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People Must Live By Work Book Club: Week 6 (Chapter 5)

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Last week, the online book club of my new book (available to the reading public here and here) discussed how the 1946 Employment Act jettisoned the New Deal’s legacy of direct job creation in favor of an embrace of Keynesian economic planning.

This week, I’m going to turn my attention to the next “big boom” in progressive policymaking, the War on Poverty, and look at why jobs weren’t a part of the plan to win the war.

Summary:

As I’ll talk about more in the research section, lots of people have written about jobs and the War on Poverty, with quite a few theories advanced. Some have stressed the intellectual currents of anti-poverty in the 1960s, which pointed in other directions; others point to the lack of institutional capacity within the Federal government to do jobs policy in the wake of the 1946 Employment Act; still others argue that LBJ’s political commitments on the cost of the War on Poverty and his penchants for avoiding redistribution conflicted too strongly with a direct job creation approach.

I see some other factors at work:

First, the Labor Department led by Willard Wirtz, which is usually described as the champion of jobs polic within the War on Poverty, turns out to have been much less of vocal advocate:

In this, Wirtz and the Labor Department dissented from the CEA/OEO orthodoxy – but only to a degree. In the same “Unconditional War on Poverty” memo in which the Labor Department argued in favor of a jobs-first strategy, the authors agreed that “the cycle of poverty and ignorance has got to be broken” with “a vast increase in the education of young America” and so strongly favored jobs training that they argued “training is employment.”47 The actual jobs programs proposed were rather minor. They suggested reforming the US Employment Service to develop more placements for low-skilled workers, a voluntary work-sharing program, and so forth, with the most concrete proposal being government guarantees of investments from union pension funds in poverty areas.

…In 1963-64, the Labor Department had broken with the fiscal Keynesian orthodoxy that a rising tide would lift all boats. But it mostly dissented in theory; it was not a strong advocate for direct job creation. The Department had many irons in the fire: a minimum wage increase, income tax credits for the working poor, and wage subsidies for employers to hire the unemployed among them. These proposals represented equally important options for dealing with poverty among those who worked and those who were unemployed. Labor’s pre-existing commitment to manpower training programs – inherited from the Area Redevelopment Act and Manpower Training and Development Act – was perfectly compatible with the War on Poverty’s consensus that the problems of the poor were best dealt with by making the poor more employable.

Second, there was a failure of synthesis between those within the Labor Department who were interested in direct job creation, and those activists in the social democratic wing of the Civil Rights Movement – A.P Randolph and Bayard Rustin, who had worked to ensure that the 1963 March on Washington would be for “jobs” as well as “freedom” and who had recently worked with our friend Leon Keyserling to design the Freedom Budget – who had preserved the intellectual legacy of the New Deal. As a result, the Labor Department had to re-learn direct job creation from scratch, rather than draw on the lessons of the past.

Third, those within the War on Poverty bureaucracy who were advocates for direct job creation tended to have a disjuncture between their policy preferences and their analytic/theoretical frameworks:

…in both Harrington and Moynihan we see these repeated inconsistencies – demanding “massive public works” but then providing modest gradualist jobs proposals; seeing unemployment as the cause of poverty and the result of poverty. Their proposals didn’t match their underlying theory of poverty. As Alice O’Connor points out at length, their shared focus on deviancy and pathology, initially used to dramatize the poverty problem, backfired and then fueled an individualist approach to anti-poverty programs and a growing popular backlash against the poor.77 Neither Harrington nor Moynihan were ever particularly clear whether family dysfunction and pathology were a consequence of or the cause of poverty and unemployment. In some places, they would argue that jobs could eliminate pathological family structures by restoring the earning power and marriageability of poor (black) men; in other places, they would argue that poverty was “more a moral and cultural crisis than a material one. Indeed it is frequently the former that produces the latter.”78

Because of this lack of clarity, O’Connor notes, this argument would eventually lead people to use the diagnosis offered by Harrington and Moynihan as arguments against their policy prescription, that “broken homes, illegitimacy, and female-oriented homes” rather than unemployment were the causes of “the big-city Negro’s plight.” On this basis, job creation efforts of the kind recommended by the Kerner Commission wouldn’t help.79

In my own research, I found that the heart of the story wasn’t what didn’t happen within the War on Poverty task forces in 1964, but rather what did happen in 1965-1967. Gradually, both the faint-hearted advocates in the Labor Department and the new converts within the Office of Economic Opportunity (who had lost faith in the human capital approach to anti-poverty after the troubled rollout of the Job Corps) engaged in a process of policy learning a la Hugh Heclo that led to them developing more ambitious and more well-elaborated proposals for DJC, and pressuring the Johnson Administration as a whole to get on board.

Even in LBJ’s 1968 campaign manifestos, when election-year incentives to create jobs peaked, Labor was unable to break through the president’s budgetary caution. After his election, the President’s staff mobilized for only a modest package of $2.1 billion for work training programs that would have covered 1.3 million trainees, and an expansion of the JOBS program to the 500,000 already envisioned by the Labor Department.125 Even at this date, LBJ wouldn’t go beyond job training. The OEO fared little better than their allies in the Labor Department. Despite an initial plan to spend $1-2 billion a year and the agency’s own proposals for $10 billion a year to close the poverty gap (i.e, how much money would be required to move all households in poverty above the poverty line), the OEO’s growth was stymied.126

The Johnson Administration’s failure to embrace the conclusion of its own task forces points to the limits of bureaucratic autonomy during the War on Poverty. On the inside, Labor and the OEO made significant inroads into the intellectual universe of the Federal government, but they weren’t able to move from reports and proposals to budget lines and programs in action. By contrast, the CEA and the “core economic departments” (the Budget Bureau, the Council of Economic Advisors, and the Treasury Department) had much more sway over economic policy than their counterparts during the New Deal or even during the Truman Administration did, which they used to pump the brakes on the War on Poverty.

