By Matt Bruenig, People’s Policy Project, 2018
Discussion around the idea of a job guarantee has picked up of late (CBPP, The Nation, Sanders Institute I, II). As with any idea that attracts a sizable number of adherents, the term “job guarantee” means lots of different things to a lot of different people, which makes it a difficult thing to talk about in a comprehensive way. But with that limitation recognized, I thought it might be worthwhile to share some notes about the recent burst.
Poverty Mistakes
As part of trying to sell the idea of a jobs guarantee, advocates make claims about poverty that are untrue and contradicted by their other statements.
Kelton says:
[1] What we believe is that anyone whose working full time in America should not be living in poverty. [2] And that means choosing a wage that will allow a family of three or four to have one person working and to pull that family out of poverty. So we start at $15 an hour.
Paul says:
[1] The federal job guarantee would provide a job, at non-poverty wages, for all citizens above the age of 18 that sought one. … [2] The federal job guarantee would provide a job at a minimum annual wage of $24,600 for full-time workers (poverty line for a family of four) and a minimum hourly wage of $11.83.
In both cases, statement (1) claims the job guarantee is going to ensure people who work full time are not in poverty, but then statement (2) clarifies that this is not true for anyone who lives in a family with more than four members.
To provide a wage that really ensured no person who works full time is in poverty, the amount would need to be $26 per hour, as that corresponds to the official poverty threshold for families with nine or more members. Even that is too low though. The Census poverty thresholds arbitrarily cut off at nine members, but families can definitely be larger than that. In the 2016 CPS ASEC file, the largest family unit is 16 members. If you extrapolate out the Census poverty thresholds to a family that size, a true non-poverty wage would need to be around $40 per hour.
Presumably the reason the JG advocates do not propose a $40 wage is because that would be impractically high for many reasons. But what this insight should also tell you is that this is not a particularly good way to eliminate in-work poverty. It is already the case that people who work full time and live alone are not in poverty. What makes workers fall into poverty is the existence of nonworker family members (children, disabled, students, unemployed, elderly) who live with them. The way super-low-poverty countries get that way is by ensuring each of these nonworker populations receives an adequate transfer income: pensions, child benefits, unemployment benefits, etc. Nothing else can get the job done and I’d say it’s broadly unhelpful to the project of poverty eradication to keep pretending otherwise.
Inflation Contradictions
Arguments for job guarantees often contain contradictory claims about what effect it would have on inflation, the labor market, and labor demand generally. In most JG advocacy, it is simultaneously claimed that the job guarantee would employ large numbers of people without creating inflation problems and that it will create more competition for workers and thereby bid up private sector wages. Needless to say, these two things are at odds with one another.
Here’s Paul:
[1] The job guarantee would function as a de facto floor in the labor market, greatly increasing the bargaining position of workers throughout the economy. For private employers to attract employees, they would have to offer a job that is at least as good as the one offered by the government.
…
[2] With a job guarantee policy in place, the Federal Reserve can conduct monetary policy without promoting rising levels of unemployment. In this scenario, the job guarantee program can maintain employment and consumption expenditures while the Federal Reserve employs monetary policy to reduce private investment in order to cool the economy.
…
The job guarantee would function as a robust automatic stabilizer in the economy, maintaining levels of employment during economic downturns through direct hiring, and freely allowing workers to flow from the jobs program to the private sector during economic boom times.
The first statement suggests that the JG will actively compete for workers in the private sector. That is, the JG will lure workers out of their private jobs through superior compensation, thereby creating wage inflationary pressures. In his Nation piece, Sean McElwee makes this claim very explicitly, saying that nurses could quit their jobs at hospitals to work a JG job and that this would put upward wage pressure on the nursing profession.
The second statement suggests that the JG will act as a buffer that absorbs workers in economic downturns and releases them in economic upturns. In this construction, the plan is not inflationary as it does not compete with private sector employment, but only scoops up those who would otherwise not be employed.
This is a tension that runs throughout the JG world.
The Jobs
The last problem I will discuss here is the problem of coming up with suitable jobs. This to me remains the biggest challenge that is really not satisfactorily answered in JG programs. Hugh Sturgess has provided the most eloquent articulation of this problem I’ve seen so far. Sturgess argues that JG job ideas, justifications, and criteria combine to form an “impossible quadrilateral:”
[I]t is not possible for JG jobs to display all of the following qualities: requiring only basic skills (needed for universal eligibility); socially beneficial; indifferent to time (as JG work is countercyclical); and distinct from the rest of the public sector. Any attempt to achieve one criterion requires abandoning another.
He continues:
These can be divided into three overarching tensions: (1) many suggested JG jobs require skills that are not commensurate with the minimum wage; (2) most social needs are ongoing, so should not be addressed through short-term jobs provided in a countercyclical fashion; and (3) it is difficult to keep the JG and the mainline public sector distinct.
To get more concrete about this point, it’s best to just look at the jobs being proposed. Here’s Paul:
- the repair, maintenance, and expansion of the nation’s infrastructure, housing stock, and public buildings;
- energy efficiency upgrades to public and private buildings;
- assistance with ecological restoration and services to reduce the country’s carbon footprint;
- engagement in community development projects;
- provision of high-quality preschool and afterschool services; provision of teachers’ aids;
- provision of high-quality elder care and companionship;
- rejuvenation of the nation’s defunded postal service;
- support for the arts; and
- other activities that shall support the public good
Ideas 3, 4, 7, and 9 are too vague to assess. Ideas 1 and 2 require a lot of skill and training, which is not suitable for a JG program. It is also hard to imagine how a local job guarantee administration would manage to pull off building a bridge or a house by itself. Ideas 5 and 6 require considerable amounts of skill and training and are also permanently needed, which make them unsuitable for a cyclical jobs program. Additionally, we generally expect people who work with children, elderly people, and disabled people to be vetted as most are not comfortable allowing just anyone to care for vulnerable groups. Idea 8 is the only one of the bunch that looks promising, though it’s debatable how much social value it carries and it is also hard to imagine that many of the kinds of people who would go through the JG program would want to do “the arts.”
Of course, the “impossible quadrilateral” only presents itself because of the claims made by JG advocates. The challenge posed by it is easily solved once you drop the “socially beneficial” claims, which frankly seem implausible. It seems possible to have a program that absorbs workers in downturns and assigns them to low-value, low-capital, low-skilled (“make-work”) jobs in order to keep them activated. But since this is not a very sexy thing to talk about, proponents inevitably exaggerate in ways that create incoherence.
Other Approaches
The left has long said that full employment must be an economic priority. But a program where you create offices around the country that promise to find tasks for anyone who shows up is obviously not the only possible approach here.
For instance, consider a package where the Federal Reserve stops prematurely jacking up rates, the federal government funds ordinary active labor market policies (ALMP) that help match people to job openings, and provides free child care. This is how a more typical country seems to pursue high employment rates, with considerable success
These other approaches to full employment will presumably be deemed insufficient because they don’t truly eliminate all involuntary unemployment in the same way that a take-all-comers approach that directly employs any and all random labor flows does. But this is more of a semantical distinction than anything else. If you take anyone receiving an unemployment check and have them do some sort of task, you can declare that they are employed. Workfare does not traditionally get counted as employment but if you wanted to do that, you obviously could. Whether such people are usefully employed in any meaningful respect is a different thing altogether and the idea that thousands of administrations across the country will be able to usefully employ random flows of labor with random sets of skills in random durations is fairly implausible. This is not a knock on the bureaucracy. The top business geniuses in the country would struggle to run an enterprise like that.
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The Nation: Why Democrats Should Embrace a Federal Jobs Guarantee
By Sean McElwee, Colin McAuliffe and Jon Green, MARCH 20, 2018
For decades, the idea of government-guaranteed jobs for all Americans has stalked the outer edges of political debate. It has been promoted by labor unions and has ideological support among some progressive thinkers, but in recent years hasn’t been seen as a mainstream policy issue for the Democratic party. Now, that may be changing.
Senator Kirsten Gillibrand told The Nation she supports a government-backed jobs guarantee. “Guaranteed jobs programs, creating floors for wages and benefits, and expanding the right to collectively bargain are exactly the type of roles that government must take to shift power back to workers and our communities,” she said. “Corporate interests have controlled the agenda in Washington for decades so we can’t tinker at the margins and expect to rebuild the middle class and stamp out inequality. We need to get back to an economy that rewards workers, not just shareholder value and CEO pay.”
Gillibrand is widely considered to be a front-runner for the 2020 Democratic presidential nomination, and a jobs guarantee will definitely be part of that discussion. Already, major Democratic think tanks have been prepping detailed policies for how the federal government can guarantee that every worker can get a job.
The Center on Budget and Policy Priorities, for example, recently released a paper arguing for a job guarantee through a national infrastructure bank that would set a floor on wages and benefits. The Center for American Progress has also crafted a job-guarantee proposal it dubs “a Marshall Plan for America.”
The CBPP paper* envisions an infrastructure bank that would fund vital projects and ensure that jobs are well-paid, with health insurance and paid leave. The National Investment Employment Corps would guarantee a minimum annual wage of $24,600, with opportunities to advance and health and leave benefit. The plan’s mean expected wage of $32,500 a year is more than three times the highest proposed universal basic income.
The government would also be able to use this job-creating ability to expand jobs in sectors where the market won’t currently invest. “You can imagine greening the entire United States,” said Darrick Hamilton, an economist who co-authored the CBPP paper. “The ideas of the jobs go far beyond my imagination, and the NEIC allows communities to have a say in the projects they need.”
Hamilton noted that a job guarantee “would especially benefit marginalized and stigmatized workers that face structural barriers in the private sector.” As his CBPP paper notes, a job guarantee has a long history in the United States: Early versions of the Humphrey-Hawkins Act of 1978 included language that would have established a Job Guarantee Office, but it was scrapped in favor of an “incrementalist approach.” There are international examples as well, from the Argentina’s Jefes y Jefas program and India’s and National Rural Employment Guarantee Act (NREGA) to South Korea’s Moon Jae-in’s responding to the country’s rising inequality with a promise to create 810,000 government jobs.
