Honoring Dr. King’s Call for a Job Guarantee Program

By Fadhel Kaboub, New Economic Perspectives, August 28, 2013

rustin and kingFifty years ago today, Dr. Martin Luther King, Jr. led the 1963 “March on Washington for Jobs and Freedom.” Yes, jobs!

For the civil rights leaders, the fight for justice was not limited to providing equal voting rights for all Americans and abstaining from discriminatory practices against African Americans. A federally funded Job Guarantee program was a central theme articulated by Martin Luther King and Bayard Rustin  (the organizer of the 1963 March on Washington, and one of this year’s recipients (posthumously) of the Presidential Medal of Freedom).

Mathew Forstater’s work has frequently reminded economists and policymakers of our failure to address structural unemployment and to ensure a useful and productive employment opportunity for anyone who is ready, willing, and able to work.

In a 1965 interview, Dr. King said “we must develop a federal program of public works, retraining, and jobs for all—so that none, white or black, will have cause to feel threatened. At the present time, thousands of jobs a week are disappearing in the wake of automation and other production efficiency techniques.”

In 1968, he also said “We need an economic bill of rights. This would guarantee a job to all people who want to work and are able to work… It would mean creating certain public-service jobs.”

Rustin was very clear in 1968 when he wrote: “The government becomes the employer of first and last resort for the hardcore poor…Neither individuals nor the private sector of the economy has, or can take, responsibility for full employment in American society. This is the responsibility of all segments of the society and thus, finally, of the government.”

The details of this Job Guarantee plan have been worked out nearly five decades ago by the A. Philip Randolph Institute in the “Freedom Budget” of 1966. Needless to say, this plan has enjoyed wide support from NEPeconomists working in the Minsky tradition.

Unfortunately, mainstream economists have been successful in spreading their deficit phobia in Washington and have kept the U.S. from implementing one of the most socially and economically transformative policies since the New Deal program. The so-called “sound finance” advocates (deficit hawks and deficit doves) fail to understand the meaning of financial sovereignty, recognize the difference between currency issuers and currency users, and accept the logical implications of the sectoral balance analysis.

Five years after the Great Recession, the U.S. Congress has spent hundreds of billions of dollars on market-friendly, supply side, incentive-driven policies that have failed to put a dent on unemployment, and the Fed has poured more than $29 trillion dollars to bailout Wall Street. Yet, an effective Job Guarantee program has been ignored for five decades for the same old excuses (it is too expensive, wasteful, inefficient, inflationary, etc.), which have been fully refuted by the NEP community.

In this recent paper (“The Fiscal Cliff Mythology and the Full Employment Alternative”), I put together a cost estimation for a Job Guarantee (JG) program that would employ 23.4 million underemployed individuals (those who are officially unemployed, the margin­ally attached to the labor force, and the involuntary part-time workers).

I proposed a three-tier JG wage structure such that skilled workers earn $21/hour, semi-skilled workers earn $18/hour, and unskilled workers earn $15/hour. Additionally, JG workers would receive an annual benefits package of $10,000.

For the sake of argument, I assumed that the 23.4 million people in the JG program are working 40 hours/week even though not all JG work­ers will opt for full-time employment.

Adding another $50 billion to account for program material costs, and assuming that the unemployment pool is evenly divided between skilled, semi-skilled, and unskilled workers, I find that the net annual cost of the program is only $593.8 billion or 3.93 percent of GDP.

That is less than $600 billion a year to end unemployment, reduce unemployment-related social costs (mental health, suicide, family breakdown, crime, incarceration, etc.), and bring tangible hope to economically disadvantaged communities.

Now, is there anybody in Washington today who has the courage to truly honor the legacy of Martin Luther King, Bayard Rustin, and A. Philip Randolph; not with medals, flags, postal stamps, and endless speeches, but with real action, a Job Guarantee program?

Those of us advocating for social justice as workers, teachers, journalists, lawyers, engineers, and citizens from all walks of life must continue building this social movement to guarantee productive employment for all.