4% unemployment also notice lute lute -- full employment of policy he says is abandon the 1970s when concerns about inflation began to take precedence. it's about one hour and 20 minutes. [applause] >> thank you, joe. i am happy to introduce bob. bob pollin is one of the leading economists in the united states. heterodox economists are the best kind. they are the ones that think outside the narrow box of orthodox economics. bob is a professor of economics at the university of massachusetts and codirector and co-founder of the political economy research institute at umass, a very important research institute backed does excellent academic scholarship with a public purpose. bob's books include a number of looks, contours of descent on the u.s. economy and in 2003, two books on the living wage, 1998 book of the living wage, building a fair economy and a reasonably measure of fairness, the economics of the living wage and his most recent book is the topic for tonight, "back to full employment." i just want to add that bob's work on the living wage has been very very important. he has been probably the leading researcher on this important issue. has written numerous papers and reports in addition to his books and has traveled to cities across the country to speak about the living wage and has testified before many city councils who were considering a living wage proposal and i think this is a really important contribution and i just want to acknowledged that. bob's recent work is focused on the green economy and the achievement of the twin goals of sustainable energy and full employment. there are numbers of reports on this topic in this worked on green projects for the u.s. department of energy and the international labor organization and is currently directing a green energy project for the u.n. industrial development organization. bob's talk tonight will be based on his latest book, "back to full employment" and i just want to add a little context here. and that is that the unemployment problem in the u.s. is more serious than it appears from the official government statistics. the main reason why it's official and the reason it unemployment has declined in recent years is the official estimate of the labor force has hardly increased at all since 2008. the population growth has just stopped. but what what is happening is that jobs are so scarce that millions of unemployed workers have given up looking for a job and they are not counted in the official government statistics. if we just as an exercise assume that the labor force over the last several years has grown at a normal rate, then the rate of unemployment would be three or four percentage points higher than the official 7.9, more like 12%, clearly in double digits. and that is serious. and i think the unemployment rate is going to remain double digits for the foreseeable future unless the government provides some major job creating initiatives and bob is going to tell us tonight how that can be done. join me in welcoming bob pollin. [applause] >> thank you thank you very much fred and thank you very much john. i'm very happy to be here. i guess the plan is i will just warm up and talk about what is in this tiny, tiny, tiny book. a little bit of some overview and then we can have some discussion. so while fred took all of my good lines there but the magnitude of the unemployment situation today is really unprecedented since the 1930s and it is not as fred says respect the data, at least the data in the headlines. so as fred said, what we aren't measuring when we say 7.9% or the number of people that are not trying to get jobs immediately because they have become discouraged and it also is not including people who want full-time jobs but only got very part-time jobs. the labor department does count these people. they are just kind of buried and statistical stacks and if you take just those two groups, the people who want full-time and maybe only got two hours a week and they got five hours or 10 hours and the people as fred said he worked his courage to, the unemployment rate today officially is not something i made up, it is 14.4%. not that 7.9 isn't bad enough but 14.4, now 14.4% as 23 million people. just to try to ground out a little bit, if we think about the population in the biggest cities in the country starting with new york, l.a., chicago, houston, san diego. it's in the book here but san jose is 10, odalys. anyway take the 10 biggest cities and add up their entire population of all the people in all of those cities, that's 23 million people. that is how severe the unemployment crisis is. and again there is no precedent since we got out of the great depression. so, another statistic. we had this thing we now call the great recession and the have followed the wall street crash that was caused by excessive speculation on wall street. now according to the official marketers of when recessions and, the recession started in the last three months of 2007 and it officially ended by june of 2009. that's three and a half years ago and we have been out of a recession for three and a half years, officially. now, one thing i recently calculated is, let's look at this recession relative to all the other recessions that have taken place since the great depression. now, and all the other recessions, there are different experiences that the economy does bounce back. when you say the recession and, it actually really ends. you can see that in the statistics and on average, the unemployment rate for the other recessions, sometimes are severe but the unemployment rate in the other recessions averaged three years out. it was 6.3% and in this recession the average, the three years after the recession ended with 9.2%. so for the three years and i'm not talking about the recession itself. i'm talking about after the recession ended, it was 9.2% as opposed to the previous experiences including 1988 was very severe but then we came out of it. 6.3%. now the difference, if we actually have a 6.3% unemployment rate today instead of the average of 9.2, officially that's 4.5 million people that would have jobs now that don't. so we have a very severe problem by any measure and everybody knows it. the presidential race, romney was talking about it and there is of course the question of what you do about it. so, i will mention a few things about what to do about it at first let me make a couple of points. the first is -- this is a very simple thing. why do we care so much about unemployment and i think everybody knows the answer but it's worth saying it anyway. people need jobs. most people are not