A jobs guarantee would also boost wages in the private sector, which have been depressed in part by the consolidation of large corporations. Take hospitals: As they have merged, nurses (disproportionately women of color) find it more difficult to go from hospital to hospital and leverage job opportunities for higher wages. But if nurses knew they could go get a job through the government, the private sector would face pressure to increase pay. “The corporate establishment hates full employment and has fought very hard to ensure the economy never reaches full employment—even though it’s the most successful means of improving human welfare we’ve ever enacted,” said Economist Marshall Steinbaum.
To explore the possibility of Democrats’ running on a guaranteed-job plan, we asked the respected data analytics firm Civis Analytics to not only poll guaranteed jobs, but poll it in the way that would be most likely to gain opposition from voters. They asked respondents: “Democrats in congress are proposing a bill which would guarantee a job to every American adult, with the government providing jobs for people who can’t find employment in the private sector. This would be paid for by a 5 percent income tax increase on those making over $200,000 per year. Would you be for or against this policy?”
We expected that in a generic scenario, people would support guaranteed jobs, but before urging Democrats to embrace it, we wanted to see if the policy might take a hit when Republicans made the issue partisan and talked about tax hikes.
The results of the Civis polling were nothing short of stunning, showing large net support for a job guarantee: 52 percent in support, 29 percent opposed, and the rest don’t know. “Even with explicit partisan framing and the inclusion of revenue in the wording, this is one of the most popular issues we’ve ever polled,” said David Shor, a senior data scientist at Civis Analytics.
The chart below shows net support among different political groups. Clinton supporters overwhelmingly support a job guarantee (69 percent to 16 percent, with the rest unsure). High levels of support among nonvoters are particularly noteworthy. Even among Trump voters, support was only net negative of 18 points, which seems high, but 32 percent of Trump voters support a job guarantee, even with the negative framing.
In addition, the job-guarantee polls strongly across all racial groups, but through the roof among black voters (net support of 62 percent) and Latinos (55 percent). In addition, young voters love the job guarantee, with a net support of 43 percent among individuals 18–34 and a net support of 22 percent among 35–64. and net support of 8 percent among individuals 65 and older.
Among the merits of the guaranteed job is that it appeals most to the voters Democrats struggled to mobilize in 2016: low-income voters, and particularly low-income voters of color. Democrats would benefit immensely from increasing the class polarization of the electorate—that is, by winning over more working-class voters at the expense of some wealthy voters.
With a guaranteed-job proposal, Democrats could win three working-class white, black, and Latino voters for every rich white voter they lost. “It’s rare to see an issue with such a strong income divide. Republicans who make less than 25,000 per year are more supportive than Democrats who make more than 150,000,” said Michael Sadowsky, a data scientist at Civis.
The Civis polling suggests that a guaranteed-jobs proposal could help bring voters back into the Democratic fold, or at least it won’t hurt: 56 percent of Obama-to-Trump voters support a job guarantee, and only 26 percent oppose. Among nonvoters, 58 percent support the job guarantee and 15 percent oppose. The job guarantee also transcends divisions from the 2016 Democratic presidential primary: Net support among Clinton voters was 54 percent, and 61 percent among Sanders voters.
American elections, as progressives have learned all too well, are not decided by the national popular vote. For that reason, our think tank Data for Progress modeled state-level support for guaranteed jobs using data provided to us by the Center for American Progress, with the help of Senior Adviser Austin Rochford. We find that the job guarantee polls stunningly well in all 50 states. Even in the state with the lowest modeled support, Utah, support is still 57 percent. Deep-red states like West Virginia (62 percent support), Indiana (61 percent), and Kansas (67 percent) all boast strong support for a job guarantee. Indeed, the places where the job guarantee is most popular might be surprising: DC (84 percent), Mississippi (72 percent), North Carolina (72 percent), Hawaii (72 percent), and Georgia (71 percent) have the highest estimates, though support is also high in solid-blue states like California and New York (both 71 percent).
“The results of this research were just staggering. Americans not only overwhelmingly oppose cuts to programs like Medicaid and nutrition assistance. They also support really bold progressive alternatives—including a jobs guarantee,” said Jeremy Slevin, the director of advocacy for the Poverty team at CAP. “If there was any doubt as to whether progressives should champion far-reaching proposals to help people find good-paying jobs, I hope this erases it,” he said.
That appears to be happening already, from Gillibrand to several congressional candidates for 2018. In deep-blue NY-14, Alexandria Ocasio-Cortez said she’s proposing a federal jobs guarantee and sees guaranteed jobs as a way to set a floor on working conditions. “It’s basically a public option for jobs,” she said. “It guarantees a bare minimum which employment can’t go below.” She also wants jobs that solve externalities provided by the market, such as green jobs.
When we talked to Dan Canon, a congressional candidate in Indiana’s ninth district (where Trump won by a 27 point margin), he said he enthusiastically embraced a federal jobs guarantee and talked about it frequently on the campaign trail. “It’s one of those things that surprised me in how widely it has been accepted by people of all political stripes,” he said. Canon connects a job guarantee to the need for infrastructure: “We have been trained out of thinking about commonsense solutions. People need jobs, what do we do? Give them jobs.”
The job guarantee could end up being a key issue in some Democratic primaries this year. Kerri Evelyn Harris, a Democratic candidate running against incumbent Tom Carper for Senate in Delaware, said, “It is time to offer American citizens guaranteed, quality jobs, with growth potential in the government sector.” She added, “There are an array of areas that could use additional workers, from infrastructure to social work. A guaranteed-jobs program would not only help inject hope back into communities which have broken spirits due to decades of dismal job opportunities, but it will also help pump money into the economy by way of purchases by the newly and adequately employed.”
A job guarantee offers a way for the Democratic Party to return to its roots as a multiracial working-class party. As President Donald Trump recently proclaimed, “We know the single best anti-poverty program is a very simple and very beautiful paycheck.” Indeed, and the government should guarantee one.
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In These Times: Do We Need a Federal Jobs Guarantee? A Debate.
Sens. Kirsten Gillibrand, Cory Booker and Bernie Sanders have all proposed a job guarantee. But would it be drudgery?
BY ROHAN GREY & RAÚL CARRILLO REBUTTAL BY MATT BRUENIG
JUNE 18 | JULY ISSUE
THE CASE FOR A GUARANTEED JOB
BY ROHAN GREY AND RAÚL CARRILLO
Most workers work too much and too hard, only to benefit the idle rich. Thus, we support reducing working hours and capital’s share of wealth. Yet evidence suggests exclusion from work causes problems beyond the absence of income, including higher mortality and suicide rates, social isolation and a permanent decline in well-being.
Among other benefits, a JG creates a space for work focused on dignity, self-actualization and public purpose, divorced from concerns of profiteers. There is no shortage of meaningful labor, from infrastructure repair to care work to artistic revitalization. Combating climate change alone requires massive public mobilization to transform energy and food production, restore ecosystems and defend frontline communities.
Although post-work utopians claim robots are rendering human labor obsolete, the data shows no such evidence. As the Center for Economic and Policy Research notes, the last decade actually saw a decline in productivity growth between 2006 and 2015, relative to the decade beforehand.
With no robot-topia in sight, people must work. A JG reconfigures labor markets in favor of workers. As economist Michal Kalecki argued, ending the threat of unemployment grows the “self-assurance and class-consciousness of the working class.”
Additionally, as Pauli Murray and other Civil Rights leaders argued, true full employment helps ensure fair employment. Workers trapped in low-wage sectors (disproportionately workers of color) can take JG jobs instead. Workers tired of employers promoting war, incarceration, extraction, and deportation can do the same. Meanwhile, workers remaining in the private sector benefit from heightened competition among employers to fill openings.
A JG can also address other structural inequalities within the labor system. Currently, women perform the majority of care work without formal remuneration. A JG program could assist child and elder care professionals, moving familial burdens off the backs of women and into the public sphere, and formalizing and valorizing existing care work.
We do not think central bankers, currently tasked with steering the macroeconomy, are interested in, nor capable of truly achieving full employment. Furthermore, we consider traditional stimulus and labor market programs sloppy and inadequate. By establishing a legal right to work, a JG shifts responsibility for unemployment from individuals to the government.
The struggles for public education and housing are illustrative: Communities that support these goals do not simply try to earmark funds, build infrastructure and hire staff; they commit to meeting the needs of any eligible individual. Recognition of a legal right to work is necessary, but, of course, insufficient. Successful rights enforcement requires administrative support from courts and agencies, fiscal support from Congress, and political support from the public.
Critics contest, first, that jobs suitable for the unemployed are necessarily “make-work.” But the Sunrise Movement, “an army of young people” supporting a climate-oriented JG, argues critical, long-term greenwork jobs do not require prior training or skills.
Second, critics claim that certain work, like construction, can’t employ “unskilled” labor. But the Works Progress Administration did exactly that, and we still use those buildings.
Third, critics equate a JG with bloated bureaucracy. But we can easily integrate JG jobs into existing nonprofit and government infrastructure.
Fourth, critics claim a JG is susceptible to fraud and abuse. But that’s true of all public programs, including those, like Social Security, that entail “simply” cutting checks. This doesn’t mean we should give up on them.
Finally, critics claim a JG is punitive workfare by another name. But we simply argue for basic solidarity. We expect those who can work, to do so —according to their abilities, in an equitable fashion, to meet everyone’s needs.
Economic justice demands more than cash transfers. We must recognize each other as irreducibly social beings, embedded in a complex global system as consumers, and workers.
WHAT A JOBS GUARANTEE CAN’T DO
BY MATT BRUENIG
What exactly is a job guarantee program, according to Raúl and Rohan? We only get the briefest of hints in a single sentence: “We support a federally funded, locally driven job guarantee (JG), which, like programs envisioned by Sen. Bernie Sanders (I-Vt.) and economists at the Levy Economics Institute and the Center on Budget and Policy Priorities, commits the federal government to guarantee a living wage job with good benefits, including healthcare, to anyone who wants or needs one.”
In addition to its vagueness, the sentence is at odds with itself. The very nascent Sanders plan merely creates a process that local governments can use to get federal funding for local projects. This may or may not be a good idea, but, since it relies on localities’ discretion, it can’t possibly provide a job for every American “who wants or needs” one.
The JG program that the Levy Institute and other leading academics have been proposing for decades sets the federal government up as an employer of last resort. The government would fund temporary, minimum-wage jobs—described by Hyman Minsky, the godfather of JG, as “make-work”—for those who are presently unemployable in ordinary public and private sector work. The advocates of this view, including Randall Wray, Stephanie Kelton and Pavlina Tcherneva, have said these characteristics are essential if the program is to avoid creating unsustainable inflationary spirals.
