Web Only / Features » November 9, 2009
How to Create Good Jobs Now
A bold proposal for meeting human needs through a permanent U.S. employment program.
Clearly, public money ought to benefit the public, and the only way to ensure this is through collective decision-making.
This article was written by Ron Baiman, Bill Barclay, Sidney Hollander, Joe Persky, Elce Redmond, Mel Rothenberg.
For the last three decades, U.S. public policy makers have operated on the theory that individual entrepreneurial freedoms are essential to the creation of wealth and thus to the well-being of individuals and society as a whole. One of the great failures this “neo-liberal” approach to economics has been its inability to create enough jobs to keep pace with population growth.
Between 2001 and 2007, the working-age population in the United States outpaced job creation by 10 million individuals. Projections indicate that the shortfall will include another 17 million persons by 2016, making a 16-year total of 27 million missing jobs – 27 million people, in other words, who will have been pushed out of the labor force.
If current trends continue after 2016, labor force participation will have fallen to barely half the working-age population, down from a pre-2000 level of about two-thirds.
The scale of the problem–and program
To confront the growing poverty and social misery that is engulfing the poorest 40 percent of Americans, the United States will require a national jobs program based on significant public investment in the economy. We propose a program that would pay workers the current median wage ($18 per hour), which is a living wage that still allows room for promotions and pay raises. As we will demonstrate, this program can be funded easily by progressive taxes, cuts in defense spending, and taxes on carbon-emitting production.
In the short term, jobs will help people stay in their homes and encourage consumers to begin spending again. In the longer run, a reordering of our economic priorities through public investment and redistribution of access to good jobs will create an economy that serves the needs of all, rather than the wants of a few.
The plan should aim to boost national employment by 3.5 million new jobs each year for five years, for a total of 17.5 million new jobs. This rate of job creation is more than twice the currently projected growth of only 1.5 million jobs per year, which would yield only 7.5 million additional jobs over the five years.
With many more employment opportunities, workers’ bargaining power would increase. Even though the wage would not be enforced as a mandatory economy-wide minimum wage, many workers in private, low-wage jobs would demand higher wages, especially with the program’s $18 per hour minimum serving as a benchmark. It is likely that some low-wage private employers outside of the jobs program (sweatshops come to mind) would not survive the increased labor costs. (Employers could be offered wage subsides to help them survive, but that would increase the cost and dilute the benchmark effects of the program, as employers engaged in a race to the bottom of the wage scale.)
We estimate a resulting loss of roughly 1 million jobs in each of the five years. The 17.5 million jobs the federal government would be permanently supporting after five years includes approximately 5 million positions that would offset private sector employment losses triggered by the jobs program.
We recognize that the current economic downturn may depress private sector job growth below 1.5 million per year, even taking into account federal stimulus spending. In that case, our proposed jobs program might have to be enlarged still further, although we believe that implementation of our program would improve the economic environment by putting money in the pockets of many people who now lack it. This increased demand would stimulate additional growth in private sector jobs.
The work to be done
The jobs program would focus on three broad areas of the economy, with growth concentrated in public enterprises.
First, like the $787 billion stimulus package Congress passed in February, the program would increase investment in public infrastructure, including transportation, educational and healthcare facilities. Other possible spending recipients are parks (local, state and federal), which have long been under-serviced. Infrastructural work would be done by either public agencies or private contractors.
Second, jobs would be created in purely public employment, concentrated principally in health and education. Public employment in these sectors would complement the work on infrastructure, such as the construction of hospitals and schools.
Third, jobs would be created to implement a federal industrial policy that, working closely with the states, would focus on energy and its sources, uses and costs. It is clear that, left to their own devices, major private-sector energy companies have little incentive to shift our energy consumption in a direction that is either more efficient or less costly to the consumer.
As the interstate highway program of the 1950s, the space technology program of the 1960s and 1970s and the government’s development of the Internet indicate, only an entity charged with a public purpose can spark a real shift away from fossil fuels. Energy taxes, while useful for government revenue, are not sufficient. The shift from fossil fuels will require investment in technology, training of workers and temporary wage subsidies, as new energy industries move up the productivity curve.
Though neo-liberal economic ideology holds that government decision-making is inferior to that of private companies when it comes to the markets (in terms of both efficiency and cost), this thinking is contradicted by both American history and policies practiced by many countries today. The governments of China and the Scandinavian countries, for instance, play a major role in spurring their economies’ growth.
In the United States, moreover, we have had a de facto industrial policy for at least the past two decades–namely, the decision to develop the financial sector as both an engine of growth and an export leader. As in the case of the savings and loans crisis of the late 1980s and early 1990s, in which the government spent $125 billion of taxpayer money to liquidate the toxic assets of over 1,000 failed S&Ls, the finance sector is again at the center of a crisis and again drawing massively on the public purse in an attempt to avert economic catastrophe.
Clearly, public money ought to benefit the public, and the only way to ensure this is through the collective decision-making of representative government. The national jobs program we propose would reaffirm this critical government function, helping to reverse the consequences of neoliberal policies.
Ron Baiman is Director of Budget and Policy Analysis at the Center for Tax and Budget Accountability, an Illinois based public policy think tank.
Bill Barclay worked for 22 years in financial services before retiring in 2004; since then he has been active in the Oak Park Coalition for Truth and Justice and Democratic Socialists of America.
Sidney Hollander, a former Chicago Department of Human Services employee who worked on legislative issues, lives in Chicago.
Joe Persky is a professor of economics at University of Illinois, Chicago.
Elce Redmond is a community organizer and political trainer who has worked with non-governmental organizations and labor unions in the United States and around the world.
Mel Rothenberg, professor emeritus of mathematics at University of Chicago, is a longtime social activist and writer on a variety of issues, many related to the construction of socialism.
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