I couldn't bring up the page, but Bill Mitchell, an Australian economist who teaches at Newcastle University, has published an academic paper detailing how to produce a national job guarantee.
1
Just because Bernie Sanders proposed a federal jobs guarantee that included a large increase over the minimum wage doesn’t mean that ANY jobs guarantee must do so. It’s obvious that that would create tremendous disruption to the labor market. But a below-market rate job guarantee, putting the hard-core unemployed into productive employment, could be a tremendous help to the poor. When workers have developed the skills, they should be able to move into the private sector at a higher pay rate. We need to be creative about the many needs unfilled in our society. Child care is terribly expensive, and the cost prevents many mothers from working. Training people to work well with children would both drive down the cost of child care and provide parenting skills that many don’t have. (Of course, they’d need to be supervised by licensed teachers.) Urban and rural infrastructure is a disaster. When the US experiences over 400 water main breaks each day, we need manual labor to help dig and replace pipes. Potholes need filling, grass mowing, trees planting. These programs could be a combination job training / employment avenue that would enrich both skills and income in areas that still have high unemployment, such as the inner city. I’m sure it would be difficult to implement and would have to be phased in gradually. There would probably be a waiting list even for below-market-rate jobs. But by all means, we need to get started.
2
If you can couple guaranteed federal minimum wage employment (perhaps even at, say $13/hour) with a mandatory work requirement for federal wage support (including all but the most severe disabilities), you might have a path forward that both parties could actually agree to. The main challenge is finding enough federal desk jobs.
1
Mr. Krugman is well aware that with our fiat, sovereign monetary system we can well afford a full fledged federal job guarantee.
Wake up to reality, MMT is our system and we must use it to stop our country from descending into an austerity driven third world status.
https://youtu.be/d57M6ATPZIE
1
The problems with the analyses of the minimum wage that you cite are not that they may be inaccurate, biased, or wrong, but that they are irrelevant. It really does not matter if an increase in the minimum wage might increase the unemployment rate, raise prices, decrease the demand for the good or service, decrease profits, raise the cost of doing business in general, or increase or decrease tax revenue, despite the fact that economists love debating these issues and go running around collecting and analyzing data to support their points of view.
The key issue involved here is that raising the minimum wage will bring the standard of living of those affected much closer to the standard of living of those who now make slightly more than the minimum wage, and also closer to those making even slightly more than the proposed minimum wage, even if those wages would also go up too (a manager will still be paid more than the people he’s managing). This would be a completely unacceptable situation, especially when the managers are white and the people at the bottom of the wage scale are Black (in the South), or Hispanic (in Texas & Arizona). What is less clear is whether white people outside of the Bible Belt would care as much.
The key issues around any public policy will always be psychological, cultural, and philosophical, and dependent on locale. Money will matter hardly at all. Which is to say that academic economics and economists are irrelevant.
Research has shown (at least among men as I recall), that performing a job that has meaning to the worker, eg. being a machinist or welder as opposed to being a store clerk, can affect life expectancy with all other health indicators being equal, eg. obesity, smoking, alcohol.
I'm not certain that Larry Summer when part of the ACA team understood this. It's not clear to me how many patients he treated or how much public health expertise he had.
NYT Columnist and Economics Laureate Paul Krugman stated that low income immigrants from Mexico were lowering wages (and presumably taking jobs from working class Americans).
"Realistically, we'll need to reduce the inflow of low-skill immigrants. Mainly that means better controls on illegal immigration."
https://www.nytimes.com/2006/03/27/opinion/north-of-the-border.html
Apparently a great deal of the construction workforce are illegal aliens that take jobs (and meaningful jobs) from Americans.
http://eyeonhousing.org/2013/04/immigrant-workers-in-construction/#comme...
Unfortunately, a number of unscrupulous employers hire illegal aliens where they can pay below market wages and where they can have illegal working conditions since illegal aliens can't complain.
Implementing eVerify nationally which would stop the hiring of illegal aliens would help to increase wages while simultaneously help improve the health of working class Americans.
