Authors: William A. Darity Jr. and Jorge Zumaeta
Executive Summary: It took a significant departure from conventional practices, economic understandings, and policy implementations to get us out of the Great Recession of 2008. It was a gradually socially painful jobless recovery. The Emergency Economic Stabilization Act of 2008 authorized the investment of more than $700 billion to buy risky and nonperforming debt from various lending institutions (Lewis et al, 2008). Many credible sources reported that the US Federal Reserve pumped over $8 trillion into the financial industry and investment banking community.
This amount was calculated taking into account other financial support and services provided to soften the blow of the finance industry. Eight trillion dollars is a much larger sum than was given without blinking. The same philosophical postulation of “too big to fail” utilized to justify the bailout of the financial sector in 2008 should be extended to assist in the development of employment opportunities for any American who wants to take the public sector job. It is not exclusively for the unemployed, out of the labor force or discouraged worker should include the working poor to eliminate poverty.
The Federal Job Guarantee is a program that supplies a tangible and sustainable solution to break the cycle of long-term poverty in America by providing quality employment options for all, especially for the most financially vulnerable members of our society. The program has three additional other benefits. First, it creates a counter-cyclical stabilizer that could smooth severe economic downturns, Second, it generates a skillful and competitive labor force due to active investment in skills development with the prospect of impacting businesses bottom line, and third, it serves as a price floor for wages in the labor market. An efficient labor market creates a more efficient and productive business environment.
In short, the Federal Job Guarantee, if implemented conscientiously, efficiently, and strategically, has the potential of serving as a mechanism for moderating economic downswings and as a catalyst for igniting socio-economic development and equity, thereby contributing to a more productive and competitive labor force in support of business growth. Additionally, the COVID-19 Global Pandemic and economic crisis are offering an opportunity to rethink our tools to soften the business cycle swings. The Federal Job Guarantee can provide the safety net for the millions of people that have been left without employment during this crisis. The Federal Job Guarantee offers a tangible and sensitive solution for many Americans.
Key Findings
- Our proposal demonstrates that when conducting a well orchestrated FJG, the cost of implementation could be as low as 27-28 percent. More importantly, the gains in terms of tangible and intangible benefits to the most vulnerable members of our communities are significantly higher in the long run.
- The FJG has the potential of breaking the poverty cycle definitively. In short, the Federal Job Guarantee program has the potential for lifting millions of Americans out of poverty by providing meaningful job opportunities with sustainable wages, fringe benefits, and health insurance.
- The multiplier effect of such massive, but necessary investment translates into an increase in purchasing power and disposable income of the targeted population; generate increases in Government tax revenues which are very important for the state and local economies, spawn increases in savings in social benefits, and for sure a much happier, healthier and more productive labor force which paves the road for a more efficient and resilient business base.
