Labor economist picked as next top White House econ adviser

Zachary Roth

The White House has announced it plans to nominate Alan Krueger of Princeton University as the next top economic adviser to President Obama.

If confirmed by the Senate, Krueger--who served as assistant Treasury secretary for economic policy during the first two years of the Obama administration--would chair the White House Council of Economic Advisers. He'd replace Austan Goolsbee, who left that post earlier this month. So what might Krueger's nomination mean for economic policy, at a time of anemic growth and stubbornly high unemployment?

Krueger, 50, served as the Labor Department's chief economist during the Clinton administration, and a look at his curriculum vitae (pdf) reveals that much of his research has focused on issues of employment and wages.

Many of those who've been calling for a more aggressive approach on jobs and growth are cheering the pick. "He'll have a natural inclination to being sensitive to issues of inequality and jobs," Lawrence Mishel, the president of the Economic Policy Institute, a progressive Washington think tank, told The Lookout. Mishel called Krueger, "really smart, with a strong pragmatic streak."

One recent paper (pdf) co-written by Krueger charted the psychological toll of long-term joblessness. As we wrote in March, Krueger's study found that the amount of time a worker spends looking for a job decreases "sharply" the longer he's unemployed. Krueger also reported that the jobless are not any more likely to spend time looking for work when their unemployment benefits are set to expire--a finding that undercuts the claim that extending such benefits will discourage the jobless from looking for work.

Krueger initially came to prominence thanks to a 1992 paper (pdf) he co-wrote with David Card, which compared fast food restaurants in New Jersey and Pennsylvania. It suggested, surprisingly, that raising the minimum wage did not necessarily lead to higher unemployment among minimum wage workers.

At the Treasury Department, Krueger analyzed various programs, including tax incentives, to encourage employers to hire the unemployed--an idea that may well figure prominently in President Obama's package of job creation ideas, set to be unveiled next week.

"Given his expertise in labor economics, he is precisely the right choice to lead the CEA at this moment in history," Treasury Secretary Tim Geithner said of Krueger, through a spokeswoman, the Wall Street Journal reported.

Of course, Krueger will face some institutional obstacles. Past economic advisers with the Obama administration have argued for more aggressive measures targeted at job growth, but were over-ruled after other aides convinced President Obama to focus on deficit reduction. And even with the White House now saying it plans to focus on jobs, Republicans in Congress likely won't support any significant spending measures of the kind most likely to spur growth.

One additional factor may have played a role in the White House's nomination of Krueger: For his Treasury post, he recently cleared the Senate confirmation process, meaning he's likely a good bet to do so again.