4
Krugman would do well to pick up a copy of the paper he writes for every now and then. He’d find that we cannot even pay for Medicare for some, let alone Medicare for all. Medicare is set to fail to meet its obligations as early as 2026, without congressional “adjustments” (i.e. tax increases). Social security is worse.
https://mobile.nytimes.com/2018/06/05/us/politics/medicare-social-securi...
Economic illiterates like “AOC” might actually believe the communist dreck they spew. Economists like Krugman know better. He understands that promising a free lunch to the economically disgruntled will necessitate the creation of a large technocracy of which he and his ilk will occupy premiere positions. So the modern Democratic party moves farther Left and alienates more and more Americans as it’s stuck in this vicious socialist circle. The aggrieved are further agitated by the elites who salivate over the thought of running the politburo.
Meanwhile, we who understand capitalism and actually want to keep the money we earn continue to make America great. Trump 2020.
1
No one who understands capitalism, or anything much besides, supports Trump.
Moving to Medicare for all would require raising taxes, but everyone except the freeloaders not paying for health insurance would be better off as their health insurance premiums, deductibles, and other medical payments would decrease more than their taxes.
Social Security is in much better shape than Medicare, even with the Republicans trying to steal the money from the American people who paid in during their entire working life.
4
It is worth remembering that there is so much social neglect in America, so much decay in our infrastructure, that a lot of these jobs could provide a social utility that say, working in a Taco Bell or a casino, might not. Why don't we provide high speed, low cost internet, as Korea does across its country? Why do we have overcrowded classrooms. Teacher aids are can be invaluable for such classes. Arts programs are underfunded, foreign languages are being cut.
There is a lot that might be done beyond purely economic utility with a federal jobs program.
6
My wife and I purchased our small business in 2010 and we had 11 employees. We set a goal that our minimum wage for unskilled labor would be $15 per hour by 2020. We called it 15x20 and told all our employees about and we told our employees that we needed to reach certain benchmarks along the way for us to be able to pay that hourly wage.
Well, we will start paying $15 per hour minimum wage on January 1, 2019, a full year ahead of our goal and now have 19 employees. In addition to these wages, we pay two weeks vacation to EVERY employee, no matter how many or how few hours they work. We simply take the average weekly hours they worked in the preceding 12 months and pay that as vacation pay in June and December.
We also pay bonuses and have done so EVERY year. Employees with jobs where production is more difficult to quantify, we pay $0.10 per hour they worked in a given year for every year they’ve been with us. So an employee who works 1,650 hours in a year and who has been with us for 5 years, will get a bonus of 1,650 x 0.5p = $825 we pay bonuses in November so they have extra money for Christmas.
We also have a retirement savings plan for every employee who works 1,000 hours or more per year. WE fund 100% of that and employees pay nothing. Lastly we have three employee parties per year where we share results and have a good time. There’s always something to celebrate.
Businesses that claim they can’t pay $15 per hour minimum are simple badly managed businesses
9
Oh how far you have fallen Mr. Krugman. I remember the days when you were defending bank nationalization in 2009 in the spirit of New Deal progressivism. Why so squeamish about it now? If the government can provide energy, insurance (including health insurance), telecom, banking and other essential infrastructure at a lower cost to consumers than the private market, why are public jobs a bad thing? You're arguing for higher electric bills, healthcare premiums, internet costs, interest rates and more by fretting over private job losses. These industries are bloated, sclerotic, and inefficient. Government has proven time and time again to produce better outcomes than the private market in certain areas. When government can reduce cost and increase efficiency, it's time to wave bye bye to the private market and embrace the more efficient option. Neoliberals love to argue that their capitalism is best because markets drive greater efficiency and reduce costs to consumers, yet when government can demonstrably outperform the private market in this regard, somehow that argument doesn't apply. It's sclerotic thinking like this which is preventing our country from moving forward. There are certain areas where markets do not generate optimal outcomes, Akerlof and Shiller. When the private market produces better outcomes than government, don't mess with it, but where the private market fails to do so, we need to embrace the more efficient alternative.
4
Mr. Krugman.
