Make-Work Jobs

As we have seen, the flow approach to job search enriches our understanding of the Keynesian prescription. We can think of Aggregate Demand policies as ways of increasing the number of opportunities for employment and successful job search. That clarifies a key point about these policies: They are going to take time and will reduce unemployment gradually over time, if they do work. And it leads us to think a bit more carefully about those opportunities. What kinds of opportunities are they?

It is here that critics may object to direct government employment programs such as the Works Progress Administration. The objection could go like this: "The whole point of job search is to match people with jobs producing goods and services profitably in the private sector, or in the production of public goods and services that are justified by the benefits citizens receive from them. Thus, getting people out of the job search to do jobs that are not justified by sales or benefits does not solve the problem. It just short-circuits it."

And this point would be well taken. It would certainly be best if everyone in the labor force were employed in the production of goods and services that can be sold to cover their full cost, or public goods and services whose benefits exceed their costs. Any "make-work" jobs program is at best an inferior substitute for that kind of job placement. That's why "make-work" would make more sense to most people as an emergency measure, for periods like the Great Depression when huge numbers are unemployed and there just isn't time to get them employed in private sector jobs and jobs in the production of public goods and services that would be needed anyway.

On the other hand, direct government employment may be the only solution to some of our most serious long-term unemployment problems: structural unemployment.

Next:Structural Unemployment