The Federal Job Guarantee - A Policy to Achieve Permanent Full Employment

Introduction

• Full employment has been a policy goal in the U.S. since the early 20th century.
• President Franklin D. Roosevelt was a notable proponent, advocating for direct hiring programs during the Great Depression.
• Modern definitions of full employment often equate it with a 4%-6% unemployment rate, based on NAIRU (Non-Accelerating Inflation Rate of Unemployment).
• Current unemployment measures fail to account for discouraged workers and those inadequately employed.
• Disparities exist in unemployment rates among different racial groups.

Challenges with Current Employment Policies

• Unemployment is a significant predictor of poverty, but a job alone does not guarantee escape from poverty.
• Various government programs exist (Federal Reserve mandates, EITC, minimum wage laws), but they don't fully address unemployment or poverty.

Proposal: National Investment Employment Corps (NIEC)

• Objective: To achieve and maintain full employment and end working poverty.
• Features:
  • Provide universal job coverage for all adults.
  • Minimum annual wage of $24,600, indexed to inflation.
  • Fringe benefits: health insurance, retirement plans, paid leave.
• Benefits:
  • Eliminate involuntary unemployment.
  • Set a labor market floor, improving bargaining power for workers.
  • Reduce poverty through non-poverty wages.
  • Macroeconomic stabilization and restoration of tax bases.

Historical Context

• Past legislation (Employment Act of 1946, Full Employment and Balanced Growth Act of 1978) aimed for full employment but fell short.
• NIEC proposes a large-scale federal employment program to directly hire unemployed individuals.

International Examples

• India's NREGA: Provides guaranteed employment, boosting wages and employment in private sectors.
• Argentina's Jefes y Jefas: Offers community development jobs to household heads.
• Both programs provide insights into designing effective employment policies.

Economic and Social Benefits

• Eliminates cyclical and structural unemployment.
• Provides a de facto floor in the labor market.
• Enhances worker livelihoods without inducing inflation.
• Boosts local and state tax revenues through increased employment.

Implementation and Costs

• Initial costs estimated at $543 billion annually.
• Potential savings from reduced need for unemployment benefits and other social programs.
• Long-term economic growth expected from increased productivity and consumer spending.
• Program funding options: reduced social program costs, financial transaction tax, estate and gift tax modifications.

Conclusion

• A federal job guarantee offers transformative potential for the U.S. labor market.
• Ensures access to employment at non-poverty wages.
• Encourages policymakers to consider bold solutions for achieving full employment.

Authors

• Mark Paul, William Darity Jr., and Darrick Hamilton
• Supported by the Center on Budget and Policy Priorities.

References

• Various studies and historical data support the analysis presented in the proposal.