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Aaron Regunberg: RI Needs a Modern Day Works Progress Administration

Friday, August 10, 2012

 

A few news channels ran a minor story this week about how bronze plaques in Roger Williams Park have been disappearing recently, pried from sidewalks and curbs, maybe to be sold for scrap, maybe to be kept as souvenirs. The plaques have a short message written on them: “Built by Works Progress Administration,” and are identical to similar plaques on thousands of roads, sidewalks, public buildings, parks, and other infrastructure projects in every state and nearly every city around the country. We’ve all probably seen them (many, many times) even if we haven’t registered having seen them—I myself have prominent memories of cleaning off the Works Progress Administration plaque at the dam outside of Chicago where I’d go fishing as a kid.

So what was the Works Progress Administration (or WPA, for short)? It was a direct job creation program implemented by Franklin Roosevelt’s administration during the Great Depression to provide employment opportunities to American workers on public projects. The basic idea was pretty simple—there were all these roads and bridges and projects that needed building, and all these out-of-work Americans that needed work. Why not put the two together to lower the unemployment rate, improve the economy, and get a bunch of great things (like a beautified Roger Williams Park) out of the mix?

The WPA was an incredibly effective program on all three of these levels, directly helping many millions of Americans and indirectly helping countless more. It began in 1935, over right-wing objections that it was a government takeover of some sort or another, and continued until it was no longer necessary (when World War II ended the Great Depression), at which point it was terminated.

Fast-forward to the present. The United States, and particularly Rhode Island, is still mired in a Great Recession. When you factor in all the workers that the official unemployment rate fails to capture, there are 20-30 million people in the U.S. who cannot find work. This is not because the private sector doesn’t have the money to hire. In fact, large corporations have recovered from the recession—they are making record-breaking profits and sitting on trillions of dollars. Yet businesses are still reluctant to begin hiring or investing in major capital improvements. We need millions and millions of jobs nationally, and thousands and thousands here in Rhode Island, and it’s pretty clear that the private sector isn’t going to be providing them in the near- or medium-term.

So why not take a clue from the successes of the WPA and have the public sector fill the gap? A temporary direct job creation program would increase unemployment quickly while serving vital community needs. A state-level public works initiative with on-the-job training would ensure Rhode Islanders without employment could get meaningful work until a real recovery takes place, while also allowing communities to make urgent and long-ignored improvements to their infrastructure—improvements that we need to make if we’re ever going to achieve a real economic recovery.

Take, for example, transportation. Multiple reports rank Rhode Island as among the worst states in the nation for transportation infrastructure and public transit, two factors that are widely accepted as essential foundations of a strong economy. Why in the world wouldn’t we want to invest in public transportation projects that put Rhode Islanders to work while repairing our roads, bridges, and rail systems in ways that improve our long-term economic fundamentals?

Or look at many of our communities’ crumbling schools. As my fellow Mindsetter Dan Lawlor consistently points out, thousands of our children in Rhode Island go to schools that were built a century ago and are literally falling apart around them. We could rebuild these ancient structures while providing unemployed Rhode Islanders work (work which, in turn, provides their families with disposable incomes that will be spent on Main Street and recycled throughout our economy).

Clean-energy investments. Green retrofitting to decrease fuel consumption. The list of important projects goes on and on. And—just as the WPA was disbanded after the U.S. economy recovered in the 1940s—so too could this program be liquidated once our Great Recession is finally over.

Best of all, direct job creation is actually the most cost-effective government recovery strategy on a dollar-to-jobs ratio. At the national level, studies of economic stimulus methods—of which there were a bunch back in 2009—have shown that, while $100 billion spent on tax cuts would indirectly generate 136,000 full time jobs within two years, and $100 billion spent on extended benefits programs like food stamps would indirectly generate 714,000 jobs, $100 billion spent to directly employ American workers would create 2.6 million full time jobs over two years (2.1 million directly and half a million indirectly). In comparison, the Bush-era tax cuts cost about $295 billion in lost revenue each year, most of which goes directly to the bank accounts of the nation’s wealthiest families.

