A case study in lowering unemployment: The Work Projects Administration
A perspective from our Global Market Strategist
Unemployment rates for many countries are sky high and likely to remain high for some time. In response to the pandemic, many developed countries’ central banks have showered accommodative monetary policy on their respective economies. However, if history is a guide, that is unlikely to have a major impact on lowering unemployment. Instead, fiscal policy can be more impactful on unemployment because it is more direct. As governments around the world debate the next steps of their policy response, this is perhaps a valuable time to examine a case study in reducing unemployment through fiscal spending.
Fiscal spending that directly creates jobs — such as government hiring of workers to undertake infrastructure projects — should be particularly effective in reducing unemployment because there is a direct relationship between the expenditure and the job creation. A notable example of this type of policy is the Work Projects Administration, formerly known as the Works Progress Administration (WPA), which enabled the US government to directly employ millions of unemployed Americans.
Is this a model for 2020 and beyond?
Learn how the WPA:
- Put millions back to work in the 1930s
- Had a compounding effect on job creation
- Made critical contributions to US infrastructure