The Democratic party has long prided itself on being the party of workers. But an extraordinary thing happened the last few weeks in the debate over Obamacare. When the Congressional Budget Office said the law would reduce the number of full-time-equivalent workers by 2.5 million by 2024, Democrats considered it not a bug but a feature. The law was liberating people from the constraints of working.
This tack suggests an opening for Republicans. As the party struggles to forge a new, more appealing identity, it should endeavor to become the party of work.
As some party leaders are beginning to realize, Republicans have been overinvested in debt reduction as an agenda item and in entrepreneurship as an ideal. Both are important things, and they are worthy of being pursued and celebrated, respectively. But they have limited political salience. For all its importance, the federal debt is a bloodless green-eyeshade issue, and, as our colleague Ramesh Ponnuru often points out, most people aren’t and never will be entrepreneurs.
Work is different. It stands for a constellation of values and, like education, is universally honored. Even Democrats usually try to associate themselves with it. Every night during prime time of their 2012 convention — after the encomiums to abortion were over — Democrats invoked hard work. The high point of the convention was a moving portrayal by Michelle Obama of her father struggling to get up and go to work every day despite his multiple sclerosis.
For Republicans, who will always be the party of social orderliness compared with the Democrats, work is the most basic cultural issue, and one that is an easy sell compared with others; whereas it is difficult, for example, to talk about the central importance of marriage before childbearing to personal advancement.
Work is a proxy for all sorts of desirable habits and attitudes. Work means responsibility. It requires diligence, punctuality, and sociability.
It is no accident that the biggest Republican political and policy triumph since the 1980s is welfare reform. It was a change that put Republicans on the side of personal responsibility and work, and one that was hugely successful because it moved welfare recipients into the job market.
The Republicans should be the party of work, in multiple senses. They should extol work and demand it; they should advance a broad job-creation agenda and narrowly tailored measures for the long-term unemployed; and they should fight every government disincentive to work.
Worklessness is a central challenge of our time.
In October of last year, America’s labor-force-participation rate, which reflects the number of Americans with jobs or actively looking for jobs, fell to its lowest level since 1978. Some of this is due to the aging of the population and rising higher-education enrollment. But when we take account of the surge in part-time employment, we see that full-time-equivalent employment is well below trend.
One consequence of stagnant employment growth has been the emergence of a heartbreakingly large phalanx of long-term unemployed: 3.6 million people who have been looking for work and haven’t found it for six months or more. When we factor in workers who want full-time work but who’ve had no choice but to work part time for months, and in some cases years, the number is larger still.
The numbers are even more disturbing when we focus on adult men. Nicholas Eberstadt, a political economist and demographer at the American Enterprise Institute, writes, “Over the past 60 years, the employment[-to-population] ratio for adult men has plummeted by about 20 percentage points. Which is to say: If America’s male employment ratios were back at their Eisenhower-era levels, well over 20 million more men would be at work today.”
What are the effects of worklessness?
As one would expect, it blights people’s economic prospects. “Even in good economic times,” Robert Rector and Rachel Sheffield of the Heritage Foundation write, “the average poor family with children has only 800 hours of total parental work per year — the equivalent of one adult working 16 hours per week. The math is fairly simple: Little work equals little income, which equals poverty.” In Expanding Work Programs for Poor Men, Lawrence M. Mead, a professor of politics at New York University, observes that the worklessness problem persisted even during the tight labor markets of the late 1990s. Worklessness contributes to poverty when we are at the peak of the business cycle as well as the trough.
As for long-term unemployment, we know its devastating effects on workers. Besides the tremendous financial blow, it erodes their skills, and employers are less likely to hire people who have been out of the work force for a long time. More fundamentally, it eats away at people’s sense of identity and even increases the odds that they will commit suicide. Work is good for people.
One of the most disturbing developments of the past 40 years is that though the United States as a whole has grown more affluent, poverty and worklessness have grown more concentrated. Even as racial segregation has declined, the physical separation of the jobless poor from the rest of society has continued apace.
The problem with this extreme concentration of poverty and joblessness is that children who grow up in these environments find it very difficult to acquire the norms and habits essential to flourishing in mainstream American life, and as a result they find themselves stuck in place. According to Scott Winship of the Manhattan Institute, 70 percent of children raised in low-income households never make it into the middle class as adults, and one of the reasons is that many children raised in low-income households are extremely isolated from the world of work.
