What If We Didn’t... have any unemployment?
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In the autumn of 2011, the U.S. was still reeling from one of the worst financial crises in modern history. Unemployment hovered around 9% as throngs of demonstrators took to the streets as part of the Occupy Wall Street movement to protest what they considered as the United States’ decision to put the interests of large banks above those of struggling Americans.
Despite this populist outrage, many lawmakers sought to place the blame for the nation’s woes on unemployed workers themselves. At a Republican presidential primary debate in November of that year, then-presidential candidate Newt Gingrich famously told Occupy Wall Street protesters to “go get a job — right after you take a bath.”
Today, such stigmatization of the unemployed in America persists. Seven years after Gingrich’s broadside, lawmakers are working to punish the unemployed by moving to add work requirements to key social safety net programs like Medicaid.
Meanwhile, even as the U.S. unemployment rate hovers near 4% and is on a track to reach its lowest levels in almost 50 years, frustration and dissatisfaction looms among American workers being blamed for their own misfortune.
After a short growth blip at the beginning of 2018, wage growth once again slowed, and many Americans are coping with the new normal of chronic “underemployment” — when workers take part-time jobs when they would prefer full-time work.
The contradiction in the sort of poor-shaming pushed by Gingrich and others is self-evident. How does one simply go “get a job” if there aren’t enough well-paying, full-time jobs for everyone to have? In a political system that focuses so much on “job creation” and “job creators,” why does the burden fall on workers when there’s just not enough work to go around?
These questions have loomed large in political debates in Washington for over a decade now, ever since the Great Recession plunged the American economy into the worst crisis it’s seen in generations. But rarely, if ever, have advocates for better jobs considered taking the Gingriches of Washington at their word and initiated a system where anyone who wants a job can simply go get one. Or better yet: What about a system where anyone protesting in the streets for better jobs can go create one for themselves?
So, what would America look like with a universal job guarantee?
We’ve been here before
America has actually attempted large scale public works programs to fix unemployment in the past. In 1935, amid the Great Depression, President Franklin Delano Roosevelt and Labor Secretary Frances Perkins oversaw the creation of the Works Progress Administration (later renamed the Works Projects Administration). This was a national infrastructure program designed to put Americans to work on infrastructure projects like schools, roads, bridges and airports.
Over the course of its existence, the WPA employed more than 8.5 million Americans and created 1.4 million public projects across the country. In addition to infrastructure and manual labor jobs, other sub-programs were created to increase employment in other sectors. A program called Federal Project Number One helped employ workers in federal art and theater programs, while the Civilian Conservation Corps put young men to work on environmental conservation projects. And the National Youth Administration, another WPA program, helped train and employ Americans as young as 16.
At the time of its creation, about one in every five members of the U.S. workforce were unemployed. The WPA helped dramatically reduce unemployment, by both putting people to work and creating economic stimulus through government spending. By 1943, unemployment had fallen to less than 2%, thanks in large part to the jobs created both directly and indirectly through the WPA.
Despite the program’s success in curbing rampant unemployment, it was shuttered in 1943 when a booming wartime economy also curbed need for such government employment. Then the post-war economic boom made programs like the WPA a distant memory.
“Radical people creating tremendously good projects”
Today, economists and policy experts are researching what America might look like if lawmakers were to create a new sustainable permanent job guarantee program in the U.S.
Randy Wray, a professor of economics at Bard College and a senior scholar at the Levy Institute, has spent the past 25 years working with his colleagues to study universal job guarantee programs, wherein a nation’s government provides a job for anyone who wants one. Wray has written extensively on the theory of how job guarantee programs can work, as well as what job guarantee programs look like in other countries.
“Only the national government can afford to provide jobs for all at a decent wage,” Wray said in an interview with Mic. “Although the market economy might occasionally produce full employment, it can’t sustain it. We see it as the responsibility of the national government to ensure a job for everyone who is ready and willing to work.”
