Underestimating Humphrey-Hawkins

...Thinking Aloud UNDERESTIMATING HUMPHREY-HAWKINS BY BAYARD RUSTIN The Humphrey-Hawkins Full Employment and Balanced Growth Bill has been treated to remarkably diverse and conflicting interpretations It has been lauded as the answer to eliminating unemployment, condemned as an inflationary boondogle, even damned with faint praise And its true import is being further obscured by the widespread belief that it is now a "watered-down" compromise, little more than a symbolic gestuie The nearly complete opposition of businessmen and conservatives to the bill (as well as to the idea that full employment should be the overriding goal of national economic policy) is, of course, not surprising—although a strong case can be made that particularly for these interests resistance is shortsighted The paradox is that while business hostility has not declined with the supposed weakening of the legislation, enthusiasm in the liberal community seems to be inversely related to the prospects for passage Given the persistence of intolerable levels of unemployment, the consequent suffermg in black, poor and urban communities, and the substantial merits of the bill, this attitude is puzzling It could prove tremendously costly, too, not only by diminishing the chances of adoption, but also by undercutting the momentum for social justice that the bill promises to engender In short, I believe an unwarranted and exaggerated skepticism about Humphrey-Hawkins could prove self-fulfilling One cause of much of the erosion of support may be the notion, widely promulgated in the press, that since the latest version of Humphrey-Hawkins is the product of give-and-take between the Carter Administration and the two chief sponsors—the late Senator Hubert H Humphrey (D -Minn ) and Representative Augustus F Hawkins (D -Cal)—the original objectives have been surrendered In addition to faulty journalism, two aspects of the present political landscape would appear to help explain the waning warmth for Humphrev-Hawkins Bayard Rustin, a frequent New Leader contributor, is executive director of the 4 Philip Randolph Institute First, disappointment with the Carter Administration has spilled over into disillusionment with the bill Many liberals, blacks and trade umomsts have never really felt at home with Jimmy Carter, and his initial year in office has not overcome their uneasiness The fear is that the White House's backing of Humphrey-Hawkins is a pro forma offering, designed to placate labor and the black community and permit the continuation of an approach based on the misguided conviction that economic recovery depends on the restoration of business "confidence" and a balanced budget This suspicion is not without justification—as was made clear by the President's decidedly middle-of-the-road economic report to the Congress, with its definition of full employment as 4 9 per cent unemployment Ultimately, however, neither the Administration's motivations in endorsing the Humphrey-Hawkins bill nor finding fault wi' its current form can detract from the significance of Jirr..»iy Carter's approval It has placed the issue of unemployment squarely at the center of national discussion for years to come The second, more troublesome factor contributing to the diminishing ardor for Humphrey-Hawkins is a weakening of the liberal community's traditional concerns With economic stagnation feeding political inertia, environmental protection and other quahty-of-hfe issues have tended to supplant ending poverty and more equitable income distribution as the most important liberal priorities As a n suit, the progressive commitment to economic growth as a prerequisite for equalizing and expanding the opportunities of the country's underprivileged has become uncertain and confused Fundamentally, the case for Humphrey-Hawkins is the alternative it offers to the economics of contrived scarcity that has dominated post-World War II policy-making In the 32 years following passage of the Employment Act of 1946, the United States has not come close to achieving, much less sustaining, full employment and production During the '50s, many economists pointed to the fnctional unemployment considered inevitable in a complex industrialized economy and advocated accepting a 3 per cent rate of joblessness as the equivalent of full employment Under the New Economics of the Kennedy and Johnson Administrations, despite higher levels of activity, the goal was raised to 4 per cent Unfortunately, even that has never been reached Since 1960, this country has averaged 5 2 per cent joblessness, and the latest recovery has been exceedingly slow and incomplete A sustained 5 per cent rate of real growth—itself a virtually unprecedented and highly doubtful feat—would not push unemployment below 5 per cent until about 1981, and not to 4 per cent until 1983 Another imperative addressed by Humphrey-Hawkins is the need to halt the slide toward a dual economy During Jimmy Carter's first year in office, unemployment among whites went down dramatically, but among blacks the improvement was marginal The decline in overall unemployment from 7 8 per cent in December 1976 to 6 4 per cent a year later consisted largely of a drop m white joblessness from 7 1 to 5 6 per cent, during the same period, black unemployment moved far less dramatically from 13 4 to 12 5 per cent Moreover, because government statistics ignore both those who have become so discouraged they have given up looking for work (30 per cent of whom are black), and part-time workers who need and want full-time positions but are unable to find them (20 per cent of whom are black), the true extent of black joblessness is greatly understated In