Federal Job Guarantee as a Proposition for Enhancing Economic Efficiencies and Business Effectiveness

construction hats hung up on an orange wall

Following the 2008 economic recession, the U.S. government invested trillions of dollars into the financial industry and investment banking community in an attempt to reduce the negative effects of the market crash.

However, this recovery was ultimately a jobless one and led to negligible employment opportunities for the millions of un- and underemployed workers in America.

The Federal Job Guarantee (FJG), proposed in this paper, takes the “too big to fail” rationale that was previously applied to the financial sector and extends it to the most financially vulnerable members of society. Through the provision of a quality job opportunity for all who want one, the FJG will help end the cycle of long-term poverty in the country, in addition to providing a mechanism that will smooth severe economic downturns, develop a skilled labor force, establish a wage floor, and foster a more productive business environment.

Written in July 2020 amidst the COVID-19 pandemic, this paper highlights the value of the safety net that a Federal Job Guarantee would provide.

Key Findings

  • Labor force participation rate has remained at a historical two-decade low of roughly 63 percent.
  • This paper suggests an alternative to the full FJG being implemented by the federal government; here, 62 percent of employment will occur under the federal government, with the remaining 38 percent coming from the private sector to increase its odds of political success.
  • Once accounting for savings from a reduction in unemployment benefits and the multiplier effect of the initial investment, the cost of implementing the FJG will not compare to the opportunity cost of not doing so. In conducting a well-orchestrated FJG, the true cost of implementation could be as low as 27-28 percent of previous estimates.
  • Through its reduction of unemployment and the accompanying emotional boon it would provide, an FJG could also potentially induce non-fiduciary benefits in individuals and the population writ large, such as better physical and mental health and reduced rates of crime and drug use.