The basic problem with the academics’ proposal is that the make-work jobs will not provide meaningful benefits to society. A JG program could not provide child care and elder care because those jobs need to be done on a permanent basis, not merely when the economy is in recession and many people are out of work.
A JG program could not build infrastructure because construction requires highly skilled workers who make more than the minimum wage. A JG program could not do climate-change work because building sea walls, installing solar panels and just about anything else on this front requires skilled workers who will not work for minimum wage.
If you think it is better to have unemployed people pick up trash and rake leaves rather than receive an unemployment check while they search for a job, then a JG could make sense. Otherwise, you should oppose it, as I do.
READ NEXT:
DO WE NEED A UNIVERSAL BASIC INCOME? A DEBATE.
is a doctoral candidate at Cornell Law School. He is a director of the National Jobs for All Coalition and the Modern Money Network.
is an attorney fighting for economic justice in New York City. He is a director of the National Jobs for All Coalition and the Modern Money Network.
is the founder of the People’s Policy Project, a socialist-leaning think tank in Washington, D.C.
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Levy Economics Institute of Bard College
GUARANTEED JOBS THROUGH A PUBLIC SERVICE EMPLOYMENT PROGRAM
By randall wray, stephanie a. kelton, pavlina r. tcherneva, scott fullwiler, and flavia dantas
In this policy note, we examine the effects of implementing a nationwide job creation program. In recent months, support for a national job guarantee has been growing rapidly, with a number of progressive organizations issuing proposals. The Levy Economics Institute has spent more than a quarter of a century researching the topic and putting forth numerous proposals. The Institute will soon be issuing a major report that will provide detailed estimates of the economic effects of a nationwide program, including impacts on the federal budget, inflation, GDP, and private sector employment.
We begin this note with a brief overview of the goals and structure of the proposal that has been developed at the Levy Economics Institute, building on the work of the Institute’s scholars. The program we envision—which we call a Public Service Employment (PSE) program—would create millions of new jobs at a living wage in an effort to guarantee employment to anyone ready and willing to work. We then discuss current labor market conditions and assess how a job guarantee program modeled on our PSE approach would affect employment and poverty.
Senior Scholar l. randall wray is a professor of economics at Bard College. Research Associate stephanie a. kelton is a professor of public policy and economics at Stony Brook University. Research Associate pavlina r. tcherneva is an associate professor of economics and director of the economics program at Bard College. scott fullwiler is an assistant professor of economics at the University of Missouri–Kansas City. flavia dantas is an associate professor of economics at State University of New York at Cortland.
Copyright © 2018 Levy Economics Institute of Bard College ISSN 2166-028X
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We see the PSE program as part of a restructuring of the economy that represents a radical departure from the neoliberalism that has dominated national policy for the past four decades. Neoliberal doctrine has resulted in stagnant wages, chronically high unemployment, declining labor force participation among prime-age male workers, rising inequality that already exceeds levels achieved in America’s notorious “Gilded Age,” and an explosion of household debt. Other key initiatives in this restructuring include calls for a national infrastructure investment plan, the movement to eliminate student debt (see Fullwiler et al. 2018), proposals to create “Medicare for All,” and the push to raise minimum wages to $15 per hour.
The PSE program would play a complementary role by offering paid work at a living wage of $15 per hour with a basic package of benefits that would include healthcare provided through an expansion of Medicare. It would ensure full employment in the sense that the program would supply a job to anyone ready and willing to work. Jobs would be provided in every community—taking workers where they are, delivering an economic boost to every community in the country.
Goals and Structure of the PSE Program
There has been a recent surge of interest in the creation of a national “job guarantee.” Those now championing the idea (rightly) recognize that our nation is failing to provide an opportunity to work for millions of Americans who want and need jobs. In our work on such proposals, spanning more than a quarter of a century, we have examined America’s experience with job creation programs, including the New Deal programs, as well as those adopted in other countries. As a result of our long investigation of the successes and failures of those experiences, we have designed a program that is in some respects simpler than other proposals and yet provides greater potential for economic stabilization.
Our PSE program pays a uniform wage of $15 per hour, for both part-time and full-time work. This ensures that anyone ready and willing to work will be able to earn at least that wage. In other words, this becomes the effective minimum wage across the country—a wage other employers will have to meet (either by paying at least that wage or by offering other benefits or opportunities in compensation for a lower wage). It also offers basic healthcare (we suggest that this be done through an expansion of Medicare), as well as other basic benefits (such as childcare)—effectively establishing a minimum benefits package that other employers will have to match (or those offering below-minimum benefits will have to pay above $15 per hour). This inclusion of benefits and a generous wage was also part of the strategy that President Roosevelt attempted to pursue in his New Deal jobs programs, and his purpose—to provide a boost to living standards at the bottom—was similar. Unfortunately, President Roosevelt was not able to achieve that goal—he was forced by political opposition to accept a tiered wage structure, with relatively decent wages for skilled workers but poverty-level wages for low-skilled workers. States dominated by conservative politicians then ensured that most jobs created in their states through New Deal programs like the Works Progress Administration (WPA) were designated as low-skilled jobs, in order to keep wages low. Radical restructuring of US labor markets to ensure that anyone who works full time will earn a living wage requires a high minimum program wage.
In addition, Roosevelt’s plan for the New Deal jobs programs was to create employment that did not compete with private sector activities. The goal was to ensure full employment with decent basic wages, but to do so without putting private employers out of business. It is important that the program of job creation does not pull workers out of existing jobs in the private sector. Our PSE program is designed to ensure that all employers pay fair (living) wages, but without competing for employees or displacing private sector undertakings.
Some job guarantee proposals would pay tiered wages, with higher wages for workers of higher skill. We see two problems with such a strategy. First, it could generate the same political fighting that we saw over the New Deal programs, as states dominated by conservatives will try to exclude projects with higher wages. More importantly, higher wages for workers with greater skills will increase competition with private sector employers. Indeed, during periods of economic growth, there is already substantial competition for skilled workers. We believe that the most serious unemployment problem faced in the United States is chronic unemployment for workers with lower skills and education—they have high unemployment (and underemployment) through thick and thin of the business cycle. Our design targets job creation for this group. While workers with greater education and skills will turn to this program when jobs are scarce, PSE participation for them will be transitional: they will work temporarily in the program until conditions improve. Since their normal pay will be above the program wage of $15 per hour, they will have an incentive to return to employment outside the program. The PSE program will not try to retain them with pay above $15 per hour.
On the other hand, the PSE program will provide not only the opportunity to work for those with lower skills and education, it will enhance their chances to obtain work outside the program. They will gain work experience as well as on-the-job training. This will be made an explicit goal of every job created in the program. As such, when labor markets are tight, employers will recruit workers out of the PSE program.
By design, employment in the PSE program will move in a countercyclical pattern—growing in downturns and shrinking in recoveries as workers are pulled into the private sector. This helps to stabilize economic activity and household incomes. Economists call this an automatic stabilizer. The government’s budget will also move in a countercyclical manner as spending on the program cycles with the economy. This, too, helps to smooth cyclical fluctuations.
While we recognize some advantages to designs that feature a federally run program like the WPA, we prefer a highly decentralized program. Today, the federal government directly employs only 2.8 million workers (less than 2 percent of US employment). Advocates of a universal job guarantee recognize that the program might employ at least five times that number of workers. We worry about the political feasibility of expanding federal employment on such a scale. We also see the advantages of decentralizing administration to the community level. Since the goal is to create jobs in every community, and to create projects that are beneficial to every community, it makes sense to involve the local communities in the projects from the proposal stage through to implementation, administration, and evaluation.
Hence, while we would have the federal government provide the funding for the program, we would allow state and local governments as well as registered nongovernmental, not-for-profits to put forth proposals. (To retain a level playing field within the private sector, we would not allow for-profit firms to participate—as they might try to replace part of their workforce with federally paid or subsidized workers.) Since federal monies would be spent, we envision that project assessment and evaluation would take place at multiple levels: community, state, regional, and federal.
We expect that most of the jobs created will provide public services in nonprofit community organizations, public schools, and state and local governments. We recommend that the federal government’s role be largely confined to providing administrative services (through local employment offices), project evaluation, and funding of wages, benefits, and some materials costs. However, if state and local efforts prove to be insufficient, the federal government will need to create supplemental projects to ensure a sufficient number of jobs are made available to all seeking work. These should be targeted to underserved groups.
While some advocates of job guarantee programs would follow the New Deal in undertaking large-scale public works projects, we would limit the use of PSE program workers on infrastructure projects to small-scale projects or for approved apprenticeship or other trainee positions. We do this to avoid conflicts with the Davis-Bacon Act and prevailing wage laws that require wages higher than $15 per hour. As discussed above, we do not favor a tiered wage structure and do not want to compete with private sector employment. Virtually all public works projects today involve government contracts that are awarded to private construction firms. However, PSE workers could be used for very small projects (installing playground equipment), simple maintenance of infrastructure (planting vegetation as screening), and environmental retrofitting (adding insulation to housing in low-income neighborhoods or to community buildings), where such projects do not conflict with applicable prevailing wage laws or the Davis-Bacon Act.
We also envision experimentation with alternative approaches to employment and the provision of community services. For example, a number of proposals for creation of workers’ cooperatives could be solicited. These might be supported by the PSE program for a limited time with the federal government paying wages until the co-ops could become self-supporting. Alternatively, proposals can be solicited for apprenticeship programs that would train PSE workers for skilled employment outside the program after a specified term of PSE program employment. While we want to avoid funding of programs that train workers for jobs that do not exist, training should be a part of every PSE job and some room should be made in the program for approved apprenticeship programs.
While we advocate a program wage of $15 per hour, we recognize that moving immediately from the current federal minimum wage to $15 per hour would be disruptive in many regions of the country. Further, scaling up to a national program that might employ 15 million workers will take time. Hence, we recognize that the program will probably be phased in over a period of several years, both in terms of the numbers employed and the wages and benefits paid. Current proposals for lifting the minimum wage frequently allow for gradual increments, with the wage finally reaching $15 per hour in 2022. This allows time for employers to adjust to higher wages.
