Do Jobs Not Matter Anymore?

Maybe we should just scrap Labor Day and rename it "Capital Day."

Beginning in the late 1970s, the promoters of supply-side economics tried to resell us on the economic ideas of the 1890s and obliterate the assumptions that had dominated thinking about the economy from the election of Franklin Roosevelt in 1932 during the Great Depression.

The lesson of the Depression was that if ordinary workers lacked jobs and adequate incomes, the economy would crash because too few people could afford to buy what businesses hoped to sell. This was demand-side economics and it laid heavy stress on spreading incomes and job opportunities broadly.

Supply-side theories on the urgency of cutting taxes on the rich were exploded when Bill Clinton raised taxes on the wealthy and -- contrary to the supply-side predictions -- helped unleash a remarkable period of economic growth.

The simple truth is that the standard of living of most Americans depends on getting jobs that pay well. This means that unemployment matters not just for those out of work but also for those whose wages are depressed when too many people are competing for too few jobs. For most Americans, the best economic policy is still low unemployment. That's why the late 1990s produced income growth for the poor and the middle class as well as the wealthy.

I am all for a nation of owners and investors. But most people need jobs. For 25 years, we have been hearing that labor depends upon capital. It's time to resurrect the other, buried truth: that capital depends upon labor. Our prosperity really does require keeping the "Labor" in Labor Day.