It seems like you can't swing a dead cat these days without hitting a new jobs guarantee program floated by progressives. And that's a good thing! It's about time that programmatic support for full employment became a standard part of the progressive repertoire.
Of course, full employment is by one means a new idea, even if programmatic support for it has hitherto been tepid. Full employment was enshrined in the US as a primary goal of the federal government in the Humphrey-Hawkins Full Employment Act of 1978 and, in a softer form (“maximum sustainable employment”) was made part of the dual mandate of the Federal Reserve (along with price stability) around the same time. Ironically, the record of sustaining full employment has been dreadful since then. In the 1949-1979 period, the US economy was at full employment 69 percent of the time; from 1979 to the present day, the economy has only been at full employment 29 percent of the time .
This is because the passage of the Humphrey-Hawkins full employment bill happened to coincide with the conservative economic counterrevolution that attached little significance to full employment as a policy goal. Instead, it was deemed far more important to keep inflation down, lower taxes, remove regulatory inefficiencies and let capitalism find its natural level. If more unemployment resulted, so be it—it would do more harm than good to interfere and risk a spike in inflation.
It is unsurprising that a period where full employment was the exception not the rule has coincided with a period of rapidly escalating inequality. The most straightforward effect of full employment is that it increases employer competition for workers, leading to rising wages, especially at the low end of the labor market. Conversely, the lack of full employment produces slack labor markets where employers call the shots and low wage workers are particularly disadvantaged. This of course increases inequality, just as we have generally seen since 1979 (with the exception of the 1995-2000 period, a period of—you guessed it—full employment).
This rising inequality in and of itself undermines growth by taking money out of the hands of those most likely to spend, not save, their income. Running the economy at full employment most of the time should partially reverse this trend and boost growth. And full employment forces employers to increase investment and deploy their (now more expensive) workers more efficiently, which should have beneficial effects on productivity and therefore also boost growth .
In short, more full employment means less inequality and more growth. So it's great that progressives are now willing to put big ideas on the table to make full employment a permanent fixture of the US economy.
Of course, how exactly to do this is tricky and Annie Lowrey of the Atlantic provides a good guide to some of the jobs guarantee programs out there, along with their strengths and potential pitfalls. The Center for American Progress (full disclosure: I work there!) also has a new one out that is well worth a careful look.
It should be stressed that the details of a jobs guarantee plan don't need to be settled right now. Let a hundred flowers bloom, a hundred schools of thought contend! This is a debate well worth having and sends good signals about what the Democratic party really stands for. And that in the end is probably just as important--perhaps more so--that getting all the policy details worked out in advance.
Post a Comment
Note: Only a member of this blog may post a comment.