We Need a Jobs Guarantee Now More Than Ever
Unemployment in the US is skyrocketing, with the Federal Reserve predicting a long-term unemployment rate of 10 percent. Creating quality jobs for all who want it should be the chief concern of the federal government, not the bogeyman of inflation.
If COVID-19 is a crisis of public health, it has also become an ominous crisis of unemployment. Over forty million Americans have filed for unemployment, and the national unemployment rate is on track to surpass 25 percent. Increasingly, it appears we will be enduring a protracted period of slow economic recovery at best. The resulting problem of unemployment is here to stay for a while, especially considering the tepid and inadequate economic response from the federal government.
There has never been a more urgent moment to consider the federal government’s role in ensuring quality employment for all those that want it. The Case For a Job Guarantee, by Pavlina Tcherneva, makes the case in a clear and accessible manner about how our society can move toward full employment, and why it is so important to do so. This project inevitably entails taking on capital, for as the great British socialist Aneurin Bevan said, “Security of employment and the competitive society are a contradiction in terms.”
The idea of a federal job guarantee has recently received more attention due to the Bernie Sanders campaign. However, it still has not been as prominent in policy discussions as other core demands like Medicare for All and free public higher education. The COVID-19 crisis should make us all seriously rethink the strategic value of the federal job guarantee, and how we can campaign around this issue in the future. As many of us continue to live in quarantine, this short and punchy book is a great way to stimulate our thinking about what the post-COVID recovery plan should look like.
The Missing Piece
The demand for some version of a federal job guarantee is not new in US politics. Tcherneva highlights that the idea was part of the UN Declaration of Human Rights and Franklin D. Roosevelt’s Economic Bill of Rights, as well as a key issue raised during the Civil Rights Movement. Though there were some impressive federal job programs mounted during the New Deal, the author calls the Job Guarantee “the missing piece of the Roosevelt Revolution.”
The Civilian Conservation Corps, Works Progress Administration, and Tennessee Valley Authority were the first successful efforts to achieve civilian employment assurance led by the state. These experiments prompted the federal government to further inquire as to how to build these programs out nationally. In 1943 the National Resources Planning Board released two reports called Security, Work, and Relief Policies and After the War- Full Employment. Both of them called for jobs programs, administered by a Federal Work Agency that would employ “all who are willing and able to work.”
These efforts culminated in the James Murray Full-Employment Bill of 1945. The proposed legislation called on the federal government to step in when the private sector could not meet employment needs. Business interests like the Chamber of Commerce, National Association of Manufacturers, and the American Farm Bureau Federation fought hard against the bill, and it never passed. Ever since, there’s been a steady rightward drift in the stance the federal government has taken toward employment.
In the mid-1960s, A. Philip Randolph’s “Freedom Budget” laid out a path toward full employment, but was eschewed by liberals favoring the War on Poverty. They believed programs like Community Action and Job Corps could end poverty without major involvement at the federal level. However, these programs were far too small to actually move us toward full employment. Subsequent proposals have fallen prey to the myth that The Case For a Jobs Guarantee skillfully busts: the correlation between full employment and high inflation.
“High, Low, or Just Right”
The book offers a revealing history on the concept of the natural rate of unemployment. Mainstream economists warn that if unemployment is too low, employers will need to raise wages and prices. They’ve deemed this all-elusive “natural” sweet spot as the Non-Accelerating Rate of Unemployment (NAIRU). Federal Reserve chairman Jerome Powell unintentionally revealed the absurdity of this notion when he said, “We need the concept of a natural rate of unemployment. We need to have some sense of whether unemployment is high, low, or just right.”
Since the postwar years the Congressional Budget Office has asserted the “just right” level of unemployment to be between 4.5 percent and 6.5 percent. In other words, if over 13 million workers are unemployed today we should be satisfied with this as “just right.”
While traditional economists fret over the costs of inflation, this book paints a vivid picture of the social costs caused by unemployment. People who are out of a job have a more difficult time finding work, especially if they’ve been unemployed long term. It creates a dangerous cycle in the broader economy where people cut back spending and fuel further layoffs from businesses. The loss of stable, blue-collar work is the primary cause of the “deaths of despair” often mentioned when discussing working-class white Americans.
Our country is plagued by phenomena like suicide, alcoholism, and depression. Unemployment cuts people off from social networks and a sense of usefulness, creating and fueling all these ills. Creating quality employment for all who want it should be the chief concern of the federal government, not the bogeyman of inflation.
How It Works
The Case for a Job Guarantee is not an overly detailed blueprint of how the author thinks the program should be implemented. It does, however, offer an inspiring vision of what society would look like if we utilized the various talents and skills working people possess. The job guarantee would essentially act as a public option for employment, expanding during periods of economic slowdown and shrinking during periods of private sector job growth.
