By John F. Henry
Levy Economics Institute
On January 6, 1941, President Franklin Delano Roosevelt delivered his State of the Union Address to Congress. It was a perilous stage in world history, and Roosevelt used his annual address to urge U.S. entry into the war then raging. Against the isolationists in Congress (and in the general population), Roosevelt contended that the main objective of U.S. entry was to fight for the universal freedoms that all peoples of the world should possess. These “four freedoms” were freedom of speech, freedom of worship, freedom from want, and freedom from fear. It is the third freedom—freedom from want—with which we are here concerned.
In the economic organization within which we live—call it capitalism, free enterprise, entrepreneurial—the majority of the population must find employment that provides sufficient income to allow a life free from want. The reality, however, is that many, and sometimes very many as in the “Great Depression” of the 1930’s, cannot secure employment, and, even if successful in finding a job, the income generated is insufficient to escape a life of want. It is somewhat ironic that the economic system requires that most people must secure jobs at sufficient wages, but that same system does not require that such jobs are available. The reason for this is fairly straightforward—business firms will hire people and pay sufficient wages only if it’s profitable to do so. There is no guarantee that this is the case. Indeed, it is not the case for a large percentage of the working population. As Roosevelt stated in his 1944 State of the Union .address, “(N)ecessitous men are not free men,”
In 2014, 45% of U.S. wage and salary earners earned $25,000 or less. (https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2014) For purposes of comparison, the 2014 poverty level income for a family of four was $24, 250. (https://aspe.hhs.gov/2015-poverty-guidelines) To be sure, not all income earners live in a family of four. Some are single-person earners, but some must support more than four people. And, the data on income earned refer only to those employed—full or part-time. It’s difficult to discern just how much of the U.S. labor force is unemployed as official estimates are on the conservative side. However, even the Bureau of Labor Statistics—the official government agency reporting on these numbers—informs us that a better estimate of the official rate of 5% is roughly 10%. This higher figure includes short-term discouraged workers. Other students of this calculation would put the real rate at triple the posted rate. (http://www.shadowstats.com/alternate_data/unemployment-charts) But, regardless of controversies over the actual unemployment rate, the point is that there is unemployment. And this, coupled with low wages affects the very livelihood of many of us who must “work for a living.”
In 1946, largely in response to the devastating effects of the Great Depression, including political turmoil, the U.S. Congress passed the Employment Act. This Act assigned the Federal Government to oversee the economy and undertake policies and spending programs to prevent a return to the economic debacle of the 1930’s. When the Bill was introduced by Wright Patman of Texas, sometimes referred to as “the last populist,” it was named the Full Employment Bill. This, if passed in its original form would have obligated the government to guarantee employment to all who were seeking work. However, a coalition of powerful businessmen and their allies in government gutted the Bill, and what resulted was an Act that removed the “right to work” provision of the Bill, and substituted wording that essentially suggested that the Federal Government seek ways to maintain employment at levels consistent with the needs of business concerns and the maintenance of a “free enterprise” economy:
The Congress hereby declares that it is the continuing policy and responsibility of the federal government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy with the assistance and cooperation of industry, agriculture, labor, and state and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free and competitive enterprise and the general welfare, conditions under which there will be afforded useful employment for those able, willing, and seeking work, and to promote maximum employment, production, and purchasing power. (Employment Act of 1946, Pub. L. 79-304, ch. 33, 60 Stat. 23 (1946)
Thus, rather than introducing a government-mandated program that spoke directly to the interests of working people, the Act of 1946, while requiring government to “use all practical means consistent with its needs” to “promote maximum employment” and “promote free and competitive enterprise,” it did not promote full employment and did not mandate that people had a right to employment. Essentially, the Act, while not quite a hollow statement, did not touch on the basic, fundamental issue of the nature of employment in a capitalist economy.
(In 1978, the Employment Act was amended by the “Full” Employment and Balanced Growth Act—better known as the Humphrey-Hawkins Act. Among other provisions, the Act mandated that government and the Federal Reserve should guarantee that employment should not exceed 3 percent for people 20 years and older. This—and other—provision(s) was never implemented; Congress and the Fed simply ignored it.)