Even if Labor and the OEO had moved the Johnson Administration as a whole, it’s unclear whether they would have been able to break through in Congress. Unlike during the New Deal, the timing and sequence of this process of policy learning was off. In the Roosevelt Administration, djc advocates developed their theories early on, so that by the time they were ready to move, FDR still had his political capital and his working majorities in Congress. During the War on Poverty, Federal agencies only came around to DJC several years after the high-watermark of LBJ’s political power: the mid-term elections of 1966 made it more difficult for LBJ to get legislation through Congress; inflation had damaged the credibility of the Johnson Administration’s experts and stacked the deck against further increases in spending; and of course the Vietnam War had made the choice between guns and butter one in which domestic programs for the poor were unlikely to win.

Inspiration:

This chapter proceeded more from secondary literature than previous chapters: when I was designing this research project, the War on Poverty was coming up a lot in books like Margaret Weir’s Politics and Jobs, Judith Russell’s Economics, Bureaucracy and Race, and Frank Stricker’s Why America Lost the War on Poverty. So I knew from the outset that I would have to look into the War on Poverty as a missed opportunity for direct job creation.

Image result for lbj library

However, when I finally got into the well-air-conditioned LBJ Library in a week where the temperature was 104 degrees and 100% humidity every day – note to scholars: never do research in Texas in July – I found report after report arguing for direct job creation. These reports, written by the Task Forces on Adult Work and Training Programs, Urban Employment, the L.A Riots, Adult Work Programs (which was separate from the Adult Work and Training task force), and Urban Employment Opportunities (which was separate from the Urban Employment task force) needed to be explained, needed to be fit into the broader historiographical narrative of a War on Poverty that had supposedly rejected this approach.

Research:

So as I discussed above, a lot of scholars have looked at this subject. And in contrast to previous chapters, I find myself broadly in agreement with their approaches. I think that O’Connor, Patterson, Bernstein, and Stricker are right that the new theories of poverty didn’t jibe with DJC in the same way that left-wing economics of the 1930s and 1940s had. Similarly, I think that Weir and Russell’s arguments about institutional capacity for DJC have a lot of merit – DJC had been deinstitutionalizationed in the wake of the 1946 Employment Act, and didn’t have purchase compared to the post-synthesis fiscal Keynesians within the Council of Economic Advisers. Finally, I agree with Bernstein and McKee that LBJ’s own political commitment to a pain-free anti-poverty campaign made it more difficult to get the president to agree to policies which required substantial new budgetary authority.

However, what I found in my archival research is that temporal disjuncture bettween policy and politics was absolutely key to the story. Plenty of policy learning had happened during the New Deal, often through significant setbacks (the shutting down of the Civil Works Administration in 1934 or FDR’s ill-fated attempt to balance the budget in 1937). The mideterm elections of 1934 and FDR’s landslide re-election in 1936 meant that those setbacks were not fatal, that the New Deal had time to learn their lessons and made necessary changes. But the War on Poverty only had real political momentum for a brief few years between 1964 and 1966, and after the midterm elections in 1966, there was no opportunity to apply new lessons.

What I’m getting at here is that timing really matters. If the theory of the poverty gap (i.e, that you could quantitatively measure the gap between the incomes of those living in poverty and the amount of money needed to bring them out of poverty) had come to prominence in 1963 instead of 1967, the initial task forces might have hit on a different strategy for fighting the war that LBJ had proclaimed. If the growing pains that the OEO experienced in its training programs had taken place before and not after LBJ’s landslide victory in 1964, there would have been an opportunity to change approaches while majorities still existed to give them legislative form.

Relevance:

As I see it, Chapter 5 has two main lessons for current policymakers. First, we should beware any approach to social and economic policy that assumes that markets will always function smoothly. Not only is the business cycle still with us – requiring that our policies must work in both tight and loose labor markets – but as we can see with the Affordable Care Act, it turns out that it’s actually quite difficult to get very tightly-regulated markets to function perfectly. Indeed, with the shift towards Medicare-for-All, I think we’re starting to see a movement in the Democratic Party away from indirect subsidization to direct provision. And as Suzanne Mettler has recently pointed out in The Government-Citizen Disconnect, the more visible our policies are, the more they will mobilize people to vote in their defense.

Second, because moments of opportunity are brief, we have to get our ideas right ahead of time. The New Deal is highly unusual in that FDR had working majorities from 1933-1937; LBJ’s Great Society only had 1965-1966, and the Obama Administration was only able to get major legislation from 2009-2010. Given that fact, we have to be sure that our policies are going to work before we put them into place. (While I’m not the biggest believer in states as “laboratories of democracy,” this is one place where blue states can help us stress-test and catch errors ahead of time.) This is why, when it comes to new proposals for Job Guarantees or Green New Deals, getting the details right is really important. (More on this forthcoming at some point.)

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