? Pat Robertson steps down as '700 Club' host after 60 years Carter, the longest living former president, celebrates 97th birthday MORE employed almost a million people.
Include education and training opportunities: Job creating investments should also fund training for workers at a variety of skills levels — including for entry level jobs, skilled trades and professionals in fields such as public health and information technology or cybersecurity. New projects should incorporate dedicated training funds that local stakeholders can access for workers, allocated to communities based on population, levels of unemployment and long-term unemployment.
Require fair labor practices and local hiring initiatives: Infrastructure investments should include project labor agreements requiring employer commitments to training, local hiring and set-aside goals for target populations, including women and people of color.
Carl Van Horn is distinguished professor of Public Policy and director, John J. Heldrich Center for Workforce Development, Rutgers University. Mary Alice McCarthy, Ph.D. is director of the Center on Education and Labor at New America. The authors are members of the Better Employment and Training Strategies (BETS) Taskforce, a coalition of more than 40 leading practitioners and experts who believe that it is time to modernize the country's outdated patchwork of workforce policies.