The party of work

First, Republicans need to back macroeconomic policies that will bring us closer to full employment. David Beckworth and Ramesh Ponnuru have argued in these pages that if the Federal Reserve keeps the growth of nominal spending and nominal income on a steady path, we will see a far more robust labor-market recovery. Achieving full employment is a crucial first step, as periods of full employment are also periods during which inflation-adjusted incomes rise for all households, including those at the bottom of the ladder.

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Tax reform, and particularly cuts in taxes on business investment, has great potential as a spur to job creation. In 2006, the economists Kevin A. Hassett and Aparna Mathur found that higher corporate taxes lead to lower wages. The higher wages that would result from lower corporate taxes would go a long way toward making work more attractive. And, on a smaller scale, Republicans should, of course, oppose anything that tends to reduce jobs or lock people out of the job market, from restrictions on carbon emissions to occupational-licensing requirements at the local level.

All of this would be to the end of achieving full employment, but that is easier said than done. Some thinkers, such as Evan Soltas, observe that we’re now looking at a segmented labor market, in which finding work is relatively easy for many people while the long-term unemployed languish on the sidelines. Essentially, workers in the economic mainstream feel more and more comfortable quitting their jobs to find something better, as they’re not at all concerned that jobless workers waiting in the wings pose much of a competitive threat.

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