You know well and good that as the monopoly Issuer of its own free-floating fiat currency that the United States government Can and should provide the employer of last resort. You also know that the long-debunked econometric of NAIRU pegs the economy to UNEMPLOYMENT instead of employment. Most legitimate ideas of a federal Job Guarantee name a wage of $15/hr. Any losses in the public sector employers are by far offset by increases in aggregate demand. The Modern Money stance on the FJG is superior to any crumbs you throw here. But here is the kicker; you know it, and you know you are promoting lies and half-truths to justify your NeoLiberal stance and to keep your pulpit in American economics despite Bill Mitchell having superior econometrics than you as well as Warren Mosler, Stephanie Kelton, Pavlina Tcherneva, Steven Hail, Fadhel Kaboub, and even Rohan Grey who is 30 years your junior. The activist community is on to your schtick. The schtick, once again, isn’t that you are UNAWARE of the half truths your promote. It is that we know you are fully AWARE of your own duplicity. One day soon you will fade into NeoLiberal obscurity.
And to be completely clear on what I mean by NeoLiberalism it is using microeconomics as a false platform to allow the so-called free-market to Right itself while the ‘Oligarchy’ dismantle the social safety net, privatize what is Government’s Job. You are giving ground cover for Trump and YOU know it.
3
Professor Krugman,
The national taxable wealth and the taxable payroll checks for US citizens (and illegal aliens) in the USA that are created and owned by non-government businesses, corporate businesses, and non-government private individual businessmen is (almost) the ONLY SOURCE of wealth available for any nation's government to forcibly take or confiscate a portion of in the form of taxes in order for those governments to raise funds to pay for all of their bureaucratic government bureaucratic employee payrolls, infrastructure improvements, wars, welfare, guaranteed income, unemployment benefits, government contracts, other government benefits, and other government activities, except for funds that the government raises by borrowing money or actually printing and selling US Treasury Bonds that offer our private owned businesses and wealth as collateral.
That obligates our children and future unborn generations to work harder than ourselves to repay these US Treasury Bonds when these bonds become due.
1
And that’s good and right where the use of those taxes has long term benefits, which is the point of the proposed program.
2
Automation is good. It raises what society produces with less human labor. In other words, people have to work less to have more.
It's funny when people criticize McDonalds workers' $15.00 minimum wage campaign because of automation. That's the intention: working for McDonalds sucks; in an ideal world, no one would have to flip burgers. If McDonalds is confident its profitability will rise with machines, let it do it.
But the thing is: the USA is not going through an automation problem. Investment is stagnant. Business isn't willing to automate because they know they won't recover the costs of the machines in a realistic time frame. Corporate debt is at all time highs, which further increases pressure over investment. They are doing buybacks to profit in the short term.
This results in an increased state of class struggle: business is not in a condition to automate, so they push for bringing wages down; workers are barely surviving on the fisiological level, so they are quite literally fighting for their very existence for real wage increases. The class warfare arena, which was the size of a football pitch in the 50s-60s (so they could play for a 0-0 tie), is now the size am MMA cage (fight to the death).
3
We've seen a number of states increase their minimum wage tgo $15 per hour. But except for the SeaTac region in Washington, these are all end- of-step-ups, to be reached in 2020 or 21 or 22.
While the "Fight for Fifteen" is a catchy progressive slogan, I have always thought that minimum-wage-increase advocates (of which I count myself one) would have a better argument (and more ability to shame opponents) if the proposal were "values based" or "principle based." The minimum wage should allow a family of four with one full-time-working, minimum-wage-earning, member to stay above the federal poverty line. With a federal poverty line for a family of four around $24,000 a year, that would put the current principle-based minimum wage somewhere north of $12 an hour, which just happens to be where most of the "we'll get to $15" states are for 2018. Whether it goes to $15 at the politically determined time of not, a principle-based minimum wage would be less arbitrary and less open to political whims, and therefore less easy to demagogue using the standard right-wing straw man argument that minimum wage increases hurt the poor by reducing overall employment.
