Developing strategies to end hunger
 

Jobs, Deficits, and the 2014 Hunger Report

On November 25, the Monday of Thanksgiving week, Bread for the World Institute will release the 2014 Hunger Report, Ending Hunger in America. Over the next three weeks, I will continue to preview sections of the report. 

The report offers a plan to end hunger in the United States by 2030. That’s more than enough time to get the job done, especially when you consider there are people in high places—for example, Jim Kim, president of the World Bank—who believe it is possible to end poverty globally by 2030.

With bold political leadership from the current and next U.S. presidents, Congress, governors, and state and municipal legislators—plus a public willing to do its part by holding these elected officials accountable—it wouldn’t take long at all to achieve dramatic progress against hunger and poverty in the United States. Bangladesh, Ethiopia, Peru and many other low-income countries have made such progress—if they can do it, there is absolutely no reason we can’t do it right here in the wealthiest country in the world.

Last week, I spoke about the need for a strong safety net with food stamps/SNAP as its center of gravity.  This week I want to share what the report has to say about jobs. The 2014 Hunger Report argues that the most important thing we can do to end hunger in America is to reach full employment—so that everyone who can work and wants to is able to find a job.

Full employment is step one of the report’s jobs agenda. Step two is to improve job quality, primarily by boosting the minimum wage until it is a living wage, and by making it possible for parents to balance their work and family responsibilities—for example, by making paid sick leave, flexible scheduling, and high quality child care available to all workers.

Achieving full employment is possible if the federal government takes meaningful steps to stimulate demand. Unemployment is high for one simple reason—a lack of demand. Prior to the Great Recession, which started in 2007, a housing bubble was the main source of demand in the economy. Prior to that it was a stock bubble—recall the dot.com era? The economy hasn’t had a sustainable model of growth for nearly two decades now, but we know that one is possible. First, let’s look at a chart.

Federal Deficit and Unemployment, 2014 Hunger Report
This is the most important chart in the 2014 Hunger Report. It shows the close relationship between the unemployment rate and the federal budget deficit. The blue line is the unemployment rate and the yellow line is the size of the federal deficit as a share of Gross Domestic Product. I prepared this chart using tools that are available to anyone on the Federal Reserve’s Economic Data (FRED) website.  

I’m drawing attention to this chart because, presumably, the main reason federal lawmakers are resisting spending government resources to reduce unemployment is because doing so will raise the budget deficit. That may be true in the short run. However, this chart very clearly refutes that argument over the medium or long run. The chart shows that bringing down the unemployment rate, by whatever means necessary, will reduce the federal deficit. Why? Because when more people are working, they have more money to spend, which in turn creates jobs and leads to increased tax revenue to replenish government coffers.

In a well-functioning economy, the private sector would be leading the way by investing its own resources in job creation. But we don’t have a well-functioning economy, mainly because we haven’t had an economy based on a sustainable model of growth since before the housing and stock bubbles of the past two decades. We’ve got to start building things that produce sustainable value again.

The 2014 Hunger Report calls for government to invest in revitalizing the nation’s infrastructure, both physical and human. Physical infrastructure includes roads, bridges, transportation systems, and the like. These are public goods. The private sector on its own has very little incentive to invest in these areas, so government investments wouldn’t be crowding out the private sector. In fact, only the federal government can provide sufficient seed capital and then leverage the private sector’s talent for technical innovation.  

To bring American infrastructure into the twenty-first century, according to the Society of Civil Engineers, we need an infusion of more than $3 trillion. Revitalizing the nation’s worn and decrepit physical infrastructure (even to the tune of a few hundred billion dollars) would create millions of construction and manufacturing jobs right there and shave entire percentage points off the unemployment rate. 

“Investing in human infrastructure” means boosting the professions that help build the human capital we need to continue to innovate and develop the technologies that enable our workers to compete in a global economy. These are our teachers, healthcare professionals, and especially the caregivers who make it possible for families to manage their work and family responsibilities.  

This is the thrust of the 2014 Hunger Report’s jobs agenda. Next week I will talk more about how ending hunger in America also depends on how we address the circumstances of marginalized populations, such as ex-offenders, low-income elderly people, and disabled people.  Todd Post

 

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