To explore how the idea would work in the real world, Wray and his colleagues spent several years in the early 2000s studying a job guarantee program in Argentina.
At the time, Argentina was in the midst of a severe depression. A failed currency experiment and austerity policies from the International Monetary Fund had tanked the nation’s finances and thrown its government into chaos. The national unemployment rate reached 14%, and a wave of mass protests from economically-stricken Argentines soon emerged.
Those demonstrations eventually led to the government to create the Jefes y Jefas de Hogar Desocupados program, a national job guarantee for heads of households. The program also worked to providing services for the poor and underprivileged.
In some ways, Jefes y Jefas was similar to FDR’s Works Progress Administration. But unlike the WPA, which primarily focused on federal infrastructure projects, the Argentine program had a novel innovation: allowing members of afflicted communities to create their own skilled labor and civil service jobs, like making food or building houses for their friends and neighbors. In many cases, that meant allowing the very people protesting the government’s policies to create their own jobs.
“We studied some projects that were all created by the protesters,” Wray said. “The government really was kind of clever because they said, ‘OK — you guys are out here beating pots and pans and running one government after another out. What we’re going to do, if you know better than us what to do, is to let you create the projects.’ That’s what they did. You had these really radical people creating tremendously good projects.”
Wray estimates that about one in every 10 jobs were created by the protest groups. Many of the other jobs were created in the Jefes y Jefas program by local community organizations, while others simply started their own workers co-ops. Other jobs ranged from high-skill trade jobs like crafting furniture to health care work to building local farms.
“They would take people who had never had a formal sector job before, especially women, and train them to bake bread.” Wray said. “They built a bakery and the federal government is providing the wages to pay those workers to make the bread. They gave the bread out free to the local community.”
The program was the largest direct transfer employment plan in Latin American history. Yet Wray had hoped that Jefes y Jefas, which focused mainly on part-time jobs, would go further in providing higher wages and more full time work. While it was less expansive than he would have liked, the program managed to help boost the Argentine economy in a time of crisis, providing jobs for nearly 14% of the country’s labor force without any considerable negative impacts on the country’s finances, according to Wray.
What would universal employment look like in the U.S.?
The plan that Wray and other economists are working to develop for the U.S. economy would utilize Argentina’s decentralized, community-based model for creating new jobs, while also providing higher wages and full time work opportunities in underserved sectors.
Wray’s plan for the U.S. would include a baseline $15 per hour minimum wage for guaranteed jobs, paid out through the federal government similar to the way that the Social Security program makes payments to millions of Americans every month.
The $15 an hour wage, Wray argues, would force private sector jobs to raise their wages in order to compete with the federal program. This, he says, would increase American workers’ wages over all.
“There’s a huge childcare need in America,” Wray said, offering an example of the kinds of gaps in the U.S. labor force his program could help to fill. “We have always said the program would provide childcare for all of the program’s workers, so you would have the workers in the program providing the childcare for the workers in the program.”
Experts have warned about an impending crisis in geriatric care services as the aging baby boomer population begins to reach its later years, and few workers with adequate training are drawn to enter the profession of caring for the elderly. With the number of individuals over the age of 65 set to grow from 50 million now to 80 million within a few decades some state Medicare and Medicaid programs already capping the amount of home care hours that the state will cover.
A well-designed job guarantee in America could allow professional community organizations to train workers with the basic skills they need to care for an aging population.
If such a program were to be introduced, young professionals who can’t find work in their field after exiting tertiary education could create their own jobs. Commentators have long decried the number of students graduating with supposedly “useless” humanities degrees. Those voices could potentially rest easy with a universal job guarantee program in the U.S., knowing that the federal government could provide demand for any potential glut of art history majors, the same way the government already buys up excess corn.
The framework could also include input from organized labor unions in order to ensure that quality jobs and workers rights are a central priority of the program.
But one of the most radical ways that a job guarantee would change our society would be the fundamental shift in how we think about economic crises and unemployment writ large. A decade after the 2008 financial crisis, potential for major economic downturns to create prolonged unemployment still looms large.