The factor in all this that liberals have been emphasizing the most in recent months has been stagnation in the minimum wage. It is true that a recent Congressional Budget Office analysis found that a substantial increase in the minimum wage would lift 900,000 low-wage workers out of poverty. But a minimum-wage hike would be very poorly targeted if our goal were to help poor families. Specifically, the CBO found that only 19 percent of the income gains that would follow an increase in the federal minimum wage to $10.10 would go to households whose earnings fall below the poverty line. And the CBO also projects that the U.S. work force would become smaller by an amount equal to 500,000 workers as employers found large numbers of Americans unemployable at a higher wage floor. That is, a minimum-wage hike risks making the worklessness problem worse rather than better.
So what can we do about the worklessness crisis?
First, Republicans need to back macroeconomic policies that will bring us closer to full employment. David Beckworth and Ramesh Ponnuru have argued in these pages that if the Federal Reserve keeps the growth of nominal spending and nominal income on a steady path, we will see a far more robust labor-market recovery. Achieving full employment is a crucial first step, as periods of full employment are also periods during which inflation-adjusted incomes rise for all households, including those at the bottom of the ladder.
Tax reform, and particularly cuts in taxes on business investment, has great potential as a spur to job creation. In 2006, the economists Kevin A. Hassett and Aparna Mathur found that higher corporate taxes lead to lower wages. The higher wages that would result from lower corporate taxes would go a long way toward making work more attractive. And, on a smaller scale, Republicans should, of course, oppose anything that tends to reduce jobs or lock people out of the job market, from restrictions on carbon emissions to occupational-licensing requirements at the local level.
All of this would be to the end of achieving full employment, but that is easier said than done. Some thinkers, such as Evan Soltas, observe that we’re now looking at a segmented labor market, in which finding work is relatively easy for many people while the long-term unemployed languish on the sidelines. Essentially, workers in the economic mainstream feel more and more comfortable quitting their jobs to find something better, as they’re not at all concerned that jobless workers waiting in the wings pose much of a competitive threat.
So we will need targeted policies to address the labor-market challenges facing workers stuck at the bottom. One important step would be to reduce the minimum wage for long-term-unemployed workers. As Michael R. Strain of the American Enterprise Institute has explained, employers hiring workers who’ve been out of the labor force for a long time are taking a risk. Lowering the minimum wage for these workers reduces the cost of taking this risk, thus making it more likely that employers will do so. He also proposes a federal wage subsidy to shore up the living standards of these workers, the cost of which would be offset over time as the formerly long-term unemployed gained the experience and the skills they need to earn higher, unsubsidized wages.
This points to another thorny problem. A party of work will also need to address the ways in which means-tested government benefits can actually discourage work. Eugene Steuerle of the Urban Institute has written extensively on income cut-offs for Medicaid, food stamps, and other benefits that make it costly for many poor workers to earn more income. This is one of the reasons that Obamacare, according to the CBO, discourages work — people lose the subsidy as their income rises.
One idea, which has been championed by everyone from Harvard economist Edward Glaeser to Representative Paul Ryan, the chairman of the House Budget Committee, would involve consolidating transfer programs. This would allow for a work-friendly simplification of the way in which people are phased out of these programs.
More broadly, there are two countervailing big proposals for a new version of welfare reform. On one hand, Robert Rector wants to restore the badly eroded federal work requirement in Temporary Assistance for Needy Families and extend it to other means-tested programs, such as food stamps and public housing. On the other, Oren Cass has called for replacing today’s complex welter of low-income programs with a state-administered safety net for poor Americans who are not working and a direct federal wage subsidy for those who are — an idea that Florida senator Marco Rubio has embraced in a new legislative proposal. Either approach — one depending on federal rules for these programs, the other transferring them to the states — would encourage work.
This agenda should be wrapped in an ethic of respect for and insistence on work. Never should anyone associated with the Republican party say that there are “jobs that Americans won’t do.” Republicans should honor the dignity of every job, celebrating its economic contribution no matter how small and the effort of the laborer no matter how humble. The other side of the coin, though, should be a stern, no-nonsense demand that able-bodied adults fend for themselves.
The party could do worse than to take inspiration from this statement of Lincoln’s in 1861: “Whatever is calculated to advance the condition of the honest, struggling laboring man, so far as my judgment will enable me to judge of a correct thing, I am for that thing.” He was on the way to Washington, to take leadership of a party of work.
– This article first appeared in the March 24, 2014, issue of National Review.