independently wealthy and therefore they need jobs. it's they themselves are a member of the family support so it's important that they have jobs. jobs are basic in terms of money jobs are also basic in terms of people's stability and the stability of the family, the stability of the community and a sense of self-worth, being integrated and community life. if you don't have a job you spend all of your time worrying about the fact you don't have a job and makes it much more difficult for you and other members of the families to function in any kind of normal way. so, jobs are intrinsic to well-being. they are intrinsic to material wealth but they are also intrinsic to psychological well-being and your participation in the community, to family stability. so when you have mass unemployment it eats away and really destroys the major fabric of society. that is what we have experienced since basically 2008 when the great recession started. so, i will get to on what to do but i want to mention monitor the thing which is the idea about fighting for unemployment is highly original to me. i don't want to claim any originality at all and in fact it was pretty commonplace mainstream orthodox idea for about 30 years coming out of the great depression in the 1930s. the idea was basically the capitalist economies coming out of the 1930s knew that they could not survive another great depression and the legitimacy of the system was being destroyed if you couldn't provide something he can to decent employment opportunities for people in in the society. so full employment he came a centerpiece of economic policy coming out of the 1930s and remains there. the central organizing idea. government became aware and some were more or less committed of course but the idea of providing these jobs was really the whole advent of mainstream macroeconomic policy was organized around this idea. how can a society get the full employment and stay there? there was a lot of debate to whether this was viable, whether it was desirable and over time the idea emerged that well with the government should do is worry about inflation. that is the more serious problem and unemployment will take care of itself. and this is what some of us call neoliberalism, the idea that if people don't have jobs than go out and bargain for yourselves with a potential employer. if they don't want to hire you, lower your wage and eventually somebody's going to hire you for the value that you are worth to them. that is how you achieve full employment. it's derived entirely through what will happen through bargaining in the market. and that idea has prevailed. that idea overtook the notion that society should build full employment economies and government policy should care about this. so what we have, if you want to set a date, really since the beginning of the reagan administration in 1981 and the late 1970s, you have the really decline of the idea that government policy should be focused around achieving full employment and the emergence of the idea that if government tries to do something they're just going to mess it up. so government should worry about keeping inflation down despite everything else in and along with that was the idea that let the market decide how financial operations take place and deregulate the financial markets. that is what led to the speculative bubble and crash which in turn created the great recession. so that is kind of the background to what my book goes through in some of that background. very briefly, a very short book so i tried to compress things a lot. but that is the basic background. now, how do we think about where we are today? first as fred said and i reiterated its very important to realize how severe the problem is and it's not just that we can think about jobs or no jobs. when i say full employment nine mean full employment and a decent wage and a good job. that's also crucial to recognize because even before the great recession, even before 2008, we have experienced another crisis in the job market which is that the average wage for nonsupervisory worker has actually gone down for 35 years or at this .40 years. people find it hard to believe but actually, and these are official statistics from the u.s. labor department. the average wage for nonsupervisory work after controlling for inflation so we control for inflation, was about $20.70 per hour in 1973. and today it's about $19.60. now, this is over a period when productivity, the average amount that the worker produces if you are going to work over the course of the day, how much does the worker produce? again the official government statistics according to government statistics of the average worker produces about twice what she or he did 40 years ago. so the average amount produced over the course of the day has doubled roughly whereas the average that the worker gets paid has actually declined by eight or 9%. when you hear about the rise of inequality in society, this i think captures it very well. the fact that workers have not been getting the benefit of their own productivity for basically two generations. moreover, i have a graph on that one. i turned right to it. it's tiny but there it is. that extreme rise in inequality also contributed to the financial crisis, because if the pie is doubling that workers aren't getting any more, the money has got to go somewhere. it's going to the top and because people at the top were getting so much more proportionally, that created the opportunity to gamble more so there was speculation in the financial markets. it was regulated for about 30 years but the market was regulated and at the same time you have massive amounts of money proportionally flowing to wealthy people who then concluded accurately that at least some share of what they have.they can gamble it because even if you lose five or 10% you have so much more left than you might have had in the previous historical period when workers got better wages and a better share of their overall what they themselves were producing. those are the two points in terms of getting back to full employment which is jobs yes but decent jobs too, good jobs and we can talk about some of the politics of how you get there. we have true experts here that know more about this than i do. i do. so let me just throw out some policy ideas than i want to think about short-term over now the next year or two years and longer term. in the short-term we are having the wrong debate in the country. i'm not saying the details of the debate are wrong. we are not even asking the right questions. the questions should be full employment. the