Economist Spotlight: Interview with Alan B. Krueger, Part Four

POSTED: February 18, 2014 | BY: Daniel Thompson | TAGS: ,

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This is the fourth in an eight-part series of CEE’s Economist Spotlight with Dr. Alan B. Krueger.

Dr. Krueger, the Bendheim Professor of Economics and Public Affairs at the Wilson School at Princeton University and former chairman of President Obama’s Council of Economic Advisers, is the author of the newly published textbook, Explorations in Economics. In this spotlight series, Alan will address topical issues including unemployment benefits, increased job growth, minimum wage legislation, investment in human capital, and more.

The interviews were conducted by 2013 Alfred P. Sloan Teaching Champions Awardees, Kathleen Brennan and Saji James.

Saji James:

Q. What are some ways the government can increase job growth at the federal, state and city levels?

Alan Krueger:

A. The American Recovery and Reinvestment Act (ARRA) of 2009, which will have its fifth anniversary on February 17th, included significant funds for state and local governments to retain teachers and first responders. This funding was subsequently extended, but when it ran out we saw massive layoffs at the state and local government level. Now that the financial picture of state and local governments has improved, the layoffs have stopped, but we are seeing very slow job growth at the state and local government level, and gradual declines at the federal level as a result of the sequester, or across the board budget cuts that went into effect in March 2013. The budget deal that Senator Murray and Congressman Ryan negotiated and the President signed will help to moderate the effects of the sequester, but I suspect we will not see much job growth at the state, local or federal level in the next couple of years.

This is the only recovery on record where we saw public sector employment decline. I think the need for teachers and first responders is as great today as it was in 2009, if not greater. I would like to see more support for smaller classes, and especially at the early grades, as well as increased employment of pre-school teachers. Given the intensifying effects of climate change, I also think we need more first responders. The President’s American Jobs Act included support for state and local governments to hire more teachers and first responders, although, unfortunately, that aspect of the bill was not passed by Congress. I think we will see more state and local governments act on their own to improve services and raise employment given that their tax revenue has been rising in the recovery, but there will be considerable dispersion across the country.

The next Economist Spotlight: Interview with Alan B. Krueger will publish February 20, 2014.

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