The decline in the performance and importance of the U.S. Employment Service is a major concern. Certainly, we have a large number of effective private job-placement agencies. But disadvantaged and low-income workers often lack adequate access to these agencies. In discussions two decades ago about how to lower the full-employment unemployment rate, improving job placement was always a major topic because lowering the time between the appearance of a job vacancy and a hire should lower frictional unemployment without generating inflationary pressures. Yet, in recent years, the issue has attracted little attention among policy makers and, except in the case of John Bishop ( 1993), little research.
At this point, it is unclear what exactly will work best to upgrade job matches and job finding for workers. The federal government can take the leadership in examining a range of options, from the one-stop shopping centers pushed by the Clinton administration and some states to the vouchers for job finding advocated by the Progressive Policy Institute. In this instance, I have no single preferred policy option other than calling for shifting resources away from the traditional job service and toward a broader array of options.
Because the U.S. labor market faces serious problems, it is easy to forget its important strengths and flexibility compared to the job markets in other countries. In a January 18, 1996 New York Times article titled "Economic Weakness Stirs Gloom in Europe," Nathanial Nash points to a 10.6 percent European unemployment rate and little indication of a recovery significant enough to reduce unemployment substantially.
Before embarking on too many new initiatives, we should follow Senator Daniel Patrick Moynihan's advice to "do no harm" and to learn about the best policy options with as much rigor as possible. The most progress will take place by building on a solid knowledge base and on common values of Americans. I believe my suggestions can attract the support of a wide spectrum of the public. Expanding growth, creating a system of youth apprenticeships, providing jobs to heads of poor families, improving the EITC, and upgrading the job matching system are all initiatives that can make a dent in important labor-market problems as well as appeal to the values of the American people.