Policies to Increase Employment Security: Federal Jobs Guarantee, Wage Subsidies and Beyond
Sunday, Jan. 6, 2019 1:00 PM - 3:00 PM
- Chair: Heidi Shierholz, Economic Policy Institute
General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India
AbstractA public employment program's effect on poverty depends on both program earnings and market impacts. We estimate this composite effect, exploiting a large-scale randomized experiment across 157 sub-districts and 19 million people that improved the implementation of India's employment guarantee. Without changing government expenditure, this reform raised low-income households' earnings by 13%, driven primarily by market earnings. Real wages rose 6% while days without paid work fell 7%. Effects spilled over across sub-district boundaries, and adjusting for these spillovers substantially raises point estimates. The results highlight the importance and feasibility of accounting for general equilibrium effects in program evaluation.
Working to Reduce Poverty: A National Subsidized Employment Proposal
AbstractSubsidized employment programs that increase labor supply and demand are a proven, underutilized strategy for reducing poverty in the short and long term. These programs use public and private funds to provide workers wage-paying jobs, training, and wraparound services to foster greater labor force attachment while offsetting employers' cost for wages, on-the-job training, and overhead. This article proposes two new separate but harmonized federal funding streams for subsidized employment that would expand automatically when and where economic conditions deteriorate. Participating states and local organizations would be offered generous matching funds to target adult workers most in need and to secure employer participation. The proposal would effectively reduce poverty among workers during work placements, and improve long-term unsubsidized employment and other outcomes for participants and their families.
Returning to the Promise of Full Employment: A Federal Job Guarantee in the United States
AbstractWe propose the passage of legislation guaranteeing every American over the age of eighteen a job provided by the government through a National Investment Employment Corps (NIEC). The permanent establishment of the NIEC would eliminate persistent involuntary unemployment and improve economic well-being, ensuring that the United States is able to achieve full employment, as outlined by the Full Employment and Balanced Growth Act of 1978. The Federal Job Guarantee (FJG) would provide a job, at wages that lead to a higher standard of living, to all Americans seeking employment. Benefits of a job guarantee would be felt far beyond those directly employed under the NIEC. For one, workers under the program would be providing socially useful goods and services to our society. If history is any guide, we can look at the wonders built under the Works Progress Administration, which employed over 8.5 million unique workers from 1935-1943. Workers could rebuild our crumbling infrastructure, help facilitate our transition to a green economy, provide high quality universal child care and education, and more. Such a policy would fundamentally transform the current labor market in the United States, greatly altering the current power dynamics between labor and capital - particularly for those at the less compensated end of the labor market and traditionally marginalized groups. While worker compensation historically tracked productivity growth, we have witnessed a troubling divergence in their paths since the 1970s. This relationship can be restored through bold policies, such as the Federal Job Guarantee, that empower workers. Indeed, such a program constitutes a direct route to producing full employment by eradicating involuntary unemployment, and reversing the trend of lost worker bargaining power by removing the employer threat of unemployment. Since the Federal Job Guarantee achieves, and maintains, full employment it relaxes some of the burden on the Federal Reserve with regards to its dual mandate of achieving price stability and stimulating the economy. Such a policy reform will effectively allow monetary policy to focus more on stable prices.
Economic Policy Institute
Aaron J. Sojourner,
University of Minnesota
- J1 - Demographic Economics