These lessons apply here in the Ocean State, as well. Our most recently instituted tax break for the wealthiest Rhode Islanders (you know, the one that was promised to reduce unemployment and bring us all these jobs into our state…) has been estimated to cost Rhode Island $50-70 million each year. And that’s just the latest in a series of regressive tax cuts for the wealthy that have given us a top marginal income tax rate that is currently just one-fourth as high as the top rate was in 1996, when our unemployment rate was less than 5%. And that’s not even mentioning the 38 Studios handout or the money we spend on other foolish economic development strategies that could be redirected to a direct job creation program that is guaranteed to create employment opportunities and valuable public projects. Meanwhile, our failure to provide jobs for people who want them isn’t cheap, either (unemployment is, after all, the biggest cause of our deficit). The money to implement a WPA-like program is out there, and the need for such a program is clear. So it’s quite a shame that nobody, anywhere seems to be considering this option.
 

 

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Comments:

So basically, Aaron is advocating yet another round of "stimulus" spending in which the projects state and local governments in Rhode Island can't afford are paid for by people in Arkansas and Montana.

I don't see the word "union" anywhere in this proposal, which is ironic since the only way there would be another round of stimulus spending on this type of work is if it's doled out to union workers. This is not exactly going to put legions of non-union (but very much unemployed workers) to work.

Think about this, Aaron: what if the function of public sector employment is actually to provide services to the public, and not jobs? And what if we actually fixed our lousy public finances, lowered our tax burden, and actually attracted private sector employers to Rhode Island? If the Commonwealth formerly known as "Taxachusetts" can make it work, there's no reason Rhode Island can't either.

Comment #1 by Roger Williams on 2012 08 10

"Think about this, Aaron: what if the function of public sector employment is actually to provide services to the public?"

RG, I couldn't agree with you more on this. But I'm not sure how one might argue that investments in our crumbling infrastructure, energy efficiency, school systems, transit, etc. are not important public services. And--at a time when what our economy needs is more people spending on Main Street, which in turn gives more reason for businesses to hire, which in turn will put us on the path out of the recession--I'm not sure how giving people meaningful work and incomes until we have a real private-sector recovery (which would be hastened by this program) is also not a public service.

In regards to your second paragraph, the WPA was designed to only hire unemployed workers, and it would be pretty easy to design a modern-day program in a similar fashion.

Lastly, to your first point, people in Arkansas have never paid for spending in RI--low-tax states like Arkansas are hugely net receivers of federal spending.

Comment #2 by Aaron Regunberg on 2012 08 10

I'm not trying to call out Arkansas specifically - I'm saying that *federal* money should not necessarily be spent to cover up the budget shortcomings at the state and local level *inside* Rhode Island, any more than Rhode Islanders should be funding projects nominally paid for by state and local budgets *outside* Rhode Island.

It would be easy to design another WPA - which is how the last stimulus was pitched. Politically, it was doomed to failure since the party in power used the money to reward donors and allies (big labor) and used the rest to coverup budget shortfalls for existing projects, not fund new work. This is why the government stiumulus "created or preserved" one job for every twenty to thirty five *million* dollars spent, when it could track them at all.

We don't need a WPA - we need leaders who will stop implementing ruinously expensive neo-Keynesian economic policies, fix our nightmare of public debt, end our crony capitalist system of socialized risk and privatized reward, and let our market compete globally.

Comment #3 by Roger Williams on 2012 08 10

I agree with your premise that something is needed, but consider the dynamics of the time. The WPA, along with the PWA, CCC, Artists program, NYA, and the other New Deal programs were billed as short term employment programs. These programs, especially the WPA were managed locally, whereby the resident of a city or town went to city hall, registered and then went on the roll for 30 to 45 days. The person that signed up was ready to work, and work at whatever he was told to do. Do you see this happening today? In this day and age when people, especially the young can't take direction, supervision, or even come to work on time? Just ask those that lived through that period of time and discover how much they appreciated whatever could be done. Families saved by the mandatory $25 from the CCC worker, or the 20 cents a day pick and shovel job. I like the idea, but I don't think it will survive in this modern climate.

Comment #4 by Joseph Fazio on 2012 08 10

Aaron is right. We absolutely need a new WPA. But it's not going to happen here in Rhode Island. A much more achievable goal is to restore income taxes on the wealthy to pay for property tax reduction for small businesses and middle class families. Study after study has shown that property taxes do outsized damage to the economy, and that state income taxes on the wealthy have virtually no perceptible effect on the economy. Rhode Island has monumentally high property taxes. When we raised them even higher to pay for tax cuts on the rich, our economy mysteriously underperformed, and businesses started fleeing the state. So let's tax the rich to provide some tax relief for small businesses and middle class families.

Comment #5 by Samuel Bell on 2012 08 10




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