The Weekend Economists' Panglossian Pandemic January 20-22, 2012

[Demeter]

95. John Henry: A Federally-Funded Jobs Program? Lessons from the WPA

http://www.nakedcapitalism.com/2012/01/a-federally-funded-jobs-program-lessons-from-the-wpa.html


...it might prove helpful to review some aspects of the Works Progress Administration (renamed in 1939 as Work Projects Administration). While the WPA was not a “job guarantee” program, it nevertheless points to a number of issues that are under current discussion, including those of the nature of the projects undertaken, impact on the larger economy, concerns surrounding bureaucratic impediments, etc. Let’s begin with an introductory statement pertaining to the political and economic orientation of Franklin Delano Roosevelt (and his Administration)....Roosevelt was not a progressive. He ran on a balanced budget platform, and initially attempted to fulfill his campaign promise of reducing the federal budget by slashing military spending from $752 million in 1932 to $531 million in 1934, including a 40% reduction in spending for veteran’s benefits which eliminated the pensions of half-a-million veterans and widows and reduced the benefits for those remaining on the rolls. As well, federal spending on research and education was slashed and salaries of federal employees were reduced. Such programs were reversed after 1935. And one might recall that Roosevelt attempted to return to a balanced budget program in 1937, just as the economy appeared to be slowly recovering. The result was a renewed depression that began in the fall of that year and ran through 1938.

Thus, the Roosevelt Administration was forced into progressive activism because of massive—and organized—popular discontent based mainly in working class and small farmer organizations. The union movement was rejuvenated through the formation of the CIO, farmers organized to prevent the forced sales of their properties (and this often included the threat of armed action), rent strikes were rampant, etc. Chicago, New York, other cities saw massive demonstrations. “Riots” shook the Kentucky coal fields. One must remember that the communist party was large (as these parties go), active, and popular. The specter of revolution was in the air and some politicians responded. Hamilton Fish Jr. instructed his fellow Congressmen, “(i)f we don’t give (security) under the existing system, the people will change the system. Make no mistake about that.”

The WPA was one of several programs developed to respond to this supposed threat. Initially, the Roosevelt Administration authorized the Federal Emergency Administration of Public Works in 1933 (renamed in 1939 as the Public Works Administration). The PWA allocated over $6 billion to private firms that actually undertook the large scale projects ordered by government. Dams, including Grand Coulee, hospitals, bridges (the Triborough Bridge and Lincoln Tunnel in New York City), etc. In the same year, the Civilian Conservation Corps (ostensibly Roosevelt’s favorite such program) was organized. Exceptionally active in erosion control, reforestation, the creation of public parks, etc., the CCC hired 2 million young men over the course of its history. The fundamental difference between the CCC and the PWA was that workers on CCC projects were hired directly by the government. And this funding relationship served as the model for the WPA.

The WPA was under the direction of Harry Hopkins, a notable figure in his day. While the program was officially terminated in 1943, U.S. entry into WWII effectively ended its existence. On average through 1941, the WPA employed about 3 million people each month. If we include employees in the CCC and the National Youth Administration (a separate program under the WPA), total employment in government contracted work came to roughly 4.3 million per month. This represented 8-9% of the U.S. labor force. Originally, the WPA was an extension of the Federal Emergency Relief Administration—the first federally-funded welfare program in the U.S. One rationale for the WPA was that it was better to put people to work performing useful tasks rather than merely receiving assistance: off the dole and on the job...The WPA was not intended as a “full employment” program. Only one household member could be employed under the program (it was usually males), though one does find female heads of households so employed. It should also be noted that state and local governments were required to contribute 10-30% of the costs of the various projects undertaken. Over its life, total spending on WPA projects amounted to about $13.4 billion, roughly 2% of GDP over those years.

And what were those projects? Was this simply a “make work” program that made little difference in the long run? Or, was the WPA integral to the larger economy and its contributions socially useful? A truncated tally follows. (See below for a slideshow of projects under the WPA)

560,000 miles of roads built or improved
20,000 miles of water mains, sewers constructed
417 dams built
325 firehouses built; 2384 renovated
5,000 schools constructed or renovated
143 new hospitals, 1,700 improved
2,000 stadiums, grandstands built
500 landing fields; 1,800 runways (including participation in the construction of LaGuardia Airport, NYC)
State and municipal parks, including the foundation of the extensive California state park system.
100 million trees planted
6,000 miles of fire and forest trails created
Education: Through 1941, 1 million enrolled in adult education courses, 37,000 children in classes and nursery schools; 280,000 received music instruction, 67,000 art instruction.
Libraries were built. These were especially directed toward poor and rural communities.
Zoo buildings constructed

In addition to the above, one should note the WPA’s contribution to the cultural life of the country....MORE AT LINK

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