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Don't Cut, Invest! Why the Obama Administration Should Support a Federal Job Guarantee Program
Without work people cannot eat, house themselves, care for their families, or contribute to the community. We should not tolerate current levels of unemployment in this country. Austerity doesn't work
By Alan A. Aja
Editor's Note: This article was written by Alan A. Aja along with William Darity Jr. and Darrick Hamilton. It reminds us of a very important principle already written into law: during periods when so-called "private" businesses cannot or do not provide enough jobs for people who want and need them then the government must provide those jobs. The American people should not be so dependent on the decisions of private business that the people are not free to work, to feed their families, and participate in the life of the community. It is outrageous to force millions of people to go for years without the opportunity to work and gain an income.
In the late 1970s, after nearly a decade of rising unemployment rates and high inflation, Congress passed the Full Employment and Balanced Growth Act, better known as the Humphrey-Hawkins Act of 1978. Signed into law by President Carter, the act empowered the federal government to spend proactively to increase consumer demand, with the ultimate goal of full employment for every able American. A lesser-known provision of the act, however, noted that if the private sector failed to respond adequately, the public sector would take responsibility for providing the missing work.
More than 30 years later, the United States sits at the supposed edges of the "Great Recession," triggered by the housing crisis of 2007. Despite claims of economic recovery, mass long-term unemployment remains high for skilled and unskilled alike, with African Americans and Latinos bearing a disproportionate burden. According to the Bureau of Labor Statistics, the black and Latino unemployment rate for January 2013 was estimated at 13.8% and 9.7% respectively, compared to 7.0% for whites and the overall national rate of 7.9%. This comes amidst a barrage of reports underscoring the economic fall-out of the last decade: homelessness is at an all-time high in many U.S. urban centers, wages on average are the lowest they've been on record, and income and wealth disparities have widened to levels they reached during the Great Depression. To add insult to injury, corporate profits continue to soar, and the wealthiest top one percent of earners, those earning above $1 million, receive about one-third of the entire federal asset promoting budget in the form of tax subsidies and savings, while the bottom 60 percent of earners receive only five percent.
Despite these blatant inequities, there is no current discussion in Washington DC over a basic right to employment, nor has Congress nor the president raised the possibility of actually implementing a national policy based on the national law (Humphrey-Hawkins Act) that empowered them to do so. Instead, President Obama and Democratic members of Congress have succumbed to a Tea Party driven narrative that deficit reduction, or cutting spending, will revitalize the economy and lessen the national debt. This formula, known as "austerity economics," involves cutting spending on essential social safety nets and public services, while raising taxes on the working poor and middle class to pay back creditors. But if we've learned anything from recent events in Europe, "austerity economics" yields disastrous consequences, plunging countries into worsening unemployment, record poverty rates and growing civil unrest. More job loss means less tax revenue for the essential public services families and businesses depend on to thrive. Quite frankly, the U.S. cannot afford to follow suit.
We believe the Obama administration should ignore the irresponsible narrative of austerity-economics, and embrace instead a full-employment policy that would simultaneously address the national jobs crisis and prevent another economic recession. By creating a National Investment Employment Corps (NIEC), states and municipalities could develop inventories of needed jobs for all who are able to work, matching skilled and unskilled alike with full employment opportunities. Jobs would address physical and human infrastructure needs, including building, repair and maintenance of bridges, damns, roads, parks, museums, mass transit systems, school facilities, health clinics, child care centers, even restoration of our damaged postal system. Pay would range from a minimum of $20,000 to a maximum of $80,000, each job also providing benefits, opportunities for advancement, on-the-job training and professional development.
A national program of job assurance (instead of unemployment insurance) would provide meaningful employment in a variety of "public works" projects, while potential serving as the stimulus for the types of innovative, green technologies President Obama has often touted. The cost of a National Investment Employment Corps would be less than the first stimulus package enacted by Congress and vastly less than the $10-30 trillion awarded by the Federal Reserve to the very same investment banking community that caused the economic crisis in the first place. We calculate that if 15 million persons were employed at an average of $50,000 per person, the total expense of the program would be $750 billion. Consider that in 2011 alone, federal antipoverty programs (Medicaid, unemployment insurance, etc.) cost approximately $746 billion. Not only would a federal jobs guarantee drastically reduce antipoverty expenditures, but also if implemented correctly, its budget would swell or diminish in response to economic cycles (grow in recessions, decrease during prosperity).
President Obama holds the mandate, given overwhelming support from the African Americans and Latinos during his 2012 re-election bid, to combat persistent unemployment in these communities. By ignoring the dangerous narrative of austerity economics and moving people toward full, permanent employment as mandated by the Humphrey-Hawkins Act of 1978, we not only begin to address structural barriers perpetuating inter-group disparities, but we also eliminate the threat of unemployment for all Americans.
This article appeared at the Huffington Post.
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