Promise every American a job? A bold way to employ people ‘Jobs-for-all’ guarantee would and reduce inequality in U.S. be disaster for U.S. economy

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The last recession officially ended in 2009, but you wouldn’t know it in many communities across the country. While a few have amassed great wealth, working families in every state struggle to put food on the table. A proposal sponsored by Sen. Cory Booker to create jobs through a federal program offers the bold action needed to reverse this deeply entrenched inequality.

The Federal Jobs Guarantee Development Act would provide a job for every adult seeking one through a three-year pilot program, beginning with 15 municipalities across the country. Through public-works and community-development projects, these urban and rural localities would create jobs that provide the greater of $15 per hour or the prevailing wage, plus health insurance, and paid family and sick leave. Projects would be encouraged to address priorities, such as infrastructure improvements like repair and maintenance of roads and bridges, and providing care for children, seniors and those with disabilities.

In the aggregate, things have improved since 2009. Unemployment is now at the lowest rate since 2000. But this improvement masks the deepening divide between those who have benefited from economic gains, and those who still face substantial barriers to making ends meet. It’s still very hard to find a job in some communities; the unemployment rate for African-Americans, for example, nearly doubles that of whites. Accounting for those who have given up looking for a job and those who have taken part-time jobs in lieu of finding full-time work would push unemployment rates higher. Wage growth has stagnated, and more working people are taking home poverty-level wages.

As economic opportunity becomes increasingly concentrated, we cannot afford to rely on traditional job-creation strategies to address these structural cracks in our economy. We need decisive action and direct investment, and Booker’s proposal provides a critical first step.

The job-guarantee program would generate widely shared benefits throughout the economy and begin to reverse inequality. The program would:

Eliminate poverty-wage jobs and create a floor in the labor market. If the jobs created through this program offer better wages and benefits than those in the private sector, employers would have to offer more competitive compensation to attract and retain workers.

Help stabilize the economy. Rather than creating stimulus programs in the midst of an economic downturn, the jobs guarantee would already be in place and able to absorb workers when private-sector employment contracts, and vice versa.

Generate much-needed revenue through state and local taxes. Lower unemployment and a higher wage floor would result in greater consumption and economic activity at the local level.

Provide an increased work force in areas that are currently lacking, such as child care, senior care and care for individuals with disabilities, which provide benefits throughout society.

But what about the cost? A nationwide, permanent job-guarantee program would cost $543 billion. To pay for this program we could capture some of the savings realized when people who take these jobs no longer need some other forms of assistance that now cost almost $582 billion, account for the infrastructure projects these jobs will accomplish and redirect some of the $80 billion in other economic-development incentives that have not shown results.

Unlike most incentive programs, Booker’s pilot program includes a rigorous evaluation requirement to determine whether the program effectively reduces poverty and improves the overall health and well-being of participating communities.

Rising inequality threatens core American values of hard work and opportunity by erecting barriers for many communities. Financial security and economic mobility should be accessible to everyone who is willing to work, and yet more families find this promise to be out of reach. We can’t afford to keep doing business as usual. COMMENTARY |

Recently, Democratic Socialist Sen. Bernie Sanders announced a plan to essentially nationalize work. That’s right: He is promoting a “jobs for all” plan that would create a federal guarantee of employment for all comers, at a $15-an-hour minimum wage.

Back when I was an impressionable economics student at Florida State University, my favorite professor taught me that every economic-policy proposal involves a trade-off. We live in a world in which there is no government-imposed policy that does not, by very definition, take from one group to distribute to others. The key to finding the “best” policy prescription is to home in on the solution that maximizes benefit while minimizing cost. Sadly, Sanders could learn a thing or two from Dr. Holcombe — because there are an uncountable number of reasons to oppose the senator’s latest scheme.

For the purposes of brevity, let’s home in on the big three — economic, bureaucratic, and cost.

First, there’s the catastrophe that his program would wreak on the American economy. Since the election of President Trump, the U.S. economy has achieved growth rates not seen since the glory days of Ronald Reagan. The latest jobs report has U.S. unemployment at 3.8 percent, with average monthly job-creation rate of more than 200,000. These are impressive numbers. They have come about as a direct result of the president’s economic agenda. Establishing a federal work program that sucks jobs from the private sector, creates government-mandated wage inflation and inefficiently messes with our economic trajectory would have disastrous effects on the business cycle. Think Obamacare’s takeover of health care was bad? Well, this would be that on steroids.

Second, there is the complete and total lack of logic of those on the left who think that establishing a massive federal bureaucracy would somehow be able to discern the types of jobs needed, gather qualified employees, supervise jobs performed, conduct effective evaluations and deploy human capital in ways that the market could not otherwise do. I am reminded of one of my favorite one-two punches of inquiry when discussing policy. The first is, “Do you truly, deeply and honestly trust the federal government?” When the inevitable “no” comes, I follow up with, “Then why should we give them more authority over our lives?” That response is typically met with a pondering silence. It’s remarkable how simple logic can often confound.

Last, for a federal government more than $20 trillion in debt, this policy idea would absolutely break the bank. While the senator from Vermont has yet to provide a cost estimate or any plan to pay for his idea — these concepts tend to confuse socialists — others have begun to peel back the layers of the onion. Megan McArdle of the Washington Post looked at the projected impact. She began by assuming that a good portion of existing workers not earning $15 per hour (substantially above current median wage) would shift into this federal program, thereby extracting capital from the private market. It’s either that or businesses would start inflating wages and sucking productivity from our economic engine. The results would be somewhere between disastrous and apocalyptic. Her estimate is that Sanders’ program would run the federal government (taxpayers) somewhere from $1 trillion to $2 trillion per year. For perspective, consider this amount is more than the government already spends on Social Security and Medicaid, combined.

In some faraway dream land where the laws of economics and the market don’t interact with basic human nature, Sanders’ economic ideas may indeed work: jobs, health care, housing, college — free for everyone. Back here in reality, we must contend with the truth — that the populations of the former Soviet Union, North Korea, Venezuela, Cuba and others have been fleeced, starved and decimated by politicians making promises that fly in the face of reality. Let’s make sure we don’t follow in their footsteps.