The private sector simply cannot be relied upon to deliver full employment. A never-ending slew of incentives and tax breaks would be needed to make firms get anywhere close to it. This program would give every worker the option of attaining a living wage job through the federal government. There is certainly a lot of work that could be done to improve our society, and there are plenty of people to do it.
Employment through the job guarantee would provide a base wage of $15/hour and benefits like health insurance, childcare, and paid leave. This would establish a de facto minimum standard for all employers to meet. Private firms would recognize that if they didn’t improve conditions their workers could always get a better paying job through the federal job program. Importantly, Tcherneva advocates for mandatory increases of the base wage to match inflation.
Unemployment offices that exist in every county could be converted into employment offices that administered the federal jobs guarantee. Though the program would be funded at the federal level, it could be locally administered. This could open up opportunities to experiment in more democratic forms of governance, with unions and other organizations participating in developing local job-creating projects.
These employment offices could offer training, credentialing, education, and apprenticeship opportunities to transition people out of the program to a job in the private sector. American Job Centers already deliver many of these required services, but they need more funding and support.
The job guarantee could also be an important component of the Green New Deal. For this we can take some inspiration from the New Deal. The Civilian Conservation Corps created thousands of jobs while planting 3 billion trees, controlling soil erosion, and increasing the wildlife population. There are countless potential environmental projects that would create jobs even beyond the huge infrastructure changes a Green New Deal would require. Things like flood control, tree planting, and building fisheries will all be necessary as we deal with the effects of climate change.
Tcherneva makes an important distinction between two types of job guarantees articulated by the Green New Deal. One would be federal jobs that ensure family-sustaining wages and benefits, like the ones her book outlines. The other would be high-quality union jobs that pay prevailing wages and guarantee wage parity for workers affected by the energy transition. She recommends drafting separate legislation for the Jobs Guarantee to live beyond the initial Green New Deal transition.
But How Will We Pay For It?
The book adroitly addresses the question of how to pay for such an ambitious proposal. Recent events have already started to answer this question for many Americans. To deal with the economic fallout from the pandemic Congress passed a $2.2 trillion stimulus package, much of it going into corporate slush funds and stock buybacks. Somehow, money is always there for capital when it needs it. Ruling class calls for fiscal restraint are never applied to bank bailouts, tax cuts for the rich, and endless wars.
Though the book is not a treatise on Money Monetary Theory (MMT), some of its guiding features are highlighted in order to explain the mechanisms of financing the federal job guarantee. Tcherneva asserts, as other adherents of MMT do, that a monetarily sovereign government like the US cannot really run out of money.
But regardless of one’s views on MMT, the book makes a strong argument for the broad-based economic benefits a federal job guarantee could ensure. For one, it would end the pressure for states to fall over themselves offering subsidies to corporations in exchange for jobs. As states compete for investment they lose important tax revenue, and usually jobs bounce from one state to another anyway.
A simulation from the Levy Institute found that the budgetary impact of a federal job guarantee would only be 1.5 percent of GDP. Findings also showed it would boost real GDP by half a trillion dollars and increase private sector employment by 3 to 4 million jobs, all without significantly increasing inflation. While a minimum wage increase could cause a one-time hike in prices, that does not constitute inflation because it isn’t continuous.
There are historical precedents one can look at to support these conclusions. Tcherneva points out that in 1949 the minimum wage doubled without accelerating inflation. This was also a year when we were as close to full employment as we’ve ever been. Examples like these, along with the recent massive government stimulus, should do away with the idea that there is no money to provide quality employment to everyone.
The Bold Path Forward
With the pandemic, Americans have been watching the complete failure of the state in real time. The effects, both on the economy and public health, have been devastating. The Federal Reserve has already conceded that we could be looking at 10 percent unemployment in the long term. Now is the time for the federal government to take bold action.
If there is a silver lining to this experience, it’s that more ordinary people have realized that the state has an important role to play in our lives and austerity has left us completely unprepared for moments of crisis. The orthodoxy of mainstream economists has not helped us in the past, and it certainly will not guide us out of the current economic crisis.
A Hill-HarrisX poll from October 2019 showed that 78 percent of voters supported the Job Guarantee, including 71 percent of Republicans, 87 percent of Democrats, and 81 percent of Independents. This policy will likely only gain more traction in the post-COVID-19 world.
The federal job guarantee needs to become a priority initiative for organizers and elected officials on the Left. The Case for a Job Guarantee is a must-read for those looking to make full employment a political reality.