How to Eliminate the Scourge of Unemployment: Jobs Now at a Living Wage

By L. Randall Wray

It is amazing no one has thought of this before. Seven years after the GFC began, we’ve still got up to 25 million people who want jobs but cannot find them. Of course that’s far more than the official unemployment numbers—which don’t count anyone who worked just an hour or so, or who gave up looking altogether.

Gee, I wonder how on earth we can find a solution to joblessness, or to low pay? It is all so complicated. How can we stroke the business class in just the right way to get them to create a job or two? How can we prevent our corporations from taking jobs abroad?

Should we slash “guv’ment” regulations to raise the spirits of our business undertakers? Maybe we should just eliminate minimum wages so that they can afford “expensive” American labor? Then we could compete with Viet Nam.

Or slash taxes to boost the supply side?

Or maybe we should just throw-in the towel and admit that we’ll never solve the problem of unemployment? Just throw more welfare hand-outs at the jobless? Expand the dependent classes to include more of the able-bodied. Admit that our Captains of Industry as well as our Public Stewards have failed us. We have created a dysfunctional social system that cannot provide jobs to those who want to work.

As Hyman Minsky put it a half-century ago, providing welfare rather than jobs is “a conservative rebuttal to an ancient challenge of the radicals, that capitalism necessarily generates ‘poverty in the midst of plenty’”.

Rather than paying people not to work, Minsky proclaimed we must pursue an alternative: ““We have to reverse the thrust of policy of the past 40 years and move towards a system in which labor force attachment is encouraged. But to do that we must make jobs available; any policy strategy which does not take job creation as its first and primary objective is but a continuation of the impoverishing strategy of the past decade.”

Here’s an idea: why not create jobs with decent pay? Now, why didn’t anyone ever think of that before?

Put people to work doing socially useful things. Take workers as they are, design jobs that they are able to do. Offer a high enough wage with good, supportive working conditions so that no one would take the demeaning and low paying jobs that the private sector creates. If the private sector wants to compete, it will have to pay more and provide more interesting and fulfilling work.

Here are three links to recent posts. First, a nice article by Bryan Williams, who seems to be familiar with the Job Guarantee/Employer of Last Resort proposals we’ve been pushing since the mid 1990s (note the link to a CFEPS article on the Jefes program in Argentina):

Here’s a valiant effort by Lambert Strether to promote the Job Guarantee. Note the typical accusations raised: “make work”! (as if burger-pushing jobs are not “make work”); “low pay” (as if burger-pushers—and those without jobs–are well-paid); as well as the ridiculous claim that “everyone hates to work” and the even sillier “let’s just pay everyone to stay home and be creative”.

I think the commentary says a lot more about the personal issues of the commentators. Some still seem to have a lot of “mommy issues” forty years after potty-training experiences.

And, finally, the following is a brilliant proposal: Just a $3 raise makes a living wage!

In truth, $3 is probably not enough. Let’s double that and start talking about a Job Guarantee that starts next month at $14 per hour, available to anyone who wants to work, doing work to benefit their communities. Decentralize administration. Create good working conditions. Promote creativity. Let a thousand flowers bloom.

See if Burger King and Walmart can compete with that.

5 Responses to How to Eliminate the Scourge of Unemployment: Jobs Now at a Living Wage

  1. ‘as if burger-pushing jobs are not “make work”’

    Let’s not forget those trading derivatives for a living, along with all the other ‘make work’ jobs in the financial sector that are there solely to increase the velocity of money in a vain attempt to prop up ‘trickle down’ theory.

    “Some still seem to have a lot of “mommy issues””

    Hardly surprising since they want adult society to adopt toddler rules. Individual freedom uber alles – particularly the freedoms of the poor sops that have to make the stuff they demand they should be able to have *by right*.

    Everybody loves a bung. It appeals to the inner toddler. However ask the question from the other viewpoint and the response is never quite so enthusiastic:

    Are you happy to work 40 hours a week creating stuff for other people, receiving a meagre extra wage and paying about 50% of that wage in tax, while those other people, as fit and able as you, drink beer for a living?

  2. Amen.

    On the plus side (hesitate to use that phrase regarding our global economic discussion), it seems like Draghi at least is starting to turn course: http://www.reuters.com/article/2014/08/31/us-eurozone-draghi-merkel-idUSKBN0GV0DN20140831

    It is encouraging to see that the concept of fiscal austerity is being challenged (gasp!) by as influential a person as Draghi, and the person defending it looks bad for a change. Politics and changes in economic orthodoxy move painfully slow we must remember. The situation in the EZ is more acute and more demanding of a breakthrough, I believe it there where we will see the tides turn and then hopefully US follows suit.

  3. As always ideology will prevail. I mean we have people so worked up now, and dedicated a certain ideal, the ‘third rail’ of politics, touching Soc Security, actually has appeal with the middle class? Those on the lower rungs will defend to the death the need for gov to benefit those who need it least, and will punch themselves to do so. Sometimes feels like a world gone mad.

    It’s also scary…big government, what will the people do for work? Even economists fear it.
    Keep up the good fight though guys, and it even goes beyond econ. I felt that very sentiment, I lost all hope in government and business. With no where to turn, things get a little existential crisis-y, and I don’t want perpetual world war, but I would like the US to be dedicated to some national pride, and feeling of achievement. Trying the JG would be nice!

  4. As taxation does represent a drain on the working man/women’s earning, as an economist Randall, you should be able to calculate the minimum rate that could apply to EVERY financial transaction that goes through the banking system every day. It has been done for Australia and the rate comes to a half of 1% to give the Government their current budget estimates. This means they can eliminate EVERY other form of taxation now in place – payroll tax included. What would the rate be in the US?
    Do you think a worker on – whatever- $600 a week would be happy enough to contribute – say – 1% or $6 a week to the Government? Do you believe that small and large businesses would prefer to ditch all the paperwork and problems with sales tax, Company tax, excise, etc? Wouldn’t it be much easier just to write a software change to have 1% of every bank transaction deducted by the Banks and transferred every day to a Government account? Do you think the big gamblers(sorry -“investors”) would really baulk at paying $1000 in tax for every Million they “invest” – knowing they have no other taxes to pay? And who would really bother about tax avoidance schemes – especially if there are some significant penalties attached? But – best of all – what would be the effect on the whole economy if EVERY other tax is eliminated? Surely this is worth looking at, and doing the sums. It complies with your belief that taxes create the demand for dollars, and I’d be surprised if the US rate for such a Debit Tax scheme would come out at anything like 1%.

  5. Macrocompassion

    Although the search for jobs is partly based on the availability of suitable places and the demand for goods (mostly consumer), when one take a distant and long term view of this situation the cause of poverty and unemployment is due to the lack of opportunity to find a place to work, rather than education or “entrepreneur power”.

    It is all very easy to fool ourselves and think that there are opportunities waiting to be filled, but when taking this broader view the situation is a lot more serious and it is based on the holding out of use of development sites of land. There is every reason for a landlord to attempt to do this because the price of land normally rises as the surroundings are developed (using the taxpayers money).
    So speculation in land values is the reason why some of the potentially best sites are being held unused and why the resulting prices of the sites that are nearby and in use, is so high. Land speculation which comes with the help of bank loans is why it is so difficult to find work and why goods are so comparatively costly.
    By a sensible and responsible government taxing land values instead of earnings, there would be good incentive to use land properly, making it more available and reducing its cost. This will allow more perople to find work and also make the demand for goods rise.