Authors: Mark Paul, William Darity Jr., Darrick Hamilton and Anne E. Price
Introduction: Unemployment is one of the strongest predictors of poverty. While the United States has an array of social insurance programs in place, 43.1 million people (13.5 percent) remain in poverty, struggling to meet basic needs for themselves and their families. While these programs have reduced poverty rates by nearly half, we must reckon with the fact that as the social insurance regime has shifted to a “work-based safety net,” providing the majority of assistance to the working poor – a group that would not exist under our proposed program in the first place – millions are left in dire need. During the Great Recession, the U.S. witnessed one of the largest gaps in the current safety net – the lack of support for the jobless – take a major toll on Americans across the country. At the height of the crisis, conservative measures of unemployment indicate that over 15 million Americans, or 10 percent of the labor force, were out of work, making no contribution to traditional measures of economic productivity and economic growth, and struggling desperately to provide for themselves and their families. Broader measures of unemployment, such as U6, that better capture hardship during economic downturns indicate that 17.1 percent of workers were unemployed or working part-time, despite wanting full-time employment. A job in and of itself is not a sufficient condition to escape poverty. With at least 25 percent of workers earning wages below the poverty line, and 44 percent of homeless individuals reporting to have engaged in paid employment in the past month, non-poverty wages need to be an essential component of reducing poverty. Still, we must recognize that the costs associated with unemployment go far beyond poverty. The nature of the harms from unemployment or underemployment are well documented. In addition to inflicting lasting damage on an individual’s labor market prospects, unemployment is associated with increased rates of physical and mental illness, alcohol and drug abuse, child and spouse abuse, failed relationships, suicide and attempted suicide, and a host of other personal and social ills. Figure 1 documents the persistent gap between unemployment and job openings – a gap that widens during economic downturns, but remains stubbornly large during “strong” labor markets as well. Even when the economy is booming, millions remain unemployed and underemployed due to the government’s inaction to function as an employer of last resort.
- address the long-standing unjust and discriminatory barriers that keep large segments of stigmatized populations out of the labor force;
- reverse the rising tide of inequality for all workers by strengthening their labor market bargaining power and eliminating the threat of unemployment;
- raise the wages of millions in the private sector by setting a substantially higher minimum compensation package; and
- expand the provision of public goods and services in the United States.
