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Making Sense: Why Alan Krueger Is An Interesting Fit for the White House

Photo of Alan Krueger by Ralph Alswang via flickr user Center for American Progress on April 30, 2010.

Alan Krueger of Princeton is President Obama’s choice for head of the Council of Economic Advisors. That doesn’t mean he gets the job, though, as he needs Senate confirmation.

“The choice,” said Jim Inhofe, a Republican senator from Oklahoma who has held up several of the President’s appointments, “is yet another example of the Obama administration’s war on affordable energy, on American jobs and on our economy.”
(Krueger has actually been confirmed before, serving in the Treasury Department for two years before returning to Princeton.)

Making Sense

We first heard of Krueger when most people did — upon the publication of his 1995 book with fellow economist David Card: “Myth and Measurement: The New Economics of the Minimum Wage.” Armed with data, the authors made a controversial, counter-intuitive argument. Raise the minimum wage, they claimed, and you’ll get more employment, not less. But wouldn’t higher pay discourage employers from hiring low-wage workers? No, said Krueger and Card: the main effect would be more willing workers, filling jobs faster, staying longer and, in the end, upping employment.

Krueger went on to work in the Clinton Administration’s Labor Department, then returned to Princeton. The first record I have of interviewing him is a dozen years ago, in a NewsHour studio discussion on unemployment.

Reading the transcript, I’m struck by how, even in July of 1999, with an unemployment rate of only 4.3 percent, compared to today’s 9.1 percent (with 14 million out of work), he was far from satisfied.

“There are still six million people unemployed and looking for work. Where we’ve been very successful is in reducing the short-term unemployment. The longer-term unemployment, people who have been searching 15, 20 weeks or longer, has remained stubbornly high, and it’s come down but not nearly as much as one would hope…There are people who don’t have the skills that are currently demanded by employers. These tend to be less skilled workers, particularly people who might have had contact with the criminal justice system are being spurned in the labor market.”

Not that Krueger is a pessimist. We’ve cited before his research on the resilience of the American economy with regard to job creation:

“Go back to 1960 and ask: How much of the job growth from 1960 through 2003 (a 43-year period) is in occupation categories that did not exist in 1960? It’s close to half! It’s really quite a remarkable number. We see a tremendous amount of job growth in sectors that we can’t even fathom are going to exist in the future. Economists have a terrible track record of trying to estimate where we have imbalances in supply and demand. And this is one reason why, by the way, I think that Soviet planning must have been hopeless, because you get the best American economists in the world together to try to predict which sectors we’ll have a skills shortage in, and they had a terrible track record!”

Krueger is willing to think outside the box. He’s interested in everything from the economics of scalping tickets at rock concerts to the economics of terrorism. He’s a huge New York Giants football fan — he took his dad to the team’s first Super Bowl. And he’s a clear, candid, spirited interviewee to whom we’ve gone back again and again.

Folks on either side of the economic aisle are rooting for him.

Said Martin Feldstein, CEA chairman in the Reagan White House: “Alan is an expert in labor-market problems, taxation and the economics of terrorism. I hope the president listens to him.”

Treasury Secretary Timothy Geithner: “[G]iven his expertise in labor economics, he is precisely the right choice to lead the CEA at this moment in history.”

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions _Follow Paul on Twitter._

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