the case of black teenagers (and the situation is practically as bad among blacks in their 20s), a low level of previous participation in the labor market adds to the distortion, thus the official black teenage unemployment rate is 40 per cent, and the actual rate is closer to 60 per cent That is an especially tragic statistic, for it means thousands of young blacks are growing up without the job experience that is vital for a successful adult working career—yet there is scant appreciation that employment problems while young carry over into later life High unemployment also is the biggest single factor frustrating the black struggle for equality As economist Lester Thurow has noted, with each year of high unemployment "the structure of unemployment becomes more unequal, the distribution of skills becomes more unequal, and economic integration becomes more and more remote " But we cannot expect the economy to improve either in its own terms or in the resolution of pressing social problems without a basic change in the way we approach it Humphrey-Hawkins would help initiate the process It would not by itself insure a healthy, productive and just economy, yet it would prompt significant steps in that direction The bill counteracts the tendency to accept ever-rising levels of joblessness as full employment, for example, by declaring a national commitment "to translate into practical reality the right of all Americans who are able, willing, and seeking to work to full opportunity for useful paid employment at fair rates of compensation " Its real innovation, however, is the establishment of concrete goals for full employment It would instruct the President and the Congress to exert every available effort to reduce adult (20 years or over) unemployment to 3 per cent and total unemployment (16 years and over) to 4 per cent—a level of employment that has only sporadically been achieved in the United States The goals may seem unduly high They would allow almost 4 million people to be out of work, a disproportionate percentage of them being blacks, other minorities and youths It is important, though, to place the matter in perspective Republican economists like Herbert Stein and Arthur Burns argue that 7 per cent unemployment should be considered the natural full-employment rate, Brookings Institution liberals accept 5 per cent Compared to prevailing standards, therefore, Humphrey-Hawkins' goals are ambitious, and they are merely interim targets that are to be followed by efforts to reach full employment "as soon as possible " The addition of a flexibility clause to Humphrey-Hawkins has contributed most to the impression of its having been drastically, if not fatally, weakened This would allow the President to propose modifications of the employment goals in the third year and subsequently, but his recommendations would have to be approved by Congress If the President had not used the last-resort jobs provision of the bill or taken other specified measures to stimulate employment, he would probably find it politically difficult to seek any modification in the prescribed timetables The burden of proof is therefore placed on the President and the Congress should they want to justify elongating the attainment period Humphrey-Hawkins has similarly been misinterpreted as permitting the perpetuation of existing policy, to be followed after two years—if the President deems it necessary—by a massive public works program In actuality, it would mandate that in his annual economic report to Congress the President must address areas of national concern—health, energy, food policy, the environment, etc —as ends in themselves and means of fighting unemployment It is equally inaccurate to describe the last-resort job provisions as discretionary The bill calls for their use after the first year if they are needed to meet the schedule for reducing unemployment, neglecting them would violate the clear intent of the law Some liberals have expressed concern that by incorporating anti-inflation objectives, Humphrey-Hawkins may permit employment to be held hostage to price-restraint efforts It would surely be a bitter hoax if the major legislative commitment to full employment sanctioned the very trade-off notion that is largely responsible for our prolonged experience of high unemployment In fact, the anti-m-flation "objective" of "preventing a nse in the annual rate of consumer and other prices above such rates on the date of enactment" has been dropped in the compromise version Instead, the bill states that mutually reinforcing programs shall be used to the "extent practicable" m choosing the means to achieve both unemployment reduction and reasonable price stability The clear emphasis is on providing jobs A final reason for confusion about Humphrey-Hawkins is a misapprehension about the nature and purpose of the bill It is not an emergency or temporary job-creation program Rather it is an attempt to forge a coordinated government response to the fundamental problems of economic instability by fusing a framework for more effective policies with a statement of measurable goals At the same time, Humphrey-Hawkms does contain a broad outline of appropriate programs measures to insure sufficient demand and economic growth—such as tax cuts, public spending, and monetary policv—and to reduce structural unemployment—such as youth employment and manpower training programs The supporters of Humphrey-Haw kins ha\ e no illusions that it will solve all our problems But we do believe that its enactment would so shift economic and social policy-making at the national le\el as to create an exciting new opportunity for movement toward soual justice and real economic progress...