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NATIONAL
JOBS FOR ALL COALITION Special
Report 3 © October 2003
TOWARD
A FAIR ECONOMY:
THE ECONOMIC
CONTEXT FOR 2004
by Members of the NJFAC
Executive Committee, Gertrude
Schaffner Goldberg, Chair
A Work Ethic without Enough Work
More than at any time since the Great Depression, Washington
has made work the core of its social and economic policies. This
fits the American emphasis on the work ethic, but it’s not
very ethical: Where is a parallel commitment to opportunities
to practice the work ethic? Where is the opportunity for all to
work at livable wages? Where is a guarantee of health, unemployment,
and retirement benefits? If new policies require the mothers of
young children to work, what assurance do they have of affordable
substitutes for parental care?
Unemployment was low—but by no means vanquished—in
the closing years of the 20th century. Even then, real wages still
lagged behind the levels of the 1970s, a time when the nation
was much less wealthy. The minimum wage could once be called an
anti-poverty wage. That is hardly the case now when year-round,
full-time work at the statutory minimum wage amounts to less than
60% of an official poverty level that is itself inadequate. Workers
have lost pensions, health insurance, unemployment insurance,
and other workplace rights that were once expected—once
referred to as a Social Contract. In short, jobs are not what
they used to be.
Workers have lost ground because of greatly expanded business
power, abetted by deregulation, unrestrained globalization, and
a related assault on organized labor. Workers are expected to
be flexible and mobile, to accustom themselves to frequent turnover.
And government policy, which once offered them some protection
against the vicissitudes of a market economy, often exacerbates
and seldom reduces their heightened insecurity.
Unemployment: Acute, Chronic and Costly
to the Nation
Our brief holiday from mass unemployment is over. The U.S. economy
has dropped 2.8 million jobs since the start of 2001, 2.5 million
of which have been in manufacturing. 2.1 million people were looking
for work 27 weeks or longer. In September, employment rose for
the first time in seven months just enough to match labor force
growth; consequently, unemployment held at 6.1%. In fact, the
percentage of adults with jobs fell to the lowest level in 10
years. Unemployment has reduced health care coverage and increased
poverty.
The latest Administration budget is likely to make unemployment
even worse. Tax cuts for the rich are not an economic stimulus.
Government tax policies, moreover, are throwing away the resources
that could mitigate growing inequality and widespread insecurity.
This budget will snatch billions of dollars from social programs
in the next decade. It proposes to eliminate school lunches for
many low-income children, lower already lean food stamp benefits,
and reduce health coverage for millions of children. But it will
also cut the jobs of those who provide the benefits and services--who
prepare the lunches, sell the food, deliver the health care. And
its tax policies have reduced the revenues of already-strapped
states, forcing tax and spending policies that will doubtless
weaken labor market conditions.
The defense budget has escalated, but military spending creates
fewer jobs for the buck than domestic spending. Clearly, this
military spending has not brought down unemployment and is unlikely
to do so in the future. Beleaguered industries like air transportation
and tourism are further hampered by the war.
Rising unemployment not only causes hardships for job losers
but reduces tax revenues by billions of dollars—dollars
that could finance vital social programs and create more jobs.
Unemployment literally throws away billions of dollars of potential
national output—schools and housing not built, child and
elder care not provided. Four percent unemployment in 1994, instead
of the actual rate of 6.1%, would have meant $280 billion in additional
goods and services or $1,000 for every man, woman, and child.
Unemployment: The Personal Costs
At the same time that it reduces our national product, unemployment
devastates the people who are denied a job and a living (an apt
word)—not to mention the disruption of their family life.
To rob a person of a job is a deadly deprivation. As Martin Luther
King, Jr. put it so poignantly:
It is murder, psychologically to deprive a man[sic] of
a job or an income. You are in substance saying to that man
that he has no right to exist. You are in a real way depriving
him of life, liberty, and the pursuit of happiness, denying
in his case the very creed of his society—The
Trumpet of Conscience, 1967.
African Americans and other minority groups have suffered most
from the failure to accompany civil rights with employment rights.
They are the disproportionate victims of the millions of jobs
lost to the economy and to American workers in the last two years.
Work is disappearing in the ghettos that were beginning to revive
during the brief period of lower unemployment in the late 1990s.
But African Americans have never been the majority of the unemployed.
This is a problem that transcends class, color, education, and
color lines. It is an American problem.
“Jobs and Freedom” were twin goals of the Civil Rights
Movement. Civil rights for women and minorities have been expanded,
but they are not fully guaranteed without economic rights. In
1944, President Franklin Roosevelt called for an Economic Bill
of Rights, the first of which was the right to a useful and remunerative
job. As Roosevelt put it, true freedom cannot exist without economic
security and independence. According to the Economic Bill of Rights,
Necessitous men [sic] are not free men.
The Unemployment Undercount
Why have we not extended the right to employment--the right most
consonant with our national creed-- to all our people? One reason
is that during times when official unemployment is relatively
low, the problem tends to be overlooked. That’s because
it is grossly undercounted. In order to be counted as unemployed,
a worker has to have worked less than one hour in paid employment
during the week of record and to be actively looking for work.
The way the government measures unemployment obscures the problem
everywhere, not only in the ghettos, but also in rural areas.
Unemployment Statistics: Not the Whole Story, prepared
by the National Jobs for All Coalition, graphically makes the
point that the way government counts unemployment "whitewashes"
the problem. Each month the Coalition posts new figures on official
and hidden unemployment on its website (http://www.njfac.org/jobnews.htm).