A job guarantee program could have the effect of essentially ending any fears about economic crisis. That’s because a job guarantee program would act as what economists call an “automatic stabilizer,” or a federal benefit that automatically kicks in to meet the economic needs of a crisis without requiring any authorization from Congress.
If a crisis were to occur in an America with a job guarantee, there would be far less noise about Congress’s ability to pass major stimulus legislation, or more debate over “shovel ready” jobs, because funding would automatically be allocated to local community groups to start putting people to work from day one.
Is the risk worth the reward?
While a plan like Jefes y Jefas may sound ideal, some economists argue that that a federal jobs program is, at best, a misguided approach to fixing America’s employment woes. At worst, they say, it would be a massive drag on the U.S.’s economic output and finances.
Adam Ozimek, a senior economist with Moody’s Analytics, argues that a universal job guarantee could have unintended consequences for the broader labor market. He believes that a federal program that guarantees good paying jobs would not simply be able to target the unemployed, and would likely pull workers out of the private sector labor market, creating the need for even more well-paying guaranteed jobs.
“If you’re going to make a universal job program, and it is going to [work], then that is going to absorb a lot of people who already have other jobs,” Ozimek said in an interview with Mic.
“You have two problems there,” Ozimek continued. “One is that it’s really expensive. If you are going to guarantee everyone a good job, that requires a lot of tax revenue ... you’re going to have to significantly raise taxes. And, the second problem is you essentially nationalize a large segment of the labor market.”
Ozimek worries this kind of drain from the private sector could potentially hinder the U.S. economy. It could transition workers away from high-productivity private sector jobs to potentially low-output, low-productivity publicly backed jobs, he says.
The key to solving America’s unemployment problems lies in a more traditional “Keynesian approach,” he argues. In this scenario, the government spends more money and reduces taxes to boost demand for goods and services during times of high unemployment.
“To me, it seems like a strange approach to say, ‘Well, we lack the political will to do things, basically, the normal way ... so perhaps we can generate the political will for something several orders of magnitude more radical, and several orders of magnitude more expensive, and permanent,’” Ozimek said.
A more permanent solution
If the U.S. were to introduce a federal jobs guarantee, it could put an end to the perennial fights over stimulus spending by creating a long-term program that automatically compensates for any decrease in private sector employment.
What’s more, models have shown that the increase in employment created by a federal jobs guarantee would have a stimulatory effect on the economy. This would create more demand for goods and services, and generate even more tax revenue, which could offset some of the program’s effects on the U.S. budget.
However, a federal jobs guarantee may ultimately be more ambitious than lawmakers are willing to consider anytime soon. At the same time, the idea of a guaranteed job could provide politicians with a more concrete and easy-to-grasp goal for an electorate that has little time or patience for political debates over the fundamentals of macroeconomic policy.
There’s data to support that theory. A recent poll on support for a job guarantee conducted by the Civis Analytics and analyzed by the think tank Data for Progress attempted to gauge support for the proposal in the most circumspect way possible.
Instead of asking those surveyed if they supported a guaranteed job in the abstract, the poll asked respondents a key question: would they support a bill sponsored by Democrats that would give every person who could not find private employment a guaranteed job, and one that would be funded through a 5% tax hike on those making more than $200,000 a year?
The purpose of this framing was to ensure that any potential partisan effects on support/opposition to such a proposal would be accounted for in the polling. Despite the conservative framing, a majority of Americans — 52% — said they would support the measure, and only 29% opposed, with the remaining 19% unsure or undecided.
Data for Progress also modeled support for a federal job guarantee by state using data from the Center for American Progress, and found that the policy would likely be viewed favorably in every state in the union.
This might be why Sen. Kirsten Gillibrand (D-NY), a potential 2020 presidential candidate, has already begun voicing support for the idea of a federal job guarantee.
By 2020 more politicians looking to entice voters with a bold economic message could do so with the clear and concise promise of “a job for anyone willing to work.”