Does this Great Recession need a WPA?

Facing an unemployment rate of 25 percent and the economic turmoil of the Great Depression, President Roosevelt’s administration proposed and congress passed the National Industrial Recovery Act in May of 1935.

A major component of the act was establishment of the Works Progress Administration.

The WPA was funded with an initial $4.8 billion (approximately $76 billion in today's dollars). The program initially employed 3.4 million people. While the program was in existence from 1935 to 1943 it employed 8 million.

Workers built tens of thousands of roads and highways, repaired as many bridges, schools and other public buildings and also worked to clean cities and provide services to rural areas.

Other programs designed to hire 18 to 25 year olds like the Civilian Conservation Corps were also begun, along with a program named Federal Project One, a program to hire artists that resulted in the creation of more than 200,000 works of art now in the public domain.

Unemployment which peaked at 24.9 percent in 1933 began to fall each year after the WPA began to a low of 14.3 percent in 1937 before a recession took hold that summer causing unemployment to rise back to 19 percent before World War II.

As any first year economics student can tell you lower unemployment means greater prosperity. People with jobs spend money buying products and services that create the need for businesses to hire more people to make more products and provide the additional services.

The National Recovery and Reinvestment Act of 2009 or stimulus bill allocated $787 billion dollars to economic recovery and according to Christina Romer chairman of the president’s Council of Economic Advisors, the bill created, or saved, one million jobs, further claiming that 3.5 million jobs could be "saved or created" by 2011.

Many have disputed those numbers.

What isn’t in dispute is that the WPA of 1935 created jobs, up to two million a year by some estimates. It did this while being able to avoid competing with private firms.

Could a program like this work today? It worked once more than 70 years ago, it could work again and paying a minimum wage of $11.00 an hour minimum for any job would put some wage competition into the private sector which hasn't been accomplished by a minimum wage increase in 2009.

When do we need this new version of the WPA? We needed it on Jan. 21, 2009.

On Jan. 28, 2009 in a speech on the economy and his stimulus plan proposal, President Obama said this, "Most of the money we're investing as part of this plan will get out the door immediately and go directly to job-creation, generating or saving three to four million new jobs. And the vast majority of these jobs will be created in the private sector – because, as these CEOs well know, business, not government, is the engine of growth in this country. But even as this plan puts Americans back to work today, it will also make those critical investments

The plan has not put "Americans back to work today" as the President suggested it would more than eight months ago. The unemployment rate has gone from 7.6 percent in Jan. 2009 to 9.8 percent in Oct.

Did it slow down the numbers of workers being laid off? There is evidence it did, particularly in the public sector.

But the real question, which shall always be unanswered is, would a WPA style program created in January 2009 have not only kept unemployment at the 7.6 percent, could it have lowered unemployment by October?

That is what could have been and no one will know the answer. What we do know is that in the long run, eight months, since the stimulus plan, unemployment has risen dramatically.

Harry Hopkins, an architect of the New Deal and the man who headed the WPA, faced criticism about New Deal projects including the WPA by those who suggested that these programs weren't needed, the critics arguing that the economy would recover in the long run.

Hopkins response, "People don't eat in the long run, they eat every day."

As discussion of the need for a second stimulus plan surfaced recently, I couldn't help but wonder what would happen if five million of the estimated more than 14 million unemployed were to be given jobs with a WPA style agency and placed on the federal payroll doing anything from sweeping sidewalks to assisting in classrooms to repairing roads and bridges. And doing that in the next six months in every state in the union.

The WPA initially employed 3 - 4 million people at a cost in today's dollars of 76 billion. Certainly attempting to employ 6 - 8 million at a cost of around $150 billion or more would stimulate the economy in the long run, wouldn't it?

My guess is we will never know, since the idea isn’t even in the room, never mind on the table.