The total rate is typically twice the official rate. In 2000,
when the official unemployment rate of 3.9% was the lowest in
30 years, 5.5 million people were counted as unemployed. Excluded
from the official count were 3.2 million people who worked part-time
because they couldn’t find full-time work. Another 4.4 million
people wanted jobs but were not counted because there were not
looking for work. These two categories amounted to more than the
number of people counted as unemployed. In addition, about 17
million people were essentially underemployed—working full-time,
year-round for less than the four-person poverty level.
Today, unemployment is an acute problem, but it is a chronic
ill, one that is always with us, always causing hardship to millions
of people. By underestimating the problem of unemployment, we
mute the public outcry that could demand a solution.
At times like the present, the public becomes aware of the problem.
Why? It’s not only because the magnitudes are larger; it’s
also that increasing numbers of the better organized and more
vocal segments of the population are affected. (Witness Leaning
on Their Parents Again, an article about well-off parents obliged
to help their formerly well-paid and steadily employed adult children,
New York Times, 7/19/03). It is times like these that are ripe
for solutions to the problem that is always with us. This is the
time for a Presidential aspirant to articulate a plan that could
inspire our people to vote for An America that Works.
Greater Wealth, Greater Inequality and
Poor Economics
The United States is a very rich nation. Yet, as we have grown
richer we have become less willing to share our abundant resources.
In 2002, the U.S. Gross Domestic Product was nearly twice as large
in real dollars as in 1980. What we lack is not dollars but political
will to share our riches more equitably. The poorest one-fifth
of households have less than 4% of total income while the top
fifth have 50%. How can a democratic nation countenance such inequality?
Government, nonetheless, widens inequality through its tax policies
and throws away the resources that could counter it.
Inequality is politically and economically costly to a nation.
Democratic government is clearly compromised if great wealth can
dictate its policies. Huge disparities in income are also an economic
liability. If we don’t reduce economic inequality, if we
don’t make it possible for ordinary people to consume what
the economy can produce, we will be poorer in the long run—just
as inequality in the 1920s led to near destruction of the economy
and even of short-sighted business classes.
Trust in Government
Much of what we must do depends on rebuilding our trust in government.
National figures who are running for high office can counter the
Right-wing attack on Americans’ faith in government. For
what else but democratic government can protect us from the insecurities
of a market economy that generates ever more wealth and ever more
risk and hardship?
Full Employment in a Fair Economy
How should democratic government cope with a level of inequality
that is dangerous to democratic institutions? We must take steps
to create a Fair Economy, one that balances the stricter work
ethic enacted in recent years and that distributes resources more
equitably. The core of a Fair Economy is the opportunity for a
job at a livable wage and for the other Economic Rights that Franklin
Roosevelt could envision as long ago as 1944—particularly
health care and decent housing. We need to acknowledge that only
about two-fifths of the workforce are covered by unemployment
insurance and extend protection against the risk of joblessness
to all workers.
The Benefits of Large-Scale Job Creation
The National Jobs for All Coalition believes that government
economic policy needs to be oriented toward the goal of full employment
at livable wages. An important part of this would be a large-scale
job creation program. The Coalition has examined the feasibility
of mounting such a program. It has critically examined the experience
with work programs in the Great Depression and in the 1970s with
the Comprehensive Employment and Training Act. It has analyzed
the costs of a large-scale job-creation initiative. It has also
looked at what such a program would produce in the way of useful
goods and services or what it would add to national resources
and what it would generate in the way of extra taxes paid and
in savings from unemployment insurance and other direct costs
of joblessness (although not the indirect costs such as the well-documented
social problems that are caused by unemployment).
These estimates were made by Philip Harvey, an economist and
member of the Executive Committee of the National Jobs for All
Coalition. These are Harvey’s extremely heartening conclusions:
When all these factors are considered, it is hard not to
conclude that a jobs program capable of providing work for everyone
who needs it would not cost us money. It would save us money.
Existing policies are more expensive. A comprehensive job-creation
program would lighten the burden on taxpayers. As with the provision
of universal health insurance, making sure that all Americans
have jobs they can live on is not only the humane and just thing
to do. It’s just plain smart
--Responding to Rising Unemployment
The National Jobs for All Coalition is prepared to fashion a
21ST century version of FULL EMPLOYMENT IN A FAIR ECONOMY. A first
step in the achievement of such a goal would be: a sizeable job
creation program that would have an interim goal of reducing unemployment
to a stated target rate in a stated period of time.
Staged Job Creation
A staged JOBS FOR ALL program is a practical, attainable initiative
that is inspiring as well. Full employment would make every
major
domestic problem easier to solve. To cite just one example: More
people working and paying taxes and fewer forced to retire early
is the best insurance for Social Security. (See the Coalition’s
Social Security Packet on its website: http://www.njfac.org/SSpkt.htm
)
According to Nobel Laureate, Joseph Stiglitz, Chairman of the
Council of Economic Advisors under President Bill Clinton:
There is no safety net that can fully replace the security
provided by an economy running at full employment.
The National Jobs for All Coalition holds that a Safety Net is
always necessary but recognizes that with lower unemployment,
fewer people need certain forms of social protection, such as
unemployment insurance. At the same time, full employment makes
it easier to finance other benefits—paid parental leave,
affordable child care, and affordable housing. A program of JOBS
FOR ALL, including these vital resources, should be the heart
of a compassionate, affordable, and vote-getting platform.
©National Jobs for All Coalition.
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