With millions still out of work, and slack demand seeming like an entrenched reality, getting to "full employment" sounds like an almost Utopian idea. Of course, it's not -- the U.S. economy has twice emerged from recessions in the past quarter century to achieve something close to full employment (albeit with lots of low-paying service jobs). There is a good chance that we can do so again. And that's especially true if we move on a number of policy fronts simultaneously, following a handy road map
drawn up by leading economists, Jared Bernstein and Dean Baker.
These two lay out a clear menu for getting to full employment, and here it is:
- First, stick with stimulative monetary policy and drop an idiotic fiscal policy that prioritizes cutting the budget deficit.
- Second, focus on lowering the deficit that really does matter -- the trade deficit -- through smart currency policies, as well as steps to incentivize domestic production over outsourcing.
- Third, directly create government jobs to put people to work.
- Fourth, use public policy to promote work sharing, whereby employers facing slack demand reduce the hours of all workers rather than firing people.
- Fifth, invest heavily in infrastructure, which is both a great near-term job creator and, long term, boosts economic growth.
Now does any of that sound like rocket science? I don't think so.
Beyond this agenda, there are other steps we could take, none more important than reducing inequality so that more of the nation's income ends up in the pockets of ordinary people who will immediately spend that money in ways that stimulate growth and job creation. A variety of steps could help achieve that goal, such as raising the minimum wage, facilitating labor organizing, and so on.
I know there are deep structural problems in the economy that are holding back demand and job growth. But it would be wrong to say that we've already tried everything to overcome these challenges. In truth, we've barely started pulling all the levers available.