Living-wage Jobs Campaign (12/27/13 Draft)

Following is the latest draft of the key content for the campaign that Michael Stein and I are planning to launch early next year on the powerful, new Causes.com website. The economist Dean Baker, co-author of the recently published, excellent book, Getting Back to Full Employment, has offered valuable input. The text in bold indicates the Causes.com framework, which cannot be altered. By default, the title and the URL for the campaign consist of the text in the Goal.

Your feedback would be most welcome.

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Goal (limit: 60 characters):
[I want to] get Congress to guarantee living-wage job opportunities.

Short Description (limit: 120 characters):
Everyone needs the opportunity to work at a living-wage job in order to develop their potential and serve their community.

Full Description (no known limit):

Most Americans believe that our society should assure everyone a living-wage job opportunity. In a March 2013 article, “Democracy and the Policy Preferences of Wealthy Americans,” Benjamin I. Page, Larry M. Bartels, and Jason Seawright reported that 68% of the general public believe “the government in Washington ought to see to it that everyone who wants to work can find a job” and 78% believe that the minimum wage should be “high enough so that no family with a full-time worker falls below [the] official poverty line.”

So far there’s little grassroots pressure demanding action to achieve this goal. But some signs suggest that such movement may emerge in the near future. You can encourage activist organizations to take on this issue by signing our petition: “We, the undersigned, call on Congress to see to it that everyone who wants to work can find a living-wage job.” You can also pledge to recruit additional signers and start your own “personal campaign” on our site to gather more signers. If you join us, we’ll keep you informed about other efforts to guarantee living-wage job opportunities as we become aware of them. (We will not share your email address.)

As citizens, we need not prescribe precisely how the federal government should achieve full employment. The experts and the policy makers can make those decisions. Our job is to determine if they have accomplished that goal and keep pushing them until they do. They managed to save Wall Street and our car companies when those industries were on the verge of collapse. Surely they can figure out how to enable every American who is willing and able to find a living-wage job.

Without dictating the exact methods, however, we can indicate that our mission is realistic by outlining the problem and suggesting some concrete options in terms of solutions. (As conditions change and we receive feedback, we’ll modify this statement from time to time.)

First, the federal government could enable the working poor to lift themselves out of poverty by increasing the minimum wage and the Earned Income Tax Credit to levels necessary to assure that workers earn a living wage.

Second, the federal government could send funds to local governments to hire public-service workers to meet needs that are currently being neglected. Those needs include teachers’ assistants, in-home caregiving, nursing home staff, child care workers, park and recreation staff, substance abuse counselors, neighborhood center staff, and environmental cleanup.

By relying on revenue sharing with local governments, we could minimize problems associated with “big government” and give people a greater opportunity to have a voice in how funds are spent. Citizens can more easily impact City Hall than they can the federal government.

By requiring local governments to maintain current spending levels, we could assure that they did not simply use the new funds to reduce local taxes.

By steadily increasing such funding each year until those jobs go begging due to lack of applicants, we could reach full employment. When such funding is no longer needed, it could be decreased.

About 10 million individuals are officially unemployed. But if more living-wage job opportunities were available, several million more under- and unemployed workers might take those jobs. Because a major national jobs program would boost economic growth, many workers would take jobs in the private sector. In addition, mandating paid sick time, paid family leave, and four weeks of paid vacation, as do all wealthy countries except the United States, would lead businesses to hire more workers.

To get a rough idea, let’s estimate what it might cost the federal government to fund five million living-wage public jobs at $12 per hour. Since a full-time worker at that rate earns $25,000 annually, total wages would be $125 billion. Add on another $25 billion for supervisory and administrative costs, and the total is $150 billion.

Where might those funds come from? Without increasing income and payroll tax rates, the following deficit-neutral options include:
• A small tax on financial transactions would discourage unproductive, destabilizing speculation and generate $100 billion or more.
• Reducing wasteful military spending could free up $60 billion per year or more.
• Tens of billions in increased revenues would be generated from the boost to the economy that would result from full employment.
• Billions would be saved from decreased social insurance payments to people who would no longer need assistance.
• The Federal Reserve Bank could buy municipal bonds, which would lower borrowing costs for local governments and help them pay salaries and invest in infrastructure improvements.