2
First, the value of your labor is based upon the market, that is what employers believe it to be. Not what you want it to be. Second, the minimum wage is not intended to support a family. That is something to aspire to. To work (hard) toward. In a free market, ones wage might not even fully support ones self above mere survival. That’s the built in motivation factor in capitalism.
5
What a strange world: Medicaid where work is REQUIRED, offered by the right, and j$15 ob guarantees that pay enough to allow a person to subsist on just one 40 hr/wk job.
But, will those that are broken, and partially disabled, and caring for relatives, and suffering from obvious and unobvious disability, would they feel sufficiently ASHAMED?If not, the Republicans will want nothing of it.
1
That’s what charity is for. Instead, we have a form of forced charity where not only is our money confiscated but where others decide how it is to be spent. If I want to support a particular illness or affliction that should be my choice alone. If I prefer to donate to the planting of trees rather than pre-K, for instance, that should be my prerogative.
3
If I want to pay for abortions instead of the military and Republican congresspeople's free health care, it should be my choice alone. Unfortunately it isn't.
The government shouldn’t “guarantee” a job at menial pay to everyone. But the government should be busy doing its job: fixing infrastructure, protecting the environment, treating addiction, providing elder and child care, providing real education, helping to provide affordable housing, regulating monopolies, and dismantling the huge brain washing propaganda machine of bonkers billionaires.
Those activities, if funded, would keep many Americans engaged in meaningful work the private sector has no interest in at all and, in fact, sabotages wherever it can.
8
John Brews,
Government expenditures for infrastructure, wars, police, schools, etc. only will only consume the taxable wealth that was confiscated by the government(s) from the Private sector in the USA who created that wealth.
Only private business activities and non-government employment (jobs) payrolls creates new taxable wealth in the USA.
Even though government employees and government contractor employees pay some of their pay as income taxes back to the government, this is still a net loss of the overall government economic capability.
To pay for government activities that are greater than the tax collections, the US government prints and sells US Treasury Bonds to the public.
These freshly printed US Treasury Bonds have absolutely NO VALUE at all, except that these financial instruments are easily and quickly redeemed by foreigners for (when they purchase) title to privately owned businesses, movie houses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned national wealth and other assets located in the USA that do have value and were created by previous productive US generations prior to the USA de-industrializing (instead of Gold from Ft. Knox or the NYC federal reserve bank).
If this redeeming of US Dollars with US located property instead of Gold by foreigners was not allowed, then our US Dollars would not be honored by anyone anywhere for any purchase or business transaction.
2
Turn your tin foil hat 90 degrees and consider this: excessive saving by high income individuals leads to insufficient investment. Higher taxes on higher incomes, with public investment and spending, will grow the economy faster. Soon, the rich are even richer.
1
The way I see it is that the problem of income inequality started back in the '70's when some bright bulbs at Harvard Business School (I think) started opining and teaching that the main focus of all private corporations should be to increase shareholder's profits. One way to do this was to cut labor costs. (Historically, cutting labor costs has been the go-to method of maximizing profits since the days of the Roman Republic.)
One way, of course, to cut labor costs was outsourcing, an issue that has gotten quite a bit of attention in recent years. But less attention is paid to the equally damaging effect that switching as much work as possible to part-time has done and is doing.
Companies used to have this quaint thing call "corporate responsibility." Not anymore. If is possible to make a worker part-time, a company will. And save a bunch on benefits like health and retirement. Then they don't pay those; we, the taxpayers do, through Medicaid, food stamps and welfare. And the shareholders run off to the bank with their increased profits.
How do corporations keep getting away with this? A lot of the middle class has been sucked into believing that they, as shareholders, are somehow more worthy of financial security than their part-time fellow citizens.
But who owns most of the shares at a company like Walmart? It isn't the middle class; it's the Waltons. One can see the same pattern all over the country.
So let's start sending Walmart the bill.
5
Well, you're concentrating your attention on the wrong aspect of this—aside from calling Larry Summers, who just last fall was in Mexico alerting the business class there to the looming danger of Lopez-Obrador, a progressive. Larry Summers is obviously a brilliant capable guy. He just happens to be a top retainer of the Ruling Class and will serve them all his days.
