Unemployment as a Moral Issue
I am not claiming credentials here: I am not a labor economist, and I have never been unemployed. I come to my horror of unemployment genetically. I suspect that I am considerably older than most of the readers of this blog, and unlike you, the readers, I am the child of depression era parents. After the depression, my father was scared the rest of his life; he never afterwards dared even think about a job change, and he never made an on the job decision without the spectre of losing his job bearing down on him. My mother never thought that things would turn out all right, right up to the moment she died. I have worried in a more diluted way my whole life as a consequence of my parents’ terror. I cite Don Peck’s Atlantic article below, but I should also say that his piece allowed me to cut both of my parents more slack about the way they were, even if only in memory.
But it was with this admittedly unauthentic background that I read David Brooks’ recent column on how high and long term unemployment will affect America and Don Peck’s much longer piece on the same topic in The Atlantic. We are not going to see a rerun of the 1930’s; but we are going to see a long period - of several years - during which unemployment is much higher than we are accustomed to, and long term structural unemployment is a much higher component of overall unemployment. This will, in turn, have enormous effects on the shape and morale of our society.
Our society is based on work; work is a moral matter. The good man and woman “works hard and plays by the rules.” We see work as the way we get ahead, the way we gain respect, and the way we define who we are. At any meeting of strangers “what do you do” is the first question. One of the traumas of retirement is figuring out how to answer that question. Unemployment, therefore, is not just one of many regrettable aspects of the major recession of the last 2 years. In an endless list of important issues, it has to force its way to the top as an issue a government must deal with to maintain real legitimacy.
What seems to me to be missing in the current unemployment crisis is the sense of outrage, of moral wrongness about unemployment that would bring it to the top of that list. The President, rightly, began to turn to this issue; but the jobs summit didn’t add up to much; the congressional efforts seem to me to be about zero; and I have seen little evidence of an on-going effort. I wonder if some of this has to do with the youth of almost all of the White House? If you and your parents lived your entire life in an economy in which unemployment was never much of an issue, how could you have a sense of outrage about a condition you barely know exists?
But we have to confront this issue in a way that is different than we are now. The President made a good start in his budget but there needs to be a lot more done. First of all, unemployment has to be consistently presented by the President as a national tragedy - this issue cannot disappear into the White House’s check list. Second, we are going to have to spend some more and alter more priorities: we should start getting rid of taxes on employment (payroll taxes) in favor of taxes that focus on consumption, I am for an immediate payroll tax cut now, and an effort to put consumption taxation at the center of tax reform if we ever get around to it. As an aspect of this, we should not be raising taxes right now on businesses and on capital. We want more capital employed not less. We should offer extensive education credits so that the millions of men and women who will need to retrain for entirely new jobs can do so. And, third, we should reprogram the stimulus of 2009 so that the spending occurs more rapidly. I suggested this a couple of months ago and re-suggest it now. Last year’s stimulus program included a large amount of new policy that was never going to spend fast enough to matter much to today’s unemployed. It was all part of never wasting a crisis. I would re-look at all of it asking whether or not we wouldn’t get more bang out of the expenditures by increasing unemployment payments, cutting payroll taxes, and helping with state budgets.
Don Peck makes clear in his article that it is already certain our society will be different over the next generation because of the protracted unemployment we know will occur. We should acknowledge this and make certain that we do whatever a government can do sensibly to alter the course of the problem.
Roosevelt Institute Senior Fellow and Braintruster Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.