“Eleven percent of the U.S. workforce—6.2 million workers—remained unemployed in 1939, 10 years after the onset of the Great Depression. Two years later, as the U.S. entered World War II, unemployment was halved, and by 1944, the unemployment rate fell to an unprecedented one percent. What happened?” asks Jon D. Wisman and Aaron Pacitti in Ending The Crisis With Guaranteed Employment And Retraining. (quotes to follow)
The U.S. government began massive deficit spending and, far less noted, became a de facto employer of last resort when it placed over 10 million Americans in uniform and added another two million to the Department of Defense and other agencies.
Since 2008, the U.S. economy has been mired in the second worst economic crisis in its history. Conceivably, massive government spending could bring the economy out of this slump as massive war spending ultimately ended the Great Depression of the 1930s.
Currently, the U.S. economy is trapped in the second worst economic crisis in its history. Although less severe, it shares common roots in the dramatic rise in inequality preceding both of these crises, resulting in inadequate aggregate demand, massive indebtedness, speculative frenzy, consumption distortions – conditions consequent to the dominance of laissez faire ideology. Many workers have become so discouraged that they have left the workforce entirely, as can be seen by the sharp fall in the employment-population ratio in Figure 1.
However, a far superior strategy exists: Guaranteeing employment accompanied by retraining to enable all unemployed workers to become absorbed into the regular work force. Beyond ending the crisis, the superiority of this strategy is that it would institutionalize a procedure for insuring that, in an increasingly technologically dynamic and open economy, workers would possess the necessary skills for available jobs. Guaranteeing employment would also eliminate the ecological costs associated with the need to seek growth to generate employment at practically any cost.
Finally, it would establish a new moral social contract whereby everyone is granted the dignity that accompanies being a productive member of society. Welfare for those able to work could disappear, along with the degradation and humiliation that accompanies it.
HOW GOVERNMENT GUARANTEED EMPLOYMENT AND RETRAINING WOULD WORK
Under such a program, employment could be guaranteed to everyone willing and able to work (zero involuntary unemployment) by making government the employer of last resort (ELR). In recent years, a number of economists have advocated just this.
An ELR program might work as follows. Federal funds would be given to local governments who would then distribute resources as needed to community employment centers, so that employment opportunities could be tailored to meet local needs. Employment is then offered to anyone who seeks work but would otherwise be without a job. Workers are “[hired] off the bottom” and the offered wage serves
as a price floor—a living minimum wage.16 Upon losing a job, unemployment insurance could cover a set number of weeks for the individual’s job search, at the end of which, should a job not have been located, the individual may join the ELR program.17 No other form of public support need be available to unemployed, but able-bodied workers. Thus, those choosing to not accept such employment would be voluntarily unemployed, and welfare could be restricted to those physically or mentally unable to work.
Entering into the ELR program would entail working in a government-created or approved job and/or receiving training. The goal would be to keep the entire workforce at work or in training and to move workers into the private economy as quickly as possible. A job placement component, working in conjunction with private employers, could facilitate re-entry into the regular labor market.
An ELR program would face the challenge of employing workers in domains that do not directly compete with private or current public sector jobs. Domains might include programs for assisting the elderly population, tutoring less-privileged children, day care, and improving the quality of the public space by providing flowers, benches, statuary, and fountains along streets and in parks.18 The American Society of Civil Engineers (2013) gave the United States a grade of a D+ for the current state of its infrastructure. Thus major projects such as burying utility cables; creating seawalls in flood-prone areas; providing public broadband internet access to all areas of the country, including rural ones; road and bridge repairs; improved public transportation; and high-speed rail in population-dense areas offer productive and socially useful avenues for employment. But one of the most promising uses of ELR workers would be to employ them in “green jobs,” such as alternative energy manufacturing, that provide the tools and incentives to reduce the likelihood that our species commits ecocide ).
Chosen excerpts by Job Market Monitor. Read the whole story at