PSE Program Impacts on Employment and Poverty President Obama stepped out of office with the longest uninterrupted streak of job creation on record: with 15.8 million private sector jobs added since 2010. Indeed, official unemployment rates have fallen into the 4 percent range—rates that are now commonly believed to equate to, or even exceed, full employment. The February 2018 payroll employment data showed the unemployment rate remained at 4.1 percent for the fifth month in a row, while 331,000 jobs were added. The number of unemployed remained at 6.7 million and the number of long-term unemployed was also unchanged at 1.4 million.
However, those apparently good numbers do not satisfy all analysts. Some take this as evidence that the unemployment rate has reached rock bottom and fear labor shortages will soon fuel inflation. This is the sentiment that lies behind the Federal Reserve’s move to raise rates. On the other hand, others are worried that in spite of relatively strong job creation and low official unemployment rates, some groups are being left behind. In many regions of the country, chronic joblessness is creating desperation—reflected in an opioid crisis, suicides, and rising mortality—at least for some groups. The social costs of unemployment—both visible and less so—are extensive and already shouldered by governments, communities, and families (Tcherneva 2017). Why aren’t these realities reflected in the numbers?
The problem is that the official unemployment data count only a fraction of those who are without jobs but want to work. Indeed, the constant unemployment rate and numbers of unemployed in the face of job growth is evidence that part of the big picture is missing. We need to look beyond official unemployment statistics and adopt a dynamic approach to the labor force. Many of those who leave the ranks of the officially unemployed simply exit the labor force (often because they’ve given up hope), and some of those who exit are counted as discouraged. Many of those who obtain new jobs do not come from unemployed status, but from being out of the labor force. While a significant number of them are new entrants (college graduates, for example), many others are discouraged workers who got lucky. In some respects, many of those who are out of the labor force look very much like those who are counted as unemployed in terms of their desire to work.
Table 1 shows the flows between labor force categories from January to February 2018—during which 331,000 jobs were added. Just over 1.5 million workers who had been employed in January became unemployed by February, and another 4.2 million left the labor force. Of the more than 6.5 million who had been unemployed, almost 2 million obtained jobs, 3.2 million remained unemployed, and 1.5 million left the labor force. Over 4.5 million who had been out of the labor force obtained jobs—almost two-and-a-half times greater than the number of unemployed who found paid work in February—and almost 2 million became unemployed (more than the number of employed who lost their jobs). While the vast majority of those who had been out of the labor force maintained that status, a significant minority behave much like those who are counted as unemployed—and their flows into the ranks of the employed and the unemployed significantly impact the changes in those categories’ totals. This is why relatively robust job creation does not necessarily reduce the unemployment rate.
Table 1 Labor Force Status Flows, Seasonally Adjusted (in thousands)
| Status in Current Month (February 2018) | |||||
| Status in Previous Month | Employed | Unemployed | Not in Labor Force | Other Flows* | Total |
| Employed | 148,628 | 1,560 | 4,217 | 25 | 154,430 |
| Unemployed | 1,916 | 3,220 | 1,547 | 2 | 6,684 |
| Not in Labor Force | 4,600 | 1,911 | 88,955 | 200 | 95,665 |
| Other Flows** | 71 | 15 | 294 | – | 380 |
| Total | 155,215 | 6,706 | 95,012 | 227 | |
Notes: *Including estimated deaths and other BLS population adjustments; **Including those who turned 16 and other BLS population adjustments.
Source: Bureau of Labor Statistics
Another way of looking at that is to say that official unemployment rates do not provide an accurate assessment of the tightness of labor markets. We also need to look at employment rates (number employed relative to population of working age—generally age 16) and labor force participation rates (number of employed and unemployed relative to population of working age). Figure 1 shows labor force participation rates for prime-age workers (ages 25–54).
Dantas and Wray (2017) examined in detail the stagnation or decline of labor force participation rates and employment rates by age, gender, and race. This has commonly been attributed to the aging of the US population and to other supply- side factors (such as lifestyle choices), but Dantas and Wray show that these trends account for only half of the decline. In any case, age demographics cannot apply to prime-age workers. Furthermore, the share of the population age 55 or older that continues to work has been rising, attenuating the negative impact of aging on the participation rate.
Our forthcoming Levy Institute report will provide detailed estimates of the number of people out of the labor force who would have accepted work if a universal job guarantee program had been in place in the third quarter of 2017. Even after the sustained pace of job creation of the past month, we estimate that approximately 4.5 million people who are currently counted among those out of the labor force would be ready and willing to work in such a program. If we add those who are still counted as unemployed (almost 6.7 million) and those who are involuntarily underemployed (working fewer hours than desired—about 4.5 million), we find that there are approximately 15 million potential workers who would be likely to join the program. This would reverse the troubling labor force trends of the past two decades.
For the purposes of our analysis, we assume that the program pays $15 per hour—which equates to $31,200 annually for full-time work. We assume that the workweek in the program averages 32 hours, which includes part-time and full- time workers. The program’s nonwage benefit costs are set at 20 percent. Hence, while we recognize that real-world implementation of a PSE program would be phased in over a period of years, with the wage gradually rising to $15 per hour, for the purposes of our analysis we model a program that is implemented quickly and pays $15 per hour from the beginning.
We find that the program would have a significant effect on poverty rates. At $15 per hour, one full-time worker could lift a family of up to five out of poverty; with one full-time and one part-time worker, a family of eight could rise out of poverty.1 In 2016, nearly 7.5 million people in families with a full-time worker lived in poverty. We find that with one full- time worker per family in the program, 9.5 million children would be lifted out of poverty. The average income gap of the 8 million families living in poverty in 2016 was $10,505—which is less than what a half-time job in the PSE would pay.
Direct spending on the program is just below 2.5 percent of GDP per year. However, this estimate excludes increases in tax revenue due to economic growth as well as potential savings on a wide range of federal, state, and local programs that are targeted to low-income households. In 2015, for example, the federal government spent $104 billion on food and nutritional service programs (including $74 billion for the Supplemental Nutrition Assistance Program, $21 billion for Child Nutrition, and $6 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children), $17.3 billion on Temporary Assistance for Needy Families, $50 billion on housing assistance, and $67 billion on Earned Income Tax Credits. Additionally, total direct spending by states on social services and income maintenance on public welfare was $505 billion (this does not include spending on health, policing, or corrections). Many of these programs would be significantly reduced if everyone who wanted to work had access to a job paying $15 per hour, plus benefits.
The social and economic costs of unemployment and poverty are already “paid for” by federal, state, and local governments, by private firms, by charitable organizations, and by American households. While it is difficult to estimate the dollar savings that the various levels of government might experience from a program that creates jobs at living wages for perhaps 15 million workers, lifts all workers’ wages above $15 per hour, and significantly reduces poverty, there is little doubt that social safety net spending would decline and tax revenues would rise. It would be a mistake to focus on the “cost” of federal funding for a national PSE program without considering the much greater economic and social costs already borne by government and society as a whole, a large portion of which are due to inadequate work opportunities.
In our forthcoming report, we will provide detailed estimates of the economic effects of the program—including impacts on the federal budget, GDP, inflation, poverty reduction, and additional private sector jobs created due to the economic stimulus provided by a job guarantee program that pays a living wage.
Conclusions
Despite headline-grabbing reports of a healthy US labor market, millions of Americans remain unemployed and underemployed. It is a problem that plagues our economy in good times and bad—there are never enough jobs available for all who want to work. The problem is most acute for women, youths, blacks, and Latinos, but new research from Benjamin Austin, Edward Glaeser, and Lawrence H. Summers (2018) finds a persistent lack of employment for large numbers of working-age men, especially across the Eastern heartland, a region that extends from Mississippi to Michigan.
To address the problem, Austin, Glaeser, and Summers argue in favor of geographically targeted subsidies, in particular expanding the Earned Income Tax Credit, to encourage hiring and reduce entrenched joblessness. But what if something far more ambitious were tried? What if we sought to eliminate involuntary unemployment across all demographic groups and geographic regions, by directly creating jobs in the communities where they are needed through a federally funded job guarantee program? How could such a radical transformation of the labor market be implemented? What would it cost, and what would it mean for the US economy?
In recent months, a number of proposals for direct job creation have emerged as an alternative to the more conservative approaches that continue to try to encourage private employers to hire more workers. We applaud these efforts, which are based on the recognition that the government must play a direct role in job creation. Even if the private sector could be encouraged to create enough jobs to move the economy toward fuller employment, it would be impossible to maintain that position for long. Private spending and employment have always been—and will always be—cyclical. As Hyman Minsky argued, “policy weapons which are sufficient to move an economy from slack to . . . full employment are not sufficient to sustain full employment” (Minsky 2013, 122).2 Such policies would generate inflation and financial instability that would make them unsustainable—leading to a “go-stop-go” approach to policymaking. For this reason, Minsky argued that “a suggestion of real merit is that the government become an employer of last resort” (Minsky 2013, 39).
In this policy note, we have sketched the design for such a program. We prefer a universal program that takes workers “as they are” and “where they are.” It is decentralized to ensure that it serves workers as well as the communities in which they live. The program pays $15 per hour plus benefits, establishing a nationwide effective minimum compensation level. It does not compete with private employers, beyond setting minimum labor standards. Employment in the program moves countercyclically, against business cycle swings, helping to stabilize consumption, output, income, and employment. In cyclical upswings, private employers recruit workers out of the program; in downturns, the program absorbs workers shed by private employers. Access to paid work eliminates most poverty, making it easier to deal with the poverty that remains among those who cannot, should not, or will not work. The program eliminates involuntary unemployment among those who experience the greatest barriers to obtaining full-time work. While it does not resolve all labor market problems, it tackles the most severe ones: chronic unemployment, under-employment, and poverty-level wages.
The forthcoming full report on our alternative proposal, the Public Service Employment program, provides detailed estimates of budgetary impacts, jobs created, economic growth, employment demographics, inflation, and poverty reduction.
Note
- Using 2017 preliminary poverty thresholds released by the US Census
- See also Wray (2015) for a discussion of the sustainability problems of full
References
Austin, B., E. Glaeser, and L. H. Summers. 2018. “Saving the Heartland: Place-Based Policies in 21st Century America.” Brookings Papers on Economic Activity, Conference Draft. Washington, DC: Brookings Institution. March.
