Beyond Infrastructure

The topic of the moment, in the wreckage of the debt ceiling fight and the S&P downgrade, is to ask what the government can do to boost employment.  The data from Gennaro Zezza’s most recent post suggest that one of the answers to this question is “stop firing so many people.”

Beyond stemming the losses in government payrolls, what else can be done to actively create jobs?  (All new suggestions for boosting aggregate demand or dealing with the unemployment problem should include Peter Orszag’s just-shy-of-inspiring disclaimer from his latest Bloomberg column:  “To those who will scoff that even these proposals are politically impossible, I’d note that the scope for constructive legislation has now become so narrow and the costs of doing nothing so high, we need to make ambitious proposals and hope that the legislative constraints can be adjusted.”  Huzzah?)

Jared Bernstein points out that the administration’s current proposals contain two ideas that would maintain demand rather than boosting it, and one idea that would stand a chance of helping:  investing in repairing roads and bridges.  Due to the relative capital intensity of this last item, however, Bernstein suggests that an infrastructure program focused on repairing and retrofitting schools would have a more dramatic employment effect.

The Levy Institute’s Rania Antonopoulos, Kijong Kim, Thomas Masterson, and Ajit Zacharias have looked at another solution to this problem.  Their research concludes that while the case for physical infrastructure investment is compelling, there is a public works approach that would deliver an even more impressive bang for the buck:  investment in social care.

The research group proposes a direct job creation program that puts people to work addressing our deficits in early childhood care and home-based healthcare for the elderly and chronically ill.  They modeled a $50 billion investment in both infrastructure and community-based social care delivery, and found that—due in large part to the higher labor intensity of care work—every dollar invested in social care would have twice the employment impact as a dollar of infrastructure investment.

Their Working Papers and Public Policy Brief can be read here, here, and here.  For an abbreviated version, see the recent One-Pager.  (For those of you who are (a) new to the Levy Institute website, and (b) short on time, One-Pagers are short, topical pieces that highlight policy-relevant research at the Institute—and they are indeed one page.)