If those measures were insufficient, the government could borrow money. (Annual interest payments on the debt have declined from 15% of the federal budget in the 1990s to about 5% now, so we could afford this option.)

Measures such as these would enable us to move toward full employment. After gauging our progress, if more funding were needed, a one-half-of-one-percent wealth tax on the top 1% could generate $100 billion. (More than one-third of the nation’s $60 trillion wealth is held by the top 1%.)

So clearly lack of revenue is no reason to back away from guaranteeing living-wage job opportunities. The United States has more than enough money to assure living-wage job opportunities.

The standard argument against full employment has been that it would cause excessive inflation. But partly due to global competition, it’s unclear how much inflationary pressure would result. From 1997 to 2000 the unemployment rate was below 5% and falling (approaching full employment, for some workers will always be between jobs), and from 2003 to 2008 it declined from 6.0% to 4.6%, but the core inflation rate has averaged less than 3% since 1997, which is acceptable.

True enough, higher than expected inflation does hurt Wall Street. The price traders pay for financial instruments is based on expected inflation. When they sell, if inflation proves to be greater than expected, the purchasing power of the money they get is less than what they anticipated. Inflation erodes their assets. And this creditor class has great influence on public policy.

But if wages keep pace, some inflation is beneficial to the economy, partly because it gives companies confidence their profits will increase. And multiple measures are available to handle excessive inflationary pressure, including indexing Social Security to inflation and raising interest rates.

Steadily increasing federal revenue-sharing year-by-year would enable the whole country to monitor whether reducing unemployment was contributing to excessive inflation. This decision needs to be made openly following full discussion. What is worse? Stagnant wages for the middle class, severe poverty, and widespread unemployment, or some inflation that benefits most people? How much inflation is acceptable? Historically, most countries have managed quite well with inflation rates that have been much higher than in the United States. But the official Federal Reserve Bank policy, also adopted by other central banks, is an unjustifiable goal of 2% inflation.

In Getting Back to Full Employment: A Better Bargain for Working People, the economists Dean Baker and Jared Bernstein argue that if and when inflation became a serious problem, we could deal with it then.

The issue is one of relative risks. We understand that as the unemployment rate falls to lower levels, the risk of accelerating inflation increases. But if the rate of inflation is not accelerating, there is the risk that people are being needlessly denied the chance to work and wages for those at the bottom are being held down by bad government policy. Based on the relative costs, it seems far better to take the risk of a short period with rising inflation than maintaining a higher-than-necessary level of unemployment…. Few would agree that it is appropriate to keep millions out of work and deny wage growth to tens of millions simply to reduce the risk of modestly higher inflation. [emphasis added]

In a recent interview with Washington Post columnist Ezra Klein, Bernstein stated:

The largest group of beneficiaries of full employment is not the un- and underemployed. It’s people with jobs. It creates enough pressure on the compensation system such that the bottom two-thirds of the workforce, for whom growth has been pretty much a spectator sport, get back in the game.

Klein concluded, “Full employment gives average workers the power to demand a better deal from their employers and thus reduces inequality by giving the working class an overdue raise.”

As former union leader William Winpisinger argued:

Official government policy declares unemployment is necessary to combat inflation. For two decades we’ve used high unemployment to combat inflation. We’ve had mini-recessions, mild recessions and severe recessions. We’ve sacrificed the unemployed and their families on the altar of fighting inflation and managing the economy. All we have to show for it are a decline in real incomes for American workers and their families, a growth in poverty-level jobs, and the wasted lives of nearly 10 million people marking time in the ranks of an army of unemployed.

Trading unemployment for price stability is like burning down the barn to get rid of the rats. We lock up people who practice arson as a rodent control policy. Those who promote the conscious use of unemployment to manage the economy are even more dangerous. As a national policy it is hypocritical, bankrupt and bereft of intelligence. It is long past due for this nation to commit, absolutely and unequivocally, to full employment as its number one priority.

The remaining question is how to build a movement to see to it that everyone who wants to work has a living-wage job opportunity. If you support the ““Get Congress to Guarantee Living-Wage Job Opportunities” campaign, sign our petition, and get others to sign, you’ll encourage activist organizations to take on this issue and we’ll keep you informed about opportunities to get more involved when we learn about them.

1/2/14
(The substitution of future versions will be noted here.)

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