Dantas, F., and L. R. Wray. 2017. “Full Employment: Are We There Yet?” Public Policy Brief No. 142. Annandale-on- Hudson, NY: Levy Economics Institute of Bard College. February.
Fullwiler, S., S. A. Kelton, C. Ruetschlin, and M. Steinbaum.
- 2018. “The Macroeconomic Effects of Student Debt Cancellation.” Research Project Report. Annandale-on- Hudson, NY: Levy Economics Institute of Bard College. February.
Minsky, H. P. 2013. Ending Poverty: Jobs, Not Welfare.
Annandale-on-Hudson, NY: Levy Economics Institute of Bard College.
Tcherneva, P. R. 2017. “Unemployment: The Silent Epidemic.” Working Paper No. 895. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College. August.
Wray, L. R. 2015. Why Minsky Matters: An Introduction to the Work of a Maverick Economist. Princeton, NJ: Princeton University Press.
This report was commissioned by the Center on Budget and Policy Priorities’ Full Employment Project.
Introduction
Full employment has been part of the policy discourse in the United States since the early twentieth century. One of the most notable proponents of true full employment—defined as an economy in which any person who seeks a job can secure one—was President Franklin D. Roosevelt; his vision of “economic security” for all is a touchstone for full-employment advocates. For Roosevelt, direct hiring programs such as the Works Progress Administration (WPA) and the Civilian Conservation Corps (CCC) were great successes during the Great Depression. While they provided much-needed—albeit temporary—relief during the economic catastrophe, their size and transient nature were insufficient to achieve the long-term impact on employment that Roosevelt, and the full-employment supporters that came before and after him, sought.
Today, economists and policymakers, including the governors of the Federal Reserve System, tend to associate “full employment” with a four-to-six percent unemployment rate, using the standard measure of unemployment.[4] This measure of unemployment counts workers who do not have a job, have actively looked for work in the previous four weeks, and are currently available for work; it does not count the millions who have stopped actively seeking employment, or those inadequately employed in temporary, seasonal, or other precarious employment situations. The four-to-six percent unemployment rate referred to above is based on a conception defined by economists as the non-accelerating inflation rate of unemployment (NAIRU). It is noteworthy that this “target” has changed throughout time. Moreover, an economy with these unemployment rates needlessly condemns millions of U.S. workers to unemployment and underemployment, often resulting in severe economic hardship for those left behind by decisionmakers’ policy choices.
At today’s relatively low unemployment rate of 4.1 percent (January, 2018), 6.7 million workers remain unemployed, an additional 5 million are working part-time though they would prefer full-time work, and job seekers still substantially outnumber job openings.[5]Moreover, this aggregate picture masks the fact that unemployment does not affect all workers equally. Historical unemployment data highlight the persistent trend of discriminatory labor market practices that result in substantially higher unemployment rates for some social groups. For instance, black workers routinely face an unemployment rate that is roughly twice that of white workers, even after controlling for educational attainment.[6][7] There is recent evidence that narrowing of the racial unemployment gap occurs as the labor market tightens, but these gaps may be exacerbated during economic downturns.[8]
Unemployment Level by Race
While achieving full employment is an important aspect of generating equitable growth in the economy, policymakers should also be concerned with developing policies that guard against poverty-level wages. Although unemployment is a major predictor of poverty in the United States, data indicate that simply having a job is an insufficient condition for the escape of poverty. A study by the Economic Policy Institute found that despite being employed, 28 percent of U.S. workers took home poverty-level wages in 2011, leading to grave economic conditions for these workers and their families.[9]
The U.S. government has intervened in the labor market to support full employment and non-poverty wage policies. Government programs and policies including the Federal Reserve’s dual mandate, the Earned Income Tax Credit (EITC), minimum wage laws, living wage ordinances, Medicare and Medicaid, and the Supplemental Nutrition Assistance Program (SNAP) have gone some distance toward protecting the economic well-being of millions of Americans. Though the current anti-poverty and social insurance regime slashed poverty rates nearly in half in 2016 (when compared to poverty rates in the absence of these programs), it largely bypassed those without employment; and the shift to a work-based safety net, inaugurated by the 1996 welfare reforms under the Personal Responsibility and Work Opportunity Reconciliation Act signed into law by President Clinton, further exacerbated a safety net riddled with holes for those without work.[10]
Although the programs listed above may have been effective in reducing unemployment, poverty, hunger, and other social ills, they fall short of providing a social insurance system that offers a genuine path to full employment and the elimination of poverty. We recommend a slate of bold legislation to achieve and maintain full employment and end working poverty in the U.S. economy.
We recommend:
- The permanent establishment of a National Investment Employment Corps (NIEC).The NIEC will provide universal job coverage for all adult Americans. The permanent establishment of the NIEC would eliminate involuntary unemployment.
- The elimination of poverty wages through the pay structure of the NIEC. The federal job guarantee would provide a job at a minimum annual wage of $24,600 for full-time workers (poverty line for a family of four) and a minimum hourly wage of $11.83. Workers would have the opportunity to advance within the program, rising from the minimum wage in the program to an estimated mean salary of $32,500. The wage would be indexed to the inflation rate to ensure that the purchasing power of enrollees is maintained and the wage will vary to allow for some degree of regional variation. The minimum wage rate in the program will also rise to meet the national minimum wage if it were to exceed the wage rate recommended here.[11]
- The inclusion of fringe benefits. To provide a true non-poverty wage and meet the fundamental rights of American citizens, the policy will include health insurance for all full-time workers in the program. The health insurance program should be comparable to that offered to all civil servants and elected federal officials. In addition, the NIEC would offer benefits such as retirement plans, paid family and sick leave, and one week of paid vacation per three months worked. These benefits, in conjunction with non-poverty wages, will set a reasonable floor in the labor market—which, through competitive forces, will result in private-sector workers having the dignity of fringe benefits as well.
A Bold Policy to Achieve Permanent Full Employment
The persistence of involuntary unemployment in the U.S. economy is the status quo—but it need not be. Recent research has highlighted the policy mechanisms behind rising inequality in the United States; likewise, unemployment substantially affects inequality and is itself affected by the policy.[12] While the Federal Reserve initially had a single mandate of price stability, the 1978 Full Employment and Balanced Growth Act (commonly known as the Humphrey-Hawkins Act) legally required the Federal Reserve to pursue “maximum employment,” thereby creating the modern dual mandate of the Federal Reserve. While the maximum employment mandate has resulted in sizable employment gains when the Federal Reserve chooses to prioritize it, the mechanism has proven far from sufficient in achieving full employment in the Keynesian sense—that is, an economy where anyone who wants a job can find a job.[13]
Although the federal government has established full employment as a national goal in the past—via the Employment Act of 1946 and the Full Employment and Balanced Growth Act of 1978—it has failed to achieve these goals through macroeconomic stabilization policies, monetary or fiscal. The only time the United States was operating near full employment was during World War II. From 1943 to 1945, the U.S. operated at an average unemployment rate under 1.7 percent.[14] Thus, this paper proposes the creation of a National Investment Employment Corps to achieve permanent full employment in the U.S. economy through large-scale, direct hiring by the federal government.[15] We argue that not only would such a policy bring the economy to sustained full employment, but it also would constitute a sizable restructuring of the labor market.[16]
The federal job guarantee would provide a job, at non-poverty wages, for all citizens above the age of 18 that sought one.[17] The minimum wage rate in the program is $11.83 an hour, equivalent to $24,600 per year for full-time workers, which is the current poverty line for a family of four. This rate would be indexed to inflation, ensuring that workers’ purchasing power is maintained over time.[18] The program would incorporate wage variation based on time and performance in the program, a worker’s previous experience, education, and region of residence; thus, we estimate a mean annual wage for all employees at approximately $32,500.[19]
The permanent establishment of the NIEC would eliminate persistent involuntary unemployment in the economy, ensuring that the United States lives up to the unfunded mandate to achieve and maintain full employment as outlined in the Full Employment and Balanced Growth Act of 1978. But we know that a job is not sufficient for workers to live a life of decency and guard against poverty. To provide an adequate living for workers and keep them and their families financially stable, workers will receive a benefits package in addition to a non-poverty wage as part of their compensation.[20]
At this time, we estimate additional expenditures of $10,000 per full-time worker per year to provide adequate health insurance and benefits. Since workers would be public employees, the insurance would be comparable to current health insurance plans offered to civil servants, including members of Congress.[21] Other fringe benefits will also be provided to workers, including paid family and sick leave and one-week paid vacation per three months worked.
An Abbreviated History
The idea of a federal job guarantee is not novel. Government intervention in the labor market to ensure full employment has been part of the political and policy debate at the national level at least since President Roosevelt’s final State of the Union address in 1944, wherein Roosevelt introduced what he called an Economic Bill of Rights.[22] The speech was grounded in Roosevelt’s belief that “the American Revolution was incomplete and that a new set of rights – economic rights and rights analogous to Nobel Laureate Amartya Sen’s more recent conception of human capabilities – was necessary to finish it.”[23] The first “article” of his proposed second Bill of Rights was the right to employment. The second was the right to “earn enough” to lead a life of dignity. Roosevelt was convinced that security—“physical security…economic security, social security, moral security”—was central to the success of the American experiment.
Roosevelt, a defender of private property and state-sanctioned capitalism, was convinced—and rightly so—that the free market alone could not provide the necessary security to the American people. In the absence of the provision of adequate opportunities for work by the private sector to eliminate involuntary unemployment, Roosevelt envisioned the creation and maintenance of a public-sector jobs option to provide employment for all seeking work. Prior to the 1944 State of the Union address, Harry Hopkins, a trusted advisor to Roosevelt and one of the chief architects of the New Deal, strongly advocated a permanent federal employment program; while Roosevelt supported the idea, the administration was not able to secure it.[24]
The country’s pursuit of genuine full employment—meaning the elimination of unemployment—through a job guarantee did not end with Roosevelt; rather it was just beginning. In 1946, two years after Roosevelt’s introduction of an Economic Bill of Rights, Congress passed the Employment Act of 1946. Although this was a markedly weaker version of the failed Full Employment Bill of 1945, it nevertheless helped reshape how the federal government would view its role in the pursuit of full employment.[25]
Those seeking a mechanism for permanent full employment knew their work was far from over. It is often forgotten that full employment was a cornerstone of the famed 1963 March on Washington. Civil rights leaders including Bayard Rustin, Dr. Martin Luther King Jr., and Coretta Scott King publicly endorsed the universal right to a job at non-poverty wages for all Americans.[26] Although their work in the 1960s resulted in significant strides with regard to civil rights, economic rights were largely left unrealized.
