New Data, Same Result: New Deal Never Solved Unemployment

Conn Carroll / January 15, 2009

Committed to the belief that bigger government is always better, Media Matters and Campaign for America’s Future are pushing back data showing that the New Deal never solved unemployment. Cutting through their rhetoric, both leftist organizations make the same narrow objection: that the data we use does not count make work government programs like the Civil Conservation Corps as employed.

Now we will always maintain that not counting government work programs as employment is the more accurate measure. It is the way the government counted the numbers back then, it is the way the government counts the numbers today, and as George Mason University economist Alex Tabarrok blogs, “If we counted people on work relief as employed then eliminating unemployment would be very easy — just require everyone on any kind of unemployment relief to lick stamps.”

But for the sake of argument, lets cede the point that anyone receiving government employment assistance is ’employed’. Does that end up changing the the impact of New Deal spending on unemployment? No. As the chart above shows, even when using the numbers preferred by the leftist proponents of big government, the story is still the same: Unemployment never made it near the 1970-2008 5.5% normal unemployment rate until well after the U.S. entered World War II.