question being debated instead and i don't know what he's talking about in a state of the union speech but i will bet the government is spending more than its taking an and the deficit has become the focal point of all this whole crisis, the fiscal cliff and now we are talking about these automatic cuts, the so-called sequester social spending and military spending so we are not even talking about the fact that what are the tools of the government has to promote a return to something like a decent level of employment opportunities and a decent wage? it's not even the main discussions discussion so the first thing we need to do is shift the discussion. the fiscal deficit i will just say is relatively large historic wade, it is but the reason reason its large first of all is precisely because we have the recession. because when the recession hit that means people's incomes went down and when their incomes went down that means how much they paid in taxes went down to the deficits automatically got bigger and on top of that we did run a stimulus program to counteract the magnitude of the financial crash created by wall street. so that is why we have a big deficit. now, the point though is that even with the big deficit, we do not have a fiscal crisis today. we do not have anything close to a fiscal crisis and i will give you a statistic that i hope conveys that i will explain why. we hear over and over and over again that we we are in this desperate situation. the amount that the government actually spends on covering its debts its interest payments today is actually had a historic low, not at a historic high. i know people find that hard to believe but it's it's true. again strictly from government statistics. today or in the last year the government paid 7.7% of its overall budget on interest payments. under ronald reagan, the great conservative icon and his successor george bush the first, the government was paying 17.2% total expenditures and interest payments so we have gone from 17.2% under reagan and bush 127.7% today. less than half so how is that a crisis? the answer is it's not a crisis. why is it that we have such low interest payments even though we are borrowing a lot and again it's reasonably simple. if you wanted to buy a treasury bond, a five year treasury bond today, the interest you would get on a treasury bond is 0.7%. treasury bonds are at historic lows so you can borrow and borrow and borrow but if the interest rate is less than 1% you are not accumulating obligations at a significant rate and that is where we are. now i'm not saying that the interest rate is always going to be so low but i'm hearing from the most renowned so-called deficit hawks like martin feldman at harvard and john taylor at stanford, the biggest, biggest names who have been arguing that we are deficit crisis they have been saying that the interest rate is about to shoot up. they have been saying that now for four years. eventually they may be right but at the moment they have been wrong for four years and meanwhile we still have the jobs crisis. so the government has a lot of opportunity to spend on important things to create jobs. number one to help the long-term unemployed to extend that unemployment benefit. that's not just a chair at a program. help people get back on their their feet and get decent decent jobs but also keep spending in the economy more stable so it actually helps stabilize what would otherwise be a more severe situation. on top of that state and local government needs to continue to be supported. state and local government duties three things education health care and public safety all vital and these are areas that have been cut. it's also true that state and local governments are the biggest single source of jobs and the whole economy collectively. so if you are going to keep cutting state and local government of course you're not going to get out of the jobs crisis. so we need to support them. we need to invest in traditional infrastructure and i'm going to focus on this a little bit more. we need to focus on the green economy and building up the green economy. in the short-term it creates a lot of jobs and the long-term it addresses the climate crisis. so let me talk a little bit more about that. in terms of the short-term policy, i will mention one other short-term issue which is the federal reserve, that controls the short-term interest rates have have been running what they call a zero interest rate policy now for four years. that is the interest rate at which banks borrow is zero. they get free money and they get as much as they want for free. on top of that actually if they take the money and all they do is bank it at the fed, they get one quarter of 1%. it's not a lot. it's one quarter of 1% but if you could borrow a lot you know and getting back for doing absolutely nothing, that is what they are doing. right now also something that is frustrating to me that is not an talked about enough, commercial banks in the country are sitting on $1.5 trillion in cash, 1.5 trillion to give you some sense of that. the total u.s. gdp is $15 trillion for 10% of u.s. gdg in the bank's, money they got for free doing nothing. so another policy which i talk about in the book is you must tax the banks to say you can't can't -- do we have given you money for free and we have bailed you out and you were getting at quarter of 1% for doing nothing so let's push them to get the money into the hands of small businesses and let small businesses grow. so that is another short term policy that we could do. even if the republicans would want to do it -- though they should want to do it because it would be good for small business but even if they didn't, the federal reserve could do this on its own. it has been talked about even by conservative economists because it's so egregious that we have a zero interest rate policy which by the way, i'm not even against it. what i'm against is giving it to the banks and then letting the banks do nothing and just sit on it. that is where we are in the short-term. over the long term i want to mention this point of the green economy and i think obama is going to talk about that in his state of the union. and that is all to the good because we neglected to all throughout the campaign and the reason he neglected it and i'm not privy to their thoughts but it's obvious the reason is people have become convinced that okay we want to support the environment and we want to fight climate change but it's a job killer in going to be bad for jobs. jobs have to take first priority. obama himself has said such. the fact i