After Dr. King’s assassination, Coretta Scott King doubled down on the pursuit of authentic full employment legislation. Her work was instrumental in shaping an early version of the 1978 Full Employment and Balanced Growth Act, better known as the Humphrey-Hawkins Act, and early versions of the bill established a federal Job Guarantee Office, signaling the government’s direct involvement in ending unemployment through direct employment. [27]
While this office was eventually cut from the legislation, the final bill established an interim five-year target of three percent unemployment for individuals 20 years of age and older, and four percent for individuals age 16 and over within five years, with full employment to be achieved ‘‘as soon as practicable’’ thereafter. The proposal, as originally drafted, would have been enforceable; it established a legal right to work where the unemployed would have the right to demand employment from the federal government. The bill, which was passed into law, has been largely ignored in practice, as the final version weakened the full employment mandate from a commitment to a “goal.” The U.S. government has never achieved the reasonable employment targets set in the law, close to 40 years since passing the 1978 Full Employment and Balanced Growth act.[28]
Other countries have employed varying forms of a job guarantee program to promote full employment and poverty alleviation. Perhaps the best known examples are India’s National Rural Employment Guarantee Act (NREGA) and Argentina’s Jefes y Jefas. India’s program, the largest direct employment scheme in the world, with over 600 million workers eligible for employment, provides up to 100 days of guaranteed paid employment per year for rural households. Recent research indicates that the program increased earnings for low-income households and increased employment in the private sector. Income for the low-income households increased 13.3 percent, with the vast majority (90 percent) of the increase coming from higher wages in private employment rather than wages earned through program employment.[29] The Argentinian case provides additional insight into large-scale direct employment programs, where the government successfully provided guaranteed employment to a head of household for at least four hours a day to engage largely in community development projects.[30] While both of these programs differ in important ways from what we propose here, the research evaluating them to date provides useful guidance for full employment policy design and implementation.
Benefits of Permanent Full Employment
The benefits of permanent full employment in the U.S. economy through the creation of the NIEC would be substantial. They include, but are not limited to:
- The elimination of involuntary unemployment. A public option for employment means workers will no longer be forced into unemployment. The policy would eliminate cyclical and structural unemployment and provide workers with the dignity and sense of purpose that comes with employment. Furthermore, the elimination of involuntary unemployment would bypass the social and personal ills associated with unemployment, such as the erosion of skills, increased rates of physical and mental illness, suicide and attempted suicide, and failed relationships, among others.[31]
- A true floor in the labor market. While minimum- and living-wage laws have historically been implemented to place a floor in the labor market, they fail to provide viable pathways to employment or out of poverty for those looking for work but unable to obtain employment in the first place. The job guarantee would function as a de facto floor in the labor market, greatly increasing the bargaining position of workers throughout the economy. For private employers to attract employees, they would have to offer a job that is at least as good as the one offered by the government.
- The elimination of working poverty. Unemployment is one of the strongest predictors of poverty in the United States. Households whose usual breadwinners are out of work are three times more likely to be poor than working households.[32] The job guarantee would substantially reduce poverty by eliminating involuntary unemployment and setting a non-poverty wage and compensation floor in the labor market.
- Improving workers livelihoods as the Federal Reserve manages its dual mandate. As noted above, the Federal Reserve has a dual mandate—maximum employment and price stability. Through its use of monetary policy, the Federal Reserve plays a vital role in promoting full employment; however, monetary policy has proven insufficient for eliminating involuntary unemployment. Historically, the Federal Reserve has had a significant role in increasing unemployment as a result of combating any inflationary pressures that may exist in the economy. With a job guarantee policy in place, the Federal Reserve can conduct monetary policy without promoting rising levels of unemployment. In this scenario, the job guarantee program can maintain employment and consumption expenditures while the Federal Reserve employs monetary policy to reduce private investment in order to cool the economy. Thus, U.S. workers would be less vulnerable to the Federal Reserve not adhering to their responsibility of a dual mandate appropriately due to their cultural over-emphasis—a function of their close ties to the financial sector—on price stability.
- The restoration of local and state tax bases. By providing for full employment, the job guarantee will increase employment, and therefore expenditures and tax revenues for local and state governments. Although the job guarantee is designed as a universal program, more resources will flow to communities that currently have the highest rates of unemployment and underemployment (presumably because of higher uptake of NIEC employment opportunities). This will result in increased government resources to better serve their constituents.
- Macroeconomic stabilization. The job guarantee would function as a robust automatic stabilizer in the economy, maintaining levels of employment during economic downturns through direct hiring, and freely allowing workers to flow from the jobs program to the private sector during economic boom times. While workers may see some decrease in their purchasing power during an economic contraction, the job guarantee will automatically expand as demand for employment in the private sector contracts, providing a buffer to incomes and guarding against major pitfalls in effective demand.
- The provision of socially useful goods and services. During the Great Depression, the Works Progress Administration (WPA) and Civilian Conservation Corps (CCC) were public employment programs designed to put Americans back to work. The programs were implemented near the height of the Great Depression, when the national unemployment rate reached 25 percent. These programs, implemented under the Roosevelt administration, provided goods and services that benefited all Americans by facilitating the logistics and technological expansion of our public infrastructure, including 650,000 miles of new or improved roads; 39,000 schools built, improved, or repaired; 4,000 new or improved utility plants; and 225,000 concerts performed. Under a job guarantee, even those who do not receive employment via the NIEC will likely benefit through the increased provision of public goods and socially desirable goods and services. Furthermore, the provision of productive goods and services will dampen inflationary concerns.
Program Logistics
The majority of Americans secure their livelihoods, and those of their dependents, through paid employment, yet a job at non-poverty wages is out of reach for millions of Americans. Since most people must live by work, a first objective of an economic-security program must be to reach and maintain full employment. Thus, it is the purpose of the NIEC to provide employment for all persons seeking a job and to perform the work necessary to maintain and expand the nation’s physical and human infrastructure. The establishment of the NIEC will provide a direct mechanism for achieving permanent full employment in the U.S. economy.
The NIEC would be administered by the Department of Labor and overseen by the Secretary of Labor.[33] The Secretary would administer employment grants to eligible entities, including state, county, and local governments, as well as Indian Nations, to engage in direct employment projects. These projects should be designed to address community needs and provide socially beneficial goods and services to communities and society at large.
In addition, the Secretary shall work with federal agencies to identify areas of needed investment in the U.S. economy, including goods (examples: infrastructure, energy efficiency retrofitting) and services (examples: elder care, child care, job training, education, and health services). If projects at the local, county, or state level are inadequate to maintain full employment in the region, the Secretary shall intervene in the locality to provide adequate employment opportunities. Projects will be designed to assure full employment in all localities.
The NIEC can be deployed to cover a wide scope of activities including, but not limited to, the repair, maintenance, and expansion of the nation’s infrastructure, housing stock, and public buildings; energy efficiency upgrades to public and private buildings; assistance with ecological restoration and services to reduce the country’s carbon footprint; engagement in community development projects; provision of high-quality preschool and afterschool services; provision of teachers’ aids; provision of high-quality elder care and companionship; rejuvenation of the nation’s defunded postal service; support for the arts; and other activities that shall support the public good.[34]
Because of the vital role of state and local governments in providing public workers and services, it is essential that federal agencies and the NIEC are empowered to work closely with these governments. Local and state governments will be encouraged to develop employment proposals in conjunction with community leaders, local government officials, labor organizations, and local residents to ensure the proposals will serve the needs of the constituents and available pool of labor. The employment proposals may not be used to employ individuals who will replace or speed the displacement of existing employees or individuals who would otherwise perform similar work.[35] The program will cover wage, benefits, and material expenses.[36] This structure will largely parallel the direct employment programs under the New Deal, whose projects were developed and proposed by local and state governments. Fostering partnerships and buy-in from local and state partners is critical to the success of the program, as localities may be most aware of the skills of their available workers as well as projects that will provide the greatest benefit to their communities.
Who is eligible to work under the program? Employment opportunities under the NIEC are open to all individuals age 18 and older in the United States.[37] While much of the existing safety net in the U.S. forces individuals and families to be exposed to poverty before receiving assistance, the NIEC will provide a job upon request from those who are unemployed, underemployed, or currently outside of the labor force.
Employment can be either part-time (20 hours a week) or full-time (35–40 hours a week) depending on the needs of the employee. For employees to receive their compensation, they must show up to their job and perform the tasks assigned to them. As was the case with the WPA, a Division of Progress Investigation (DPI) should be established to monitor shirking or corruption. If workers are found to be negligent, or generally disruptive to the workplace, disciplinary action can be taken by the DPI.
The duration of employment shall be as long as the individual is in need of employment at non-poverty wages. To assist with individuals’ move from the job guarantee to other employment opportunities, the program shall establish a website and database listing individuals employed under the program as available for, and seeking, employment. Thus, in many respects, job recipients under the program will still function as a reserve pool of workers; however, they will be gainfully employed under the program rather than subject to unemployment and economic and personal hardship, as well as the social stigma associated with being unemployed. In turn, individuals shall be allowed up to one day (8 hours) per employed month to seek alternative employment and for professional development.
The wage for employees should be set at a minimum of $11.83 an hour, plus benefits, and indexed to inflation. While most benefits will be available to all workers, since this is primarily a jobs program, to avoid the moral hazard of participation solely for the health insurance benefit, health insurance will only be available to full-time workers (35–40 hours per week). Wage variation would be built into the program to account for workers’ previous experience, education, and region of residence, as well as the prospect of promotion within the NIEC. Therefore, while the base wage in the NIEC will be $24,600 for full-time workers, we estimate a mean wage for all employees at approximately $32,500. Regional variation could follow the scales currently used in the federal government established by the Office of Personnel Management.[38]
Once the program is initiated, it will take time, perhaps two to three years, to scale the program to meet countrywide demand for employment.[39] In the initial phases of the program, the supply of employment opportunities will likely be insufficient to meet the demand for jobs. During this period, the Secretary shall target employment grants and engage in direct hiring in areas with the greatest level of need. These should be determined by indicators such as the unemployment and “underemployment rate” (“U-6” from the monthly employment report)[40], the poverty and extreme poverty rate, and the employment-to-population ratio (EPOP).
To manage projects past, present, and future, we recommend that the NIEC create a website where all projects will be listed. The website can function as a jobs and projects bank, where a list of the needs of communities, states, and the federal government will be maintained and updated, along with aggregate demographic indicators of job recipients. The website will help local and state administers match projects with existing workers in the NIEC. Furthermore, this database will guard against hastily planned emergency work, ensuring public employment be planned in advance and coordinated with the policies and needs of the government.
Program Uptake and Costs Estimates
Program uptake and costs are challenging to estimate for a program that will have profound implications for the economy. Make no mistake, this is a policy to transform the U.S. labor market. For instance, a recent Economic Policy Institute report analyzing the effect of a $15 minimum wage phased in by 2024 found that 41 million workers, roughly 29 percent of the wage-earning workforce, would see a raise.[41] While the wage rate in the NIEC is lower than this, taking benefits into account may result in a comparable change within the labor market—leading to the direct employment of millions and raises for tens of millions. In this section, we provide estimates for program uptake and costs under a job guarantee program in the United States.
Table 1 provides estimates for program uptake and gross cost under the NIEC given the most recent labor market statistics. Using January 2018 data from the Bureau of Labor Statistics, we estimate a total annual program cost of $543 billion, or just under 3 percent of GDP. While headline economic numbers commonly cite the official unemployment measure, we generate the estimate using a broader notion of unemployment and underemployment, known as U-6. We assume U-6 would be brought down to 1.5 percent—what we believe to be a reasonable estimate for frictional unemployment in the U.S. economy—by the uptake of employment through the NIEC and the elimination of involuntary unemployment. This would result in the employment of 10.7 million workers, or 9.7 million full-time equivalent positions.
| TABLE 1 | |
|---|---|
| Job Guarantee Expenditure and Uptake Estimates | |
| Unemployment and underemployment (U-6), January 2018 | 8.2% |
| Total number of unemployed and underemployed workers (U-6) | 13.1 million |
| Number of unemployed and underemployed workers if U-6 were at the full employment rate of 1.5% | 10.7 million |
| Full-Time Equivalent (FTE) Demanded | 9.7 million |
| Avg. Annual Wage | $32,500 |
| Avg. spending on supplies and capital goods per FTE | $11,000 |
| Employer’s Share of FICA Taxes per FTE | $2,500 |
| Avg. spending on benefits | $10,000 |
| Avg. cost per job | $56,000 |
| Total Cost | $543 billion |
We expect the number of workers employed under the NIEC to fall substantially as the private sector responds to the sizable increases in employment and the growth of workers’ purchasing power under the program. Harvey (2011) provides estimates of indirect job creation from a job guarantee program, finding that for every direct job created by the government, the private sector could generate an estimated .26 jobs; however, multipliers tend to be smaller under full employment.
Although the job guarantee may result in the displacement of some workers currently employed in the private sector, especially at the low end of the labor market, evidence from the minimum wage debates may provide insight into the employment dynamics with a job guarantee. Previous research estimating the employment effects of increases in the minimum wage by Allegretto, Dube and co-authors consistently shows that the employment effects of modest increases to the minimum wage are not distinguishable from zero.[42] Since the job guarantee places a floor in the labor market, employers will likely have to offer compensation packages at least as desirable as those offered under the NIEC. Thus, it is, de facto, similar to a rise in the minimum wage; in fact, the increase in total compensation under NIEC exceeds our traditional conception of the minimum wage.[43]
The gross cost of implementing the NIEC would be offset substantially by increases in local, state, and federal tax revenues, decreases in uptake of existing social insurance programs, increases in the growth rate of GDP, and substantial productivity and capacity gains in the U.S. economy. While we do not argue for the elimination of existing social insurance programs, the uptake of employment through the NIEC coupled with the establishment of a new floor in the labor market will result in many families earning incomes above program thresholds. The Congressional Budget Office’s Budget and Economic Outlook provides current expenditures on social insurance programs.[44] Using actual government expenditures from 2016, we see that the U.S. government already spends hundreds of billions on social insurance programs annually. While these programs have been estimated to have reduced the poverty rate by half, they have not gone far enough to totally eliminate working poverty.[45][46]
What programs could we expect to be scaled back through the reduction of need? With the job guarantee providing employment at non-poverty wages, we expect the demand for unemployment insurance ($33 billion FY 2016) to fall substantially.[47] Temporary Assistance to Needy Families (TANF; $16 billion FY 2016) could be nearly eliminated, as the job guarantee would be able to fill the gap for qualifying families in many instances. Additionally, with higher wages from the job guarantee, fewer households may qualify for the Earned Income Tax Credit (EITC; $70 billion FY 2016). For instance, those without dependents working full-time would no longer qualify, while those with dependents would be more likely to see EITC benefits reduced as they phase out of the program due to higher earnings.
With increased earnings, many families are likely to exceed the income limits for the necessary food assistance program, known as the Supplemental Nutrition Assistance Program (SNAP; $73 billion FY 2016). Finally, with the provision of health benefits to full-time workers through the NIEC, we expect to see a sizable fall in the need for Medicaid ($368 billion FY 2016) and the Children’s Health Insurance Program (CHIP; $14 billion FY 2016).[48]
Beyond savings from the reduced need for existing social insurance programs, we argue the NIEC will also generate sizable increases in tax revenue throughout the economy by increasing productive capacity and maintaining consumer spending. While the majority of economists in recent history have argued that monetary policy was sufficient to stabilize the economy, there has been a recent shift amongst economists recognizing an “activist fiscal policy” is necessary for full employment and macroeconomic stabilization.[49][50]
There would also be cost savings associated with enhanced human capacities from a job guarantee. Research indicates that extended periods of high rates of unemployment in the economy can lead to “skill losses among workers, reducing human capital and lowering future output.”[51] Putting millions of people to work through the NIEC will result in the buildup of the United States’ human and physical infrastructure and the provision of additional socially useful goods and services, resulting in a profound impact on the productivity and the long-term growth rate of the economy.
The program could be financed through a variety of mechanisms. While financing the job guarantee is not the focus of the paper, we provide three ways to finance the program policymakers should consider. First, as discussed above, the implementation of a job guarantee will substantially reduce costs in existing social insurance programs. Non-poverty wages will mean many workers no longer need to rely on government assistance to meet their basic needs. A recent UC Berkeley Center for Labor Research and Education study found that $153 billion a year is currently spent on public assistance programs because of low wages, money which could be repurposed to provide more people with a non-poverty standard of living.[52] Also, the program could be financed through implementing a financial transaction tax (as proposed in Rep. John Conyers’ H.R. 1000 bill), modifying estate and gift tax provisions, or the implementation of carbon taxes.[53]
Conclusion
A job guarantee would fundamentally transform the current labor market in the United States. Our current conception of full employment is inadequate; we discuss a bold policy in this paper to bring the United States to a permanent, more accurate indicator of full employment—by which we mean that everyone who seeks a job can find one at non-poverty wages. Beyond providing full employment, the job guarantee could be a turning point for American workers. Workers are faced with stagnating real wages and a continued erosion of labor’s share of income. The job guarantee could significantly alter the current power dynamics between labor and capital—particularly for low-wage workers and traditionally marginalized groups.
Benefits of the program reach beyond those directly employed under the NIEC. If a job guarantee were to be implemented, it also would function as a de facto employment floor in the labor market. Private employers would have to offer wages and benefits that are at least competitive with the NIEC in order to attract workers. The universal nature of the program would ensure jobs for all—including those with some forms of disability who may not be employed through the private sector. The universal design is critical to ending working poverty and involuntary unemployment; this is in contrast to other forms of intervention in the labor market, such as minimum wage laws, which do not ensure access to employment in the first place. Nevertheless, complementary changes to the existing social insurance system would be necessary to eliminate poverty entirely, as some individuals may be unable to work for various reasons.[54]
Despite the discussion of full employment as a national priority for nearly a century now, policymakers have failed to deliver an economy that prioritized employment for all. Full employment is a goal that the private market in unable to achieve, therefore requiring government intervention in the labor market. Above, we discuss a transformative policy proposal—a federal job guarantee—whereby the government engages in the direct hiring of workers at non-poverty wages to achieve, and maintain, a full employment economy. Whether or not policymakers agree with the specifics we suggest in our proposal, we encourage them to think about bold solutions to achieve and maintain full employment. Restructuring our public policies to eradicate involuntary unemployment and poverty is within our reach.
Acknowledgements
The authors would like to thank Caterina Chiopris for her excellent research assistance and Jared Bernstein, Philip Harvey, and Ben Spielberg for their extremely helpful review and feedback. The authors are grateful to the Nathan Cummings Foundation for research support provided by a grant made to the Samuel DuBois Cook Center on Social Equity.
[1] Mark Paul is a Postdoctoral Associate at the Samuel DuBois Cook Center on Social Equity at Duke University.
[2] William Darity Jr. is the Samuel DuBois Cook Professor of Public Policy, African and African-American Studies and Economics and the Director of the Samuel DuBois Cook Center on Social Equity at Duke University.
[3] Darrick Hamilton is Professor of Economics and Urban Policy at the Milano School of International Affairs, Management and Urban Policy and Department of Economics at the New School for Social Research, and Director of the Doctoral Program in Public and Urban Policy at The New School.
[4] This measure in known as “U-3” in the monthly employment report from the Bureau of Labor Statistics.
[5] Bureau of Labor Statistics, “Job Openings and Labor Turnover Summary,” U.S. Department of Labor, January, 2018, https://www.bls.gov/news.release/pdf/jolts.pdf.
[6] Janelle Jones and John Schmitt, “A College Degree is No Guarantee,” Center for Economic and Policy Research, May, 2014, http://cepr.net/documents/black-coll-grads-2014-05.pdf.
[7] The gap in unemployment between white and black workers is relatively stable across time. Further, recent research suggests that the unexplained portion of the wage differentials between white and black workers has been growing during the past forty years. For further discussion, see Mary C. Daly, Bart Hobijn, Joseph H. Pedtke, “Disappointing Facts about the Black-White Wage Gap,” Federal Reserve Bank of San Francisco, September, 2017, http://www.frbsf.org/economic-research/publications/economic-letter/2017/september/disappointing-facts-about-black-white-wage-gap/.