But regardless, what this piece misses is that the job guarantee is not a isolated piece of a reformist agenda; it is a key piece of the overall . . . political revolution that AOC is clearly campaigning on. Believers in single payer think that covering everyone in America will lead to at least a 25% increase of employment in the health care sector even factoring in the job losses that closing the big private health insurers will entail. All those health care clerical workers are going to have to retrained, and why not as actual health care workers.
Viewed through this lens, a jobs guarantee obviously becomes more viable, even if the politics of this particular— pre-crisis—moment make it seem like a pipe dream.
4
I definitely agree with the part about Larry Kudlow. The kind of blithe voodoo that he spouted on CNBC was always amusing; and bit disconcerting that he was getting the platform that he got.
We have to find a way to talk about inequality that doesn't demean either the low end or the high end.
2
Voodoo economics, or supply-side economics, is a derogatory term. But Trump's acolytes seem alright with that, music to our brutus ignoramus who, against all evidence, allows being whispered only what he wants to hear...instead of what needs to be done. We need real economists anchored in reality, and on the basis of empiric evidence, not make-believe dogma.
2
My basic grasp is: While the job guarantee is able to produce an ample space for workers/employees to switch back and forth, theoretically at anytime when desired between the two sectors, employers will adjust expenses in accordance to their prospective revenues. So, in reality, the program would not work for workers as good as politically advertised. ***** My guess is that, in an economical thinking, the high employment rate at a given time tends to be analyzed as corresponding with a higher expectancy in spending. The columnist repeatedly say it is not the case in real happenings. That, with no obviously connectable context, makes me think of Benoit Hamon, a socialist candidate for the last presidential in France. ***** His policy proposal ‘universal revenue’ (term?) was, naturally, not well received by the financial world in general. The socialist’s idea was that if an individual B has no immediate need to find a job to live (thanks to the universal revenue), B can invest B-time to B-self, which will contribute the positive to the society and economy. The assumption is such that most of individuals will behave as efficiently as possible when the basic for them is sufficed. ***** Socialism tends to see the mechanism of a society rather than its dynamism. With this regard, Ocasio-Cortez may be said as a socialist.
1
The only thing a UBI would produce would be a bigger opioid epidemic. If you remove the need to work in order to eat, you will quickly identify those among us who are prone to sloth.
3
Paul,
We have a perfect experiment in a "federal jobs guarantee program". Egypt's economy in the 1990's was strongly driven by a government program ensuring all college graduates got a job. It worked great. Everyone who could buy their way into college became a government employee. That was great. Political instability decreased, median income increased, life was great ...
... up until the point that the bureaucracy was so bloated and corrupt that it consumed the economy which started imploding in 2010. Further, when that was no longer affordable (or tolerable by the subjects of the bureaucracy) we got in the even worse position of the population despising higher education and damaging one of the few liberal institutions.
No, job guarantees are not a good thing. They're vote buying in an amazingly destructive sense. Roosevelt did much better with the CCC, which was prompt to disband and did real work, v.s. the current progressive idiocy.
2
The private prison industrial complex would hate the idea of government provided employment at market rates outside the prison system. The outrage! The private sector would have to resort to illegal aliens to avoid cutting into their profits.
3
It seems some leftist ideas have reached critical mass to manifest into some bourgeoise institutions. The journalists and working class alike need to bite the sort of two-sided bullet of critical perspectives of capitalism in that they may simultaneously serve as manifesting in existential crises, but, crises which open them to emancipatory perspectives to reality such as dialectical in general and historical in particular materialism.
We are living in the age of information, and the international working classes have never before seen capabilities to organize and achieve class conscious which is all that is needed to undermine the modern accumulation of capital which feeds on and sustains neoliberal doctrines, philosophies, and institutions.
Tell me where I’m wrong, please.
1
It is clearly "War Against the Poor" (Jack Nelson-Pallmeyer) again.
To pay for the humongous tax cut to the billionaires, Trump and his Republican minions will cut Medicