Do we need another WPA?

by: Clem Guttata

Sun May 17, 2009 at 14:28:40 PM EDT

First, NDD points out (with lots of charts) how bad the current situation is:

Regardless of when this recession ends, the malaise of working and middle class America will not be relieved until wages increase, and employment rates return to a robust level.  Since unemployment is a lagging indicator, the news on that score is grim.  Almost every analyst believes that there will be another "jobless recovery" such as those that followed  the 1990 and 2001 recessions.

Next up, bonddad proposes WPA as a solution:

So -- why do we need to look at the idea of creating another WPA?  Because looking at the overall structure of the US economy there are no areas that appear to be ready to drive the economy into a recovery.  Let me illustrate this point.  Let's break down GDP into its four basic components -- personal consumption expenditures, gross domestic investment, exports and imports and government.

I agree with their conclusion:

While the overall trend of economic numbers is moderating that does not mean we have the driving force to get us out of the hole we're in.  People don't just start spending money; businesses don't just start investing.  Someone has to make the first move.  And that's where  Keynsean policies come into play.  A WPA would accomplish several tasks.  It would lower the overall long-term unemployment rate for a period of time.  In addition, it would also increase domestic investment in areas we need like infra-structure.  Finally, it would provide the force to get us out of the hole.  While the economic numbers are getting better we need that "something" to get the numbers moving higher.  And no other area of the economy appears ready to provide that push.

Obama's program works mainly through private employers, and is not focused on manual labor.  If as it appears, we are about to undergo a sustained period of over 10% unemployment, there is a real and pressing need to get even the relatively unskilled into even manual labor cleaning, building, rebuilding and repairing our infrastructure and parks. they should not just rely on the states and the private sector.  Congress and the Obama Administration should not wait.  Both for real, and important symbolic reasons connecting them to the FDR legacy, they should enact legislation now laying the foundation to re-establish the WPA and the CCC immediately and for the duration of double-digit unemployment.

What do you think?