[8] Tomaz Cajner, Tyler Radler, David Ratner, and Ivan Vidangos, “Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle,” Federal Reserve Board, June, 2017, https://www.federalreserve.gov/econres/feds/files/2017071pap.pdf.
[9] “The State of Working America,” Economic Policy Institute, http://www.stateofworkingamerica.org/fact-sheets/poverty/.
[10] Danilo Trisi, “Safety Net Cut Poverty Nearly in Half Last Year,” Center on Budget and Policy Priorities, September, 2016, https://www.cbpp.org/blog/safety-net-cut-poverty-nearly-in-half-last-year.
[11] In effect, the job guarantee can set a new minimum degree of compensation by providing a fallback position to workers. If the federal minimum wage is raised above the current wage proposed in the program, the program wage shall be revised upward to meet the federal minimum wage. This will alter the cost estimates provided below.
[12] Joseph Stiglitz, Nell Abernathy, Adam Hersh, Mike Konczal, and Sue Holmberg, “Rewriting the Rules of the American Economy,” The Roosevelt Institute, May, 2015, http://rooseveltinstitute.org/rewriting-rules-report/.
[13] Dean Baker, Sarah Rawlins, and David Stein “The Full Employment Mandate of the Federal Reserve. Its Origins and Importance,” Center for Economic and Policy Research; Fed Up; and The Center for Popular Democracy, July 2017, http://cepr.net/images/stories/reports/full-employment-mandate-2017-07.pdf.
[14] Bureau of Labor Statistics, Historical Statistics of the United States Colonial Times to the 1970, Part I (U.S. Government Printing Office, 1975), Series D 85-86 Unemployment: 1890-1970, 135.
[15] William A. Darity Jr., “A Direct Route to Full Employment,” 37 no. 3-4 (2010), pp. 179-181.
[16] For other scholarly work exploring similar job guarantee proposals, see Harvey 1989, 2000; Wray and Forstater 2004; Wray 2008; and Tcherneva 2012, 2013.
[17] Complementary youth employment programs should be considered. For a recent discussion of full employment for the young, see Harold A. Pollack, “Full Employment for the Young, Too,” Center on Budget and Policy Priorities, September, 2017, https://www.cbpp.org/research/full-employment/full-employment-for-the-young-too.
[18] This was initially part of the Full Employment Bill of 1945, S380.
[19] The details of the wage scale should be established by a committee within the Department of Labor.
[20] Benefits, such as health insurance, are critical to the financial health of workers. For instance, medical bills are currently the leading cause of bankruptcy in the United States.
[21] Estimate was established using 2017 premiums published for non-postal workers by the U.S. Office of Personnel Management, https://www.opm.gov/healthcare-insurance/healthcare/plan-information/premiums/.
[22] Frankling D. Roosevelt, State of the Union Message to Congress, January 1944, http://www.fdrlibrary.marist.edu/archives/address_text.html
[23] Cass Sunstein, The Second Bill of Rights: FDR’s Unfinished Revolution and Why We Need It More Than Ever(New York: Basic Books, 2004).
[24] June Hopkins, Harry Hopkins: Sudden Hero, Brash Reformer (New York: St. Martin’s Press, 1999).
[25] Phillip Harvey, “The Right to Work and Basic Income Guarantees: Competing or Complementary Goals?” Rutgers Journal of Law and Urban Policy 2, no. 1.
[26] Helen Lachs Ginsburg, “Historical Amnesia: The Humphrey-Hawkins Act, Full Employment and Employed as a Right,” The Review of Black Political Economy, 39, no. 1 (2012), pp. 121-136.
[27] The act was an amendment to the 1946 Employment Act drafted by Leon Keyserling.
[28] William Darity Jr. and Darrick Hamilton “Full Employment and the Job Guarantee: An All-America Idea” in Michael Murray (ed.) Full Employment and Social Justice: Solidarity and Sustainability, Palgrave forthcoming.
[29] Karthik Muralidharan, Paul Niehaus, Sandip Sukhtankar, “General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India,” National Bureau of Economic Research, 2017, http://www.nber.org/papers/w23838?utm_campaign=ntw&utm_medium=email&utm_source=ntw.
[30] For an in-depth discussion of Argentina’s Jefes y Jefas program, see Pavlina Tcheneva and L. Randall Wray, “Employer of Last Resort Program: A case study of Argentina’s Jefes de Hogar Program,” SSRN, 2005, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1010145.
[31] Arthur H. Goldsmith, Jonathan R. Veum, and William A. Darity Jr., “Unemployment, Joblessness, Psychological Well-being and Full Employment: Theory and Evidence,” Journal of Socio-Economics 26, no. 2 (1997), pp. 133–58; William A. Darity Jr., “Employment Discrimination, Segregation, and Health,” American Journal of Public Health 93, no 2 (2003), pp. 226-231.
[32] Marilyn Achiron, “Fighting Poverty at Work,” OECD, 2009, http://oecdobserver.org/news/archivestory.php/aid/3066/Fighting_poverty_at_work.html.
[33] Similar to the New Deal jobs programs, which were operated by the federal government, employees of the NIEC at all levels would be federal employees.
[34] If the program supported the postal service, the USPS could be expanded to provide basic financial services through a public banking system, as has been advocated by the Postmaster General. Office of the Inspector General, “Providing Non-Bank Financial Services for the Underserved,” Unites States Postal Services, January, 2014, https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-14-007_0.pdf
[35] Learning from past experiences such as the Comprehensive Employment and Training Act of 1973 (CETA), it is vital that the program is designed to avoid state and local governments utilizing the program to pay for existing state and local government jobs which would normally be financed through local tax revenues. The purpose of the NIEC is to complement, not replace, existing local and state employment.
[36] Localities would be able to supplement expenses; for instance, if there are local minimum wage ordinances above the pay rate determined at the federal level for the NIEC, the specific locality would be responsible for the additional compensation above that provided by the NIEC.
[37] Additionally, there is need for complementary legislation that provides summer employment opportunities for teens.
[38] For the 2018 scale, please see Federal Salary Council, “Level of Comparability Payments for January 2018 and Other Matters Pertaining to the Locality Pay Program,” Office of Personnel and Management, December, 2016, https://www.opm.gov/policy-data-oversight/pay-leave/pay-systems/general-schedule/federal-salary-council/recommendation16.pdf.
[39] For example, when President Roosevelt established the Civil Works Administration (CWA), the program was fully functional in about two months, employing over 4 million employees and reaching 8 percent of the labor force.
[40] U3 is the International Labour Organization official unemployment rate that includes individuals that are unemployed and have actively looked for work within the past four weeks. U6 is a broader unemployment, or ‘underemployment’ rate, which, in addition to U3, includes “discouraged workers,” or those who have stopped looking for work due to current economic conditions; other marginally attached workers who are willing and able to work but have not actively sought employment in the past four weeks; part-time workers who seek but cannot attain full-time employment.
[41] David Cooper, “Raising the Minimum Wage to $15 by 2024 Would Lift Wages for 41 Million American Workers, Economic Policy Institute, April, 2017, http://www.epi.org/publication/15-by-2024-would-lift-wages-for-41-million/.
[42] Sylvia Allegretto, Arindrajit Dube, Michael Reich, and Ben Zipperer, “Credible Research Designs for Minimum Wage Studies: A Response to Neumark, Salas, and Wascher,” ILR Review 70, no. 3 (2017), pp 559-592.
[43] It is important to note that the program does not subsidize private employment. Thus, employers cannot replace private workers with workers from the NIEC program.
[44] “The Budget and Economic Outlook: 2017 to 2027,” Congressional Budget Office, January, 2017, https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-outlookonecolumn.pdf.
[45] Danilo Trisi, “Safety Net Cut Poverty Nearly in Half Last Year,” Center on Budget and Policy Priorities, September 14, 2016, http://www.cbpp.org/blog/safety-net-cut-poverty-nearly-in-half-last-year.
[46] As a result of the 1996 welfare reform, cash assistance rolls have fallen dramatically. The safety net has been transformed to rely on subsidizing the working poor through the Earned Income Tax Credit (EITC). This transition to a work-based safety net has particularly hurt those unable to obtain employment.
[47] Unemployment insurance, like the NIEC, expands during times of great need. In 2010, when UI payments peaked, total expenditures were $162.5 billion.
[48] Dollar figures in this paragraph represent current expenditures of the program in fiscal year 2016.
[49] Laurence Ball, Brad DeLong, and Larry Summers, “Fiscal Policy and Full Employment,” Center on Budget and Policy Priorities, April, 2014, https://www.cbpp.org/research/full-employment/fiscal-policy-and-full-employment.
[50] According to a 2017 Report from the Roosevelt Institute’s J.W. Mason, “in 2016, real per capita GDP was 10 percent below the Congressional Budget Office’s (CBO) 2006 forecast, and shows no signs of returning to the predicted level.” J.W. Mason, “What Recovery? The Case for Continued Expansionary Policy at the Fed,” The Roosevelt Institute, July, 2017, http://rooseveltinstitute.org/wp-content/uploads/2017/07/Monetary-Policy-Report.pdf.
[51] Sushant Acharya, Julien Bengui, Keshav Dogra, and Shu Lin Wee, “Escaping Unemployment Traps,” Federal Reserve Board, April 2017, http://economics.rutgers.edu/downloads-hidden-menu/news-and-events/workshops/macroeconomic-theory/1360-keshavdogra/file.
[52] Ken Jacobs, Ian Perry, and Jenifer MacGillvary, “The High Public Cost of Low Wages,” UC Berkeley Labor Center, Research Brief, April 2015, http://laborcenter.berkeley.edu/pdf/2015/the-high-public-cost-of-low-wages.pdf.
[53] Some proponents of the job guarantee argue that the federal government could simply fund the program directly without raising additional tax revenue. For an example, see Michael J. Murray and Mathew Forstater, “The Job Guarantee and Modern Money Theory,” (Basingstoke, UK: Palgrave Macmillan, 2017).
[54] One potentially complementary proposal would be a negative income tax, which could provide a basic income for those unable to work.
