Has White House given up on the demand side of the jobs problem?

What does the newly announced choice of Princeton economist Alan Krueger to President Obama's next top economic adviser suggest about the package of job-creation ideas the White House plans be unveil next week?

On the one hand, as we noted earlier today, much of Krueger's focus has been on issues of employment and wages. His claim to fame is a 1992 paper offering evidence that raising the minimum wage doesn't necessarily hurt job growth. So at a time when nearly 14 million Americans are officially out of work (the unofficial tally is much higher), his nomination makes sense.

But the choice may also suggest something less encouraging about how the administration plans to address the lack of jobs. As Matthew Yglesias of the liberal Center for American Progress notes, Krueger is a micro-economist, rather than a macro-economist. That means much of his work has focused on inefficiencies in the labor market--the minimum-wage paper being a prime example. Today, though, most economists agree that the major problem holding the economy back is a lack of demand--an area that would presumably benefit from the expertise of a macro-economist, who tends to think and plan in the bigger picture.

Of course, administration officials are no doubt mindful of that mandate, and have presumably selected Krueger in the belief that he is versatile enough to go outside his core area. But the pick may also suggest that the White House has already decided against large-scale stimulus efforts aimed at increasing demand, and has settled instead on smaller-scale measures designed to increase the efficiency of the labor market. Yglesias calls Krueger, "the guy you call when you've given up on reducing unemployment by increasing demand."

The recent news that the White House is looking closely at a Georgia jobs training scheme as a model for a national program offers further evidence for Yglesias' view. The program, which allows unemployed workers to train with companies while receiving jobless benefits plus a small stipend, could help connect some jobless workers with employers. But it doesn't address the key macroenomic question of how to revive waning demand by creating new job openings. And in Georgia, the retraining program's comparatively modest rates of participation have been too low to make a major impact.

The White House has said it's also mulling payroll tax cuts and other measures to spur hiring, so it won't entirely overlook the need to help create more openings. But Washington insiders are still divided on how much the Krueger nomination may reflect a more significant shift in the administration's policy priorities.