The next development occurred at the level of the United Nations. In 1948, the U.N. adopted the “Universal Declaration of Human Rights.” In light of the atrocities associated with the Nazi regime in Germany, and the carnage of WWII, a statement to the world that “the peoples of the United Nations have…reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom” was a necessary declaration to indicate that the world was now (ostensibly) different. (http://www.un.org/en/universal-declaration-human-rights/index.html)
Included in these rights, one finds the following: “Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. Everyone who works has the right to just and favourable remuneration ensuring for himself and his family and existence worthy of human dignity….” (From Article 23) (A full reading of the entire document is worth pursuing. One can readily observe that the rights listed have been adopted only in the breach. Essentially, this noble statement has been ignored, if not openly violated. To be sure, the Declaration had no legal force. However, it was believed (by some, at least) that as a moral statement, it would set the world on a new course of human history.)
Now, if one takes seriously the Declaration of Human Rights and Roosevelt’s Four Freedoms, and includes the initial Full Employment Bill of 1945, it is obvious that governments—and not just merely that of the United States—have been remiss in fulfilling their obligations to the working population; that is, to the vast majority of the citizenry. We should not expect the private, business portion of society to provide full employment at wages that would satisfy the United Nations “just and favourable” clause. Thus, it is up to governments to do so. There were movements in this direction following WWII, mainly in Europe. This was the so-called “welfare state” period that lasted from the early 1950’s into the 1960’s. This era is long-gone, superseded by the “neoliberal” period. We are told by politicians, by economists, by media personalities, that governments cannot afford to undertake programs designed to assist working people, that we must learn to be self-reliant, that the “entrepreneurial economy” requires a “flexible” labor force—a laboring population that is always threatened by the possibility of unemployment in order to promote the proper work ethic. That is, we are told that an economy mandating that most of its citizens are insecure in their ability to find employment at an income that affords “an existence worthy of human dignity” cannot be challenged. It is up to us—those who are disadvantaged by the current economic, political, and ideological climate to contest this state of affairs.
What Is To Be Done?
Full employment must find its way back to the table, to become a significant part of the conversation surrounding the making of a better world. At this juncture, wedded as we are to liberal democratic politics, the prominent politician most attuned to a progressive program that would certainly benefit the majority is Senator Sanders. He has already health care and education on the table as rights. But, in a capitalist society, the basic right necessary for a decent life is a right to employment—at a “just and favourable” wage. Granted, Senator Sanders’ call for a $15/hour minimum wage is a step in this direction, but a very small step. Full employment coupled with a wage that allows working people to live a decent and respectable life is necessary—and it can be instituted.
Readers of “New Economics Perspective” are familiar with various “job guarantee programs.” Coupled with an understanding of “modern money theory,” it can be shown that full employment at just and favorable compensation is possible. And not just possible, but would go a long way to build a more fair, more humane society. Inequalities would be reduced, working people would have more access to education, better health (including mental health), and children would have better lives. So, why not institute full employment—as a right?
There are many reference to Senator Sanders as “the new Roosevelt.” And the Works Progress Administration (renamed as the Works Projects Administration) is held up to be an example of what a jobs guarantee program can accomplish. One must be very careful in such a comparison, and even more careful in extolling the virtues of Franklin Roosevelt. Roosevelt was not actually supportive of a public works program—except as an emergency measure. (See Anthony Badger, FRD: The First Hundred Days. NY: Hill and Wang, 2008.) Rather, it was Harry Hopkins, the Director of the WPA, who was the leading force in recommending a public works program as a continuous, necessary, integral feature of the economic system. “While we have a problem of emergency proportions at the moment … we are faced for an indefinite number of years with a situation which will require a permanent plan that cannot be carried on as an emergency matter. We should face this frankly.” In addition to increasing the unemployment insurance program, he recommended “supplementing it with a broad program of public works as an established governmental activity.” (June Hopkins, Harry Hopkins: Sudden Hero, Brash Reformer. NY: St. Martins, 1999) Hopkins’ plan was basically the same as those called for by later advocates of a jobs guarantee program, including Hyman Minsky. (http://www.levyinstitute.org/pubs/wp_515.pdf)
The WPA, constrained as it was by the Roosevelt Administration, did not go nearly far enough in meeting Hopkins’ objectives: it was not a jobs guarantee program, and full employment was not achieved—that required World War II. But it was a step, and did accomplish many notable achievements. (See, https://livingnewdeal.org/map/ for every WPA project.)
So, taking the WPA as a possible starting point, extending and strengthening such a program, could Senator Sanders not only be seen as comparable to FDR, but actually institute a program that had shown such promise but was curtailed by “politics” and “sound economics”? It’s a tall order, to be sure, but it is possible. And I suspect that, like FDR, he must be “pushed” to endorse a program that truly benefits the vast majority. So, let’s push him!