Plans for another stimulus package — one that figures to come in at around $2 trillion — appeared to be falling apart over the weekend as Republicans and Democrats in Washington, D.C., can’t decide where and how to spend this incredible amount of money.
William Rodgers has what appears to be a sensible idea — an idea that is driven by a goal of rebuilding the economy, not appealing to voters.
Rodgers, the chief economist at the John J. Heldrich Center for Workforce Development at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, said the next stimulus package should be targeted to the youngest members of the workforce — recent graduates and even non-college graduates. Those who may not been able to take advantage of earlier rounds of stimulus.
Rodgers, speaking last Thursday at the 2020 Middlesex County Business Summit, said we’re in danger of pushing the next generation of workers further behind — something that will have an impact that will be felt for decades. More than that, providing stimulus for that next generation would be an economic boost for all, he said.
“There’s a long literature that has shown that young people, even college graduates, who enter a recession at a young age — when they are just developing their skills and their competencies — consistently see major losses in their lifetime income,” he said.
It’s already starting to show, Rodgers said — noting that the current overall unemployment rate of around 8% is half the percentage of the unemployment rate for younger workers, particularly younger minorities. This segment of the population, Rodgers said, is the one that will fuel a recovery.
“As we move forward, we need to continue with another source of relief, so we can get to the reimagining part of the of the conversation that the governor talks about, to where we can then really get at the structural impediments to housing, structural impediments to having health insurance, the structural impediments to getting a good education,” he said.
For all the fancy theories and graphs around economics, Rodgers said a lot of the current situation can be boiled down to two phrases.
- Economic growth is productivity growth plus population growth.
- Timing, targeting and temporary.
He breaks it down:
- Temporary: “We have to continue to build that bridge to recovery for many groups — that’s why another round of stimulus or recovery efforts are really important,” he said.
- Targeting: “We have to do some targeting for young people. We did a good job of trying to rescue the economy, providing unemployment benefits for incumbent workers, but many young college graduates do not have the wage history to be eligible,” he said.
- Timing: “Through this whole process, we’ve done a really poor job of getting the aid to people timely, especially in the first part of the year. And we’re continuing that problem now in terms of our leaders being able to get to ‘Yes,’” he said.
Timing may be the key to all of this, Rodgers said.
While Washington appears to be viewing all recovery efforts through the lens of the November election, Rodgers said the rest of the country can’t wait.
“The longer we wait, the longer we have difficulty getting to ‘Yes,’ the greater the problems,” he said. “You’re going to see misery, despair, anxiety continue, not just through the rest of the year, but into the next year — and it will jeopardize the recovery.”
If we want to have a “V-shaped” recovery, Rodgers said we need to be investing in human priorities — things that can grow productivity and health of the population.
“They have longer-term effects on economic growth and competitiveness,” he said.