How a Federal Job Program Would Fix the Economcy
President Obama this week repeated an earlier call to raise the minimum wage as part of a larger effort to fix persistent problems in the economy. But the president should go further: He should create a federal job guarantee for all citizens.
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.”
America’s workers would not be subjected to low-wage jobs if they were assured employment at nonpoverty wages.
The good news is there already exists a way to get from here to there: the Full Employment and Balanced Growth Act of 1978. The Humphrey-Hawkins Act mandated that if the private sector did not create full employment, the public sector would provide the missing jobs.
Under the law, federal policies should have been directed at attaining a 4 percent overall unemployment rate and a 3 percent adult unemployment rate by 1983 on the path toward the target of a zero percent unemployment rate by 1988.
The conventional way to achieve that objective – which never has been met – is old-fashioned Keynesian pump priming or the application of stimulus expenditures.
Keynesian spending measures are an indirect approach to job creation, requiring the private sector to respond by growing the volume of jobs.
But the Humphrey-Hawkins Act charges the public sector with the responsibility of direct job creation.
A National Investment Employment Corps would work similarly to the Works Progress Administration and the Civilian Conservation Corps developed in response to the unemployment crisis of the Great Depression.
Each NIEC job would offer individuals nonpoverty wages: a minimum salary of $23,000, 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 the program put 15 million Americans to work – the total number of people 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.
The public sector would function as an employer of last resort, and the public sector jobs would provide a permanent alternative to poorly paid jobs with negligible benefits.
And 25 years after the original target date, the nation could achieve the Humphrey-Hawkins Act’s mandate of a zero percent rate of unemployment.
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 its budget and deficit commission report in 2011.
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 – such as raising the minimum wage – for those Americans in the most desperate straits, a universal job guarantee would benefit all Americans who experience joblessness now or in the future.
Moreover, a universal job guarantee would mean that all Americans would have access to jobs promising an income above the poverty threshold.
William Darity Jr. is arts and sciences professor of public policy, African and African-American studies and economics and the director of the Research Network on Racial and Ethnic Inequality at Duke University. This commentary was originally published by The (Raleigh) News & Observer.