How to Put More Jobs in the American Jobs Act

American Jobs Act logo with white space to rightRania Antonopoulos is a senior scholar and director of the Gender Equality and the Economy program at the Levy Institute. She wrote this post with the assistance of her colleague Michael Stephens, senior editor at the Levy Economics Institute.

President Obama’s recently proposed American Jobs Act would put people to work building and repairing the nation’s roads, bridges, and schools. This is all laudable, if fairly inadequate ($50 billion for transportation infrastructure and half that for school infrastructure) given both the extent of our dilapidated infrastructure and the size of the employment hole. But a job creation idea you won’t find in the AJA would produce double the employment boost of those physical infrastructure projects. If we invest in putting people to work delivering social care services—shoring up our crumbling social infrastructure by adding jobs in professions like direct care—we can begin to crawl our way back to full employment, while providing vitally needed services and doing more to help those who are least able to weather the current non-recovery recovery. 

The idea of retrofitting and rebuilding schools has been championed (by Jared Bernstein and others) as an alternative to traditional transportation infrastructure projects because of the differences in labor intensity: transportation projects employ fewer people per dollar spent. For the same reason, investment in community-based social care services, like home health care for the elderly and disabled, gives you an even more impressive employment bang for the buck.

At the Levy Institute, we modeled a $50 billion investment in physical infrastructure (which just so happens to be the figure allotted for transportation infrastructure in the AJA) and an investment of the same amount in social care and then compared the results, explaining how investing in the social infrastructure would create far more new jobs and publishing case studies on South Africa and the United States that show how it works. The difference in employment effects was particularly dramatic: Our research suggests that social care would deliver more than twice the number of jobs per dollar invested (1.2 million versus 500,000 total jobs).

Moreover, investing in the care sector more effectively targets the least well off. Whereas 88 percent of the jobs created by physical infrastructure projects can be expected to be secured by men (mostly middle-class men), more than 90 percent of the jobs in social care would flow to women. And nearly half of the jobs created by social care investment would go to workers from households earning less than $39,000. Social care delivery eases the burden of care while providing opportunities for a stable income to those who need it most.

 

Social Care

Jobs Assigned

Number

Percent

Gender

 

 

Male

116,525

9.9

Female

1,059,401

90.1

Education

 

Less than HS

500,959

42.6

HS Grad

308,810

26.3

Some College

196,407

16.7

College Grad

169,750

14.4

Household Income

 

1st-4th decile

530,763

45.1

5th-8th decile

395,846

33.7

9th-10th decile

249,330

21.2

Total

1,175,939

100.0

Infrastructure

Jobs Assigned

Number

Percent

Gender

 

 

Male

489,814

88.6

Female

63,051

11.4

Education

 

Less than HS

77,482

14.0

HS Grad

345,897

62.6

Some College

46,609

8.4

College Grad

82,877

15.0

Household Income

 

1st-4th decile

194,915

35.3

5th-8th decile

279,438

50.5

9th-10th decile

78,516

14.2

Total

552,869

100.0

 

Source: Antonopoulos et al. (2010)

Administration of this investment does not require a new approach to channel funds through the system. The delivery systems are already organized and administered by local and state governments through Head Start/Early Head Start and various home-based care organizations that qualify for reimbursement from Medicare and Medicaid.

Note that this is not a welfare-to-work program. It provides a good, stable job and a decent income-earning opportunity to those who need it most. The current weak labor market is hitting those with a high school diploma or less particularly hard—and as the table above shows, the jobs created by social care investment would particularly benefit this category of worker.

None of this is to suggest that physical infrastructure projects are a bad idea. If anything, we need to do more infrastructure than the AJA proposes, and given how cheaply the federal government can currently borrow, we need to do it now. Jobs impact aside, keeping our physical infrastructure in decent condition is instrumental to efficient economic performance.

But the same can be said for our social infrastructure. For instance, by providing a professional alternative to the unpaid work women have traditionally done, social care helps mitigate the “double day” for women who work outside the home, allowing them to better balance paid and unpaid work burden. That makes it easier for women to remain in the workforce, thereby allowing us as a society to realize a full return on both public and private educational investments.

As with our roads and schools, or social infrastructure is crumbling. Despite marked growth in the health care sector, serious care gaps still exist in services for the young, the elderly, the sick, and the permanently ill or severely disabled. There is, as we argue, a “hidden demand for care” that could be partially addressed by investing in social care.

In an ideal political climate, the American Jobs Act would represent (at the very least) a “good start.” Building on the foundation of the President’s proposal, perhaps by including some of the social care delivery provisions from Rep. Schakowsky’s jobs bill, would allow us to enhance the job-creating potential of the AJA while also delivering relief and opportunity to those who are struggling most. The Schakowsky bill would address widespread shortages in health care providers across the country, and particularly in rural areas, by providing $8 billion in grants to health care and long-term care providers (see #5 in the Corps list).

But in this political climate, making any investment at all in job creation will be a tough sell. Ideally, the American Jobs Act should invest in the sectors that can strengthen our economy the most, both by creating the most jobs and by fulfilling other vital functions. And what better way to do that than by helping to strengthen and stabilize our direct care workforce?