bill and hillary

As the 2016 Democratic presidential nominee, Hillary Clinton has the opportunity to correct a mistake made almost a quarter century ago. She can reaffirm the party's commitment to full employment.

In the summer of 1944, a time when the country was still fully enmeshed in World War II, the Democratic Party told voters:

"To speed victory, establish and maintain peace, guarantee full employment and provide prosperity -- this is its platform."

For the next 44 years, 11 party platforms reaffirmed the party's commitment to full employment. The wording was often longer and sometimes comparably brief, but at each election the Democrats wanted to go on record as the party committed to full employment. Or at least they did until 1992.

That was the year that Bill Clinton won the Democratic presidential nomination. Bill Clinton quite openly described himself as a new type of Democrat. He distinguished himself from much of the party by supporting the death penalty, calling for "ending welfare as we know it," and backing pro-business trade deals like NAFTA.


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For new Democrats, a platform plank on full employment was old-fashioned labor and union-type politics. Clinton and his team had no interest in making this sort of commitment, as a result the words "full employment" do not appear in the 1992 party platform.

It's now Hillary Clinton's party. She will have control of a clear majority of the delegates in Philadelphia next month. This means that if she wants to reaffirm the commitment to full employment, she will certainly have the ability to include the language in the platform. (Of course Bernie Sanders delegates are likely to be fully supportive, since in both his presidential campaign and his time in Congress, Senator Sanders has been a strong proponent of full employment policies.)

Full employment is likely good politics, but it is also good policy. The only time in the last four decades where most workers saw consistent growth in real wages was the low unemployment years of the late 1990s. The productivity gains of this period were broadly shared, with wage growth at the bottom end of the wage ladder actually somewhat more rapid than at the middle and top.

In addition, the people who benefit most from low unemployment are the most disadvantaged. The African-American unemployment rate averages twice the white unemployment rate, while the unemployment rate for African-American teens is typically close to six times the unemployment rate for whites.

Suppose we could knock down the white unemployment rate by a percentage point with corresponding gains for African Americans and African-American teens. It is very difficult to envision a social program that would provide the same benefit to Black teens as a 6 percentage point drop in their unemployment rate.

As president, Clinton will have an immediate opportunity to affect employment levels, since she is likely to come into office with at least two vacancies on Federal Reserve's Board of Governors. She will also have the opportunity to reappoint the chair, Janet Yellen, or name a replacement in her first year in office. If these appointees are committed to having the Fed maintain a policy of low interest rates it can have a substantial impact on the rate of growth of the economy and employment.

In addition to Fed policy, Clinton will also be designing budget and trade policies that can have a huge impact on both the level and composition of employment. On the budget, Clinton should be prepared to run deficits to finance infrastructure and other spending, especially when the economy faces a large and persistent demand gap (aka: secular stagnation). She should also support jobs programs for the most disadvantaged to give them a foot into the labor market.

Our $500 billion annual trade deficit is the major cause of the demand gap we face. Clinton should pursue policies to lower this deficit, most importantly by reducing the value of the dollar which will make US goods and services more competitively internationally. We will not get back the 4.4 million manufacturing jobs we've lost since Bill Clinton took office, but a smaller trade deficit could get back 1-2 million, and that would make a noticeable difference in the labor market.

It is often said that after parties approve their platforms they begin ignoring them immediately. There is much truth to this line. But it is more likely that a second President Clinton will take seriously a commitment that she has made than one she has not. It would be a big step forward if she reversed a mistake made by Bill Clinton and reaffirmed the Democratic Party's commitment to full employment.

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About the Author

baker deanDean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. He is frequently cited in economics reporting in major media outlets, including the New York Times, Washington Post, CNN, CNBC, and National Public Radio. He writes a weekly column for the Guardian Unlimited (UK), the Huffington Post, TruthOut, and his blog, Beat the Press, features commentary on economic reporting. His analyses have appeared in many major publications, including the Atlantic Monthly, the Washington Post, the London Financial Times, and the New York Daily News. He received his Ph.D in economics from the University of Michigan.


Recommended Books

Getting Back to Full Employment: A Better Bargain for Working People
by Jared Bernstein and Dean Baker.

B00GOJ9GWOThis book is a follow-up to a book written a decade ago by the authors, The Benefits of Full Employment (Economic Policy Institute, 2003). It builds on the evidence presented in that book, showing that real wage growth for workers in the bottom half of the income scale is highly dependent on the overall rate of unemployment. In the late 1990s, when the United States saw its first sustained period of low unemployment in more than a quarter century, workers at the middle and bottom of the wage distribution were able to secure substantial gains in real wages.

Click here for more info and/or to order this book on Amazon.

The End of Loser Liberalism: Making Markets Progressive
by Dean Baker.

0615533639Progressives need a fundamentally new approach to politics. They have been losing not just because conservatives have so much more money and power, but also because they have accepted the conservatives' framing of political debates. They have accepted a framing where conservatives want market outcomes whereas liberals want the government to intervene to bring about outcomes that they consider fair. This puts liberals in the position of seeming to want to tax the winners to help the losers. This "loser liberalism" is bad policy and horrible politics. Progressives would be better off fighting battles over the structure of markets so that they don't redistribute income upward. This book describes some of the key areas where progressives can focus their efforts in restructuring the market so that more income flows to the bulk of the working population rather than just a small elite.

Click here for more info and/or to order this book on Amazon.

*These books are also available in digital format for "free" on Dean Baker's website, Beat the Press. Yea!