Push for Job Guarantee Gains Momentum

L. Randall Wray | January 6, 2014

I just returned from the big annual meeting of economists (this time in Philly), at which we had a panel on the Job Guarantee. One of the papers on our panel was by William (Sandy) Darity and Darrick Hamilton, which demonstrated how imperative it is to implement the JG to reduce hiring discrimination in the labor market. Darrick (who presented the paper) pointed out that official unemployment rates for black Americans is chronically twice as high as that for whites; by conventional views of what constitutes Great Depression levels of unemployment, black Americans are in a Great Depression and are always suffering from at least recession levels of unemployment.

Darrick pointed out that even in good times, blacks with some college education have unemployment rates higher than white high school drop-outs, and even as high as whites who’ve been incarcerated. Sandy has supported the Job Guarantee since the earliest days—he was on the first panel we ever organized on the JG (back when we were calling it Public Service Employment). While the JG will not eliminate racial discrimination in the USA, it will go a long way in helping to provide a real opportunity.

The highest unemployment rates are among the young. As Sandy says, black teen high school dropouts have a 95 percent joblessness rate. You read that right. The JG would give them an alternative path to gainful employment.

Some years ago, Marc-André Pigeon and I did a study of joblessness. We found that during the Clinton boom years (when the overall unemployment rate finally reached the lows that were last achieved in the Johnson years), of the 12 million jobs created only 700,000 of them went to workers who had not attended college. We found that even with the relatively robust labor markets of the Clinton boom, “Well over half of noninstitutionalized high school dropouts remain out of the labor force, compared with only a quarter of those who attended college. If the current expansion raises the employment rate for high school dropouts by only about 3 percentage points over a period of 6 years, by simple extrapolation, the expansion would have to continue for another 78 years before the gap could be closed.” YEP. If we could maintain an economic boom for 78 more years, we could get the unemployment rate down across all the groups. That’s how boomy our economy needs to be to generate jobs for workers at the bottom of the queue.

(It won’t happen. We’d get very high inflation and asset bubbles before we boomed for even a decade. See our other article that looks in depth at those who are officially “out of the labor force” but who could be brought in if jobs were available. We estimated there were probably around 26 million potentially employable people left behind. In other work we looked at incarceration rates and compared the probabilities of employment rates and incarceration rates among prime age males across race and level of educational attainment. The results were horrific; I’ll report on that some time.)

Here are three recent, interesting, pieces on the JG proposal, two by Sandy Darity and one by Jesse Myerson at Rolling Stone:

1. William Darity at PBS, describing a new bill proposed by Rep. Conyers:

Rep. John Conyers, D-Mich., has proposed a new bill: the Humphrey-Hawkins Full Employment and Training Act, which could pave the way for implementation of a federal job guarantee.The idea is straightforward: any American 18 years or older would be able to find work through a federally funded public service employment program — a “National Investment Employment Corps.” The basic idea has been endorsed by policy analysts as disparate as Kevin Hassett from the American Enterprise Institute and Jared Bernstein from the Center for Budget and Policy Priorities. The Congressional Black Caucus included the proposal in their budget and deficit commission report in 2011.

Each National Investment Employment Corps job would offer individuals non-poverty wages, a minimum salary of $20,000, plus benefits including federal health insurance. The types of jobs offered could address the maintenance and construction of the nation’s physical and human infrastructure, from building roads, bridges, dams and schools, to staffing high quality day care. The program would include a training component to equip employees with the skills necessary to fill state and municipal needs.

The program would be cost effective, too. Suppose that the program put 15 million Americans to work — the total number of persons out of work at the nadir of the current depression — at an approximate cost of $50,000 per employee. The bill for the program would be $750 billion. In 2011, the total cost of the nation’s anti-poverty programs was about $740 billion. But since the National Investment Employment Corps would function simultaneously as an employment assurance and anti-poverty program, the existing anti-poverty budget could be slashed drastically, with those savings going to finance the job guarantee.

This initiative would remove the threat of unemployment and provide a direct route to sustained full employment, particularly for those groups intensely struggling to find steady work: Young veterans, young people in general, blacks subjected to discrimination in employment, all high school dropouts, and especially black high school dropouts. While providing a particular benefit for those Americans in the most desperate straits, a universal job guarantee would benefit all Americans who could experience joblessness.

2. Jesse Myerson, from “Five Economic Reforms Millennials Should Be Fighting For,” Rolling Stone:

It’s a new year, but one thing hasn’t changed: The economy still blows. Five years after Wall Street crashed, America’s banker-gamblers have only gotten richer, while huge swaths of the country are still drowning in personal debt, tens of millions of Americans remain unemployed …Unemployment blows. The easiest and most direct solution is for the government to guarantee that everyone who wants to contribute productively to society is able to earn a decent living in the public sector. There are millions of people who want to work, and there’s tons of work that needs doing – it’s a no-brainer. And this idea isn’t as radical as it might sound: It’s similar to what the federal Works Progress Administration made possible during Roosevelt’s New Deal, and Dr. Martin Luther King, Jr. vocally supported a public-sector job guarantee in the 1960s.

A job guarantee that paid a living wage would anchor prices, drive up conditions for workers at megacorporations like Walmart and McDonald’s, and target employment for the poor and long-term unemployed – people to whom conventional stimulus money rarely trickles all the way down. The program would automatically expand during private-sector downturns and contract during private-sector upswings, balancing out the business cycle and sending people from job to job, rather than job to unemployment, when times got tough. Some economists have proposed running a job guarantee through the non-profit sector, which would make it even easier to suit the job to the worker. Imagine a world where people could contribute the skills that inspire them – teaching, tutoring, urban farming, cleaning up the environment, painting murals – rather than telemarketing or whatever other stupid tasks bosses need done to supplement their millions. Sounds nice, doesn’t it?

3. William Darity, NYTimes, “Federal Law Requires Job Creation”:

Keynesian spending measures are an indirect approach to job creation, requiring the private sector to respond by growing the volume of jobs. But a less remarked provision of the Humphrey-Hawkins Act mandates that if the private sector response does not yield full employment, the public sector will provide the missing jobs. The law charges the public sector with the responsibility of direct job creation.

Alan Aja, Daniel Bustillo, Darrick Hamilton and I argue in detail in the current issue of Social Research that this is best accomplished by the adoption of a federal job guarantee. In short, we have proposed the formation of a National Investment Employment Corps similar to the Works Progress Administration and the Civilian Conservation Corps developed in response to the unemployment crisis of the Great Depression.

The employment corps could address a host of national human and physical infrastructure needs including the building and restoration of roads, highways, dams, museums, parks, the postal service, child care centers, health clinics and schools. It could serve as a pilot site for the implementation of innovative green technologies that would enhance our environmental health. And the jobs could offer decent pay and benefits.

We propose that the minimum salary for jobs in the employment corps would be $23,000 and provide a benefits package that would include the health insurance options offered to all federal employees. We estimate that the average cost per job directly created by the employment corps would be $50,000 including salary, benefits, training, and equipment and materials – a far cry from the 2009 stimulus effort.

(cross-posted from EconoMonitor)


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