Progressive solution: A domestic Marshall Plan for jobs and community investment
In order to address these economic deficiencies, the Center for American Progress is putting together a new commission to help design a national Marshall Plan to rebuild hard-hit communities through increased economic growth; more jobs with better wages; and rising opportunities and increased security for families.
In the wake of World War II, the United States famously undertook the Marshall Plan to invest billions of dollars in war-torn European countries to rebuild their economies and modernize their industries. This was not only in the interest of Europe but also of America itself as the worlds largest economy and global leader against the spread of communism. Evoking the strategic leadership the United States demonstrated 70 years ago, a domestic Marshall Plan today for hard-hit communities would both help struggling families and individuals directly and strengthen Americas national economy through revitalizing communities that have great potential to contribute to our economic and social fabric.
The commission will be composed of national, regional, and local leaders who can provide direction and visibility to its work. It will call upon the expertise of urban and rural leaders who represent labor, business, education, health, faith, community and economic development, and racial justice to help understand the problem; lift up promising practices; and develop bold new ideas, particularly for people who did not attend college.
Amidst overall economic growth, urban centers, small towns and rural areas, and regions facing deindustrialization have suffered decades of neglect, leading to widespread frustration and disillusionment with Washington and spurring voters to either stay home or take a chance on a candidate who promised to blow up the system.
In the aftermath of an election in which rural and urban voters came to view one another with suspicion while both suffered from decades of disinvestment, the time is ripe for a policy agenda and accompanying message that underscores the common cause among struggling Americans and outlines solutions that unite them.
What follows are a few big areas of investment we expect the commission to explore in its work. Throughout the process, these ideas can be further developed and refined with input from members of the commission and other experts.
We propose today a new jobs guarantee, and we further expect a robust agenda to be developed by the commission.
It is clear, however, that effective solutions must recognize the importance that Americans attach to the dignity of work. Economic frustrations arise when work at a living wage becomes impossible to find. A successful economic policy will be one that delivers better employment and better wages for those who have been marginalized by the market economy.
A jobs guarantee to counter the effects of reduced bargaining power, technical change, globalization, and the Great Recession
The low wages and low employment rates for those without college degrees only exist because of a failure of imagination. There is no shortage of important work that needs to be done in our country. There are not nearly enough home care workers to aid the aged and disabled. Many working families with children under the age of 5 need access to affordable child care. Schools need teachers aides, and cities need EMTs. And there is no shortage of people who could do this work. What has been missing is policy that can mobilize people.
To solve this problem, we propose a large-scale, permanent program of public employment and infrastructure investmentsimilar to the Works Progress Administration (WPA) during the Great Depression but modernized for the 21st century. It will increase employment and wages for those without a college degree while providing needed services that are currently out of reach for lower-income households and cash-strapped state and local governments. Furthermore, some individuals may be hired into paying public jobs in which their primary duty will be to complete intensive, full-time training for high-growth, in-demand occupations. These public apprenticeships could include rotations with public and private entities to gain on-the-ground experience and lead to guaranteed private-sector employment upon successful completion of training.
Such an expanded public employment program could, for example, have a target of maintaining the employment rate for prime-age workers without a bachelors degree at the 2000 level of 79 percent. Currently, this would require the creation of 4.4 million jobs. At a living wagewhich we can approximate as $15 per hour plus the cost of contributions to Social Security and Medicare via payroll taxesthe direct cost of each job would be approximately $36,000 annually. Thus, a rough estimate of the costs of this employment program would be about $158 billion in the current year. This is approximately one-quarter of Trumps proposed tax cut for the wealthy on an annual basis.
This cost estimate is useful for determining orders of magnitude, although it is not precise. An effective employment program would need to provide paid training when needed to allow workers to transition to a designated type of employment. At the same time, the effects of increased employment would reduce current expenditures on unemployment insurance, Supplemental Nutrition Assistance Program (SNAP) food support, and other social programs. In addition, the expansion of employment would have a multiplier effect on overall income and tax revenue.
It is worth emphasizing that the magnitude of expenditures involved is small relative to the gifts that the current administration proposes to give to our wealthiest citizens through corporate and personal tax reductions. Simulation work by the Tax Policy Center shows that the tax proposals made by the Trump campaign would amount to a tax reduction of about $6 trillion over 10 years, most of it accruing to wealthy households.16 Compared to a public employment program of the type CAP is proposing, a $600 billion annual tax cut for the wealthy would amount to a far larger use of federal fiscal capacity. Evidence from similar tax cuts in the past shows that there would be small employment and output effects and, hence, little benefit to the population that would be better helped by a public employment program.
Three other aspects of this public employment program should be noted. First, by creating tighter labor markets, such a proposal would put upward pressure on wages, raising incomes for workers not directly taking a public job. Second, because it would employ people to provide services that are currently needed but unaffordable, it would not compete with existing private-sector employment. Finally, it would provide the dignity of work, the value of which is significant. When useful work is not available, there are large negative consequences, ranging from depression, to a decline in family stability, to deaths of despair.
Build community institutions that support incomes, employment, and mobility
The wage and employment effects that have disproportionately hurt workers without university training have also had large impacts on the communities in which they live. Declines in wages and employment have made it difficult for many communities to support the institutions that serve as anchors of the local economy, and which provide the channels for economic mobility.
We propose investments in a broadened class of infrastructureto include roads and bridges but also to modernize schools for the 21st century and to build child care centersproposals that will improve the accumulation of human capital as well as physical capital.
For example, research indicates states and local school districts are underinvesting in capital construction and maintenance by at least $46 billion annually.
Additionally, school districts currently have more than $400 billion in outstanding debt, principally issued for financing capital projects. Moreover, in many parts of the country, particularly in rural areas, there are child care deserts where child care facilities are unavailable. By spending $50 billion each year for 10 years to provide a combination of grants and low-cost financing to support school modernization and expansion and build child care facilities, pre-K through 12th grade schools can be brought up to 21st-century standards.
