In the wake of the highest unemployment rate in 25 years, The Roosevelt Institute asked historians, economists and other public thinkers to reflect on the lessons of the New Deal and explore new, big ideas for how to get America back to work. TAPPED will be cross-posting the 10-part series with the New Deal 2.0 blog over the course of the next two weeks. In this first installment, Randall Wray argues that the federal government should ensure a job offer to anyone ready and willing to work.
The latest jobs report shows that the official unemployment took a huge jump to 10.2% –15.7 million jobless workers. If we add to those numbers involuntary part-time workers, plus those who have given up looking for work, the unemployment rate is 17.5%. Even that seriously undercounts those who would be willing to work if decent jobs at decent pay were readily available–a number I put at 25 to 30 million. While there has been some debate about the number of jobs created or saved by the fiscal stimulus package, it is clear that Washington’s effort has fallen far short, and all plausible projections show more job losses to come.
What perplexes me is that we have been here before, and we know howto solve the unemployment problem: create jobs through a new, NewDeal-style jobs program.
I am advocating using those same principles, but creating somethingboth broader and permanent: a universal job guarantee available throughthe thick and thin of the business cycle. The federal government would ensure a job offer to anyone ready and willing to work, at the established program compensation level (including wages and a healthy benefits package). To keep it simple, the program wage could be set at the current federal minimum wage ($7.25 an hour), and then adjusted periodically as that is raised. The usual benefits would be provided, including vacation and sick leave, and contributions to Social Security.
Let's call this the Job Guarantee (JG) program.
The original New Deal programs included large–scale infrastructureprojects with direction coming from Washington. A permanent anduniversal JG program should be decentralized, with projects created andadministered locally–where the workers are, and for the benefit oftheir communities. The federal government would provide the wages, plusa portion of capital and supervisory expenses (perhaps capped at 25% oftotal wages paid for each JG project). Local governments and nonprofitswould propose projects and cover the rest of the expenses. Stateunemployment offices would be converted to employment offices, helpingto match workers and projects.
More after the jump.
--L. Randall Wray
Roosevelt Institute Braintruster L. Randall Wray is a professor of economics and research director of the Center for Full Employment and Price Stability at the University of Missouri–Kansas City.
