Philip Harvey [NJFAC]; Paul Krugman: Why not a WPA?
Coalition, National Jobs for All
According to NJFAC Advisory Bd member Prof. Philip Harvey, "the current stimulus, which
appropriated $787 billion and, according to Administration economic advisers, will
create or save no more than four million jobs, costs a staggering
$200,000 per job. If those funds had instead been spent solely for direct job creation where it is needed most—to renovate dilapidated housing, provide child
and elder care, expand recreational and cultural activities, improve parks and
other public spaces, undertake energy conservation measures and the like, the cost per job would have been a fraction of $200,000. Assume, for
example, that these newly employed workers earned the current average weekly
wage ($618). Add to this an additional third of the wage for materials and supplies ($207) and another amount for benefits ($140).
This comes to $966 per week or an annual
cost of $50,232 per job. Instead of four million jobs, this strategy would have
created 15 million jobs—enough to wipe out official unemployment. This figure
does not even include the additional private sector jobs that would be created
by this stimulus. Nor take into account the extra revenues from taxes paid by
millions of newly employed workers or the reduced public expenditures for
unemployment insurance and other benefits."
The Conscience of a Liberal: Paul Krugman Why not a WPA? November 6, 2009
A question I’m occasionally asked at public events is, why aren’t we creating jobs with a WPA-type program? It’s a very good question.
As it is, job-creation efforts are generally indirect. Tax cuts and transfers in the hope that people will spend them; aid to state governments in the hope of averting layoffs. Even infrastructure spending is routed through private contractors.
You can make a pretty good case that just employing a lot of people directly would be a lot more cost-effective; the WPA and CCC cost surprisingly little given the number of people put to work. Think of it as the stimulus equivalent of getting the middlemen out of the student loan program.
So why aren’t we doing this? Politics, of course: government is the problem, not the solution, even when it is, you know, the solution, and cheaper than running things through the private sector.
Still, it might be worth discussing whether we shouldn’t try to include an, um, public option in stimulus, too.http://krugman.blogs.nytimes.com/2009/11/06/
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National Jobs for All Coalition
http://www.njfac.org