Approximately 25% of Americans hold a Bachelor’s degree. Living in the Washington bubble, I was genuinely taken aback at this fact. At happy hour in Dupont, I can hear the sneers when I explain that I only hold an undergraduate’s degree. Then I thought a bit longer. I grew up in Wheaton, MD. By the time I reached middle school, my mother moved my sister and I a few towns over. The middle and high school in Wheaton had had a poor reputation for producing college-bound graduates. While I was no longer a minority, my new high school was undoubtedly diverse. I loved it, found my niche of girlfriends and every one of us graduated from high school, college, and some are headed to their Master’s.
From facebook, I have friended former classmates from Wheaton and I would ballpark that at least half do not have their Bachelor’s. Looking at my high school, even though it was new with great teachers, a good portion of old friends and acquaintances do not have a Bachelor’s either. Living in such close proximity to the Washington bubble, which let’s be honest, is an elitist city (at least the northwest quadrant), I can only imagine how slanted these “statistics” are. For those unaware, before Washington became a live-in city, the majority resided in surrounding Northern VA and MD - a ring of wealth that has in the past ten years seeped into the city. Gentrification in DC came at a cost to a sizeable, poor African American population, where rates of Bachelor’s degree attainment are astronomically low. Head 100 miles in any direction outside of DC and it is a similar scenario.
So what’s my point? Yesterday, House Majority leader Eric Cantor (VA-R) attempted to “kill” Obama’s Job Plan. For the majority of Americans that have no Bachelors, the job plan places priority on addressing unemployment through on-the-job-training, greater access to job counselors, extended unemployment insurence, and helps alleviate employers’ anxiety to hire in the current market. I am not trying to convince anyone of the plan, but there are certainly positive aspects. Yesterday’s threats to “kill” the initiative, however, heightened partisan identies and will likely instigate further obstacles to actively address unemployment. Check out below from Freakonomics on the Job Bill specifics. I will continue to follow this and post as necessary.
”- It’s reasonably well targeted. Unemployment insurance extensions will get spent. Infrastructure money gets spent and also builds stuff. As for the payroll tax: Who knows if it gets spent, but the point is to stimulate hiring, rather than spending.
- It’s reasonably well designed. The biggest problem with a payroll tax is that firms get it even for employees already on the books. But this time, the biggest payroll tax cut is only for firms raising their payrolls. This will yield a much bigger bang-for-each-buck. Early analyses have yet to realize how important this is.
- It’s reasonably timely. The usual argument against fiscal policy is that the spending only occurs by the time the economy is booming again. There’s no chance of that occurring. Perhaps this provides the confidence boost we need to counter double-dip concerns.
- It’s reasonably well focused. Tax credits for hiring the long-term unemployed will be very helpful in preventing the current recession doing long-term harm.
- It’s reasonably clever, removing the incentive to fire people, rather than reduce hours. (aka “Job sharing”)
- It’s reasonably evidence-based. Having the unemployed talk to a jobs counselor before extending benefits can have huge effects at minimal cost.
All told, it’s a very real plan and very specific. None of this is magic: Government gets more active when the market fails, and we pay it back when the market booms. This is all standard economics. There’s no gold-buggery, voodoo austerity or laughable Laffer-y. Obama’s not making up economics, he’s using simple tools to solve the obvious problems. And with long-term real interest rates close to zero, there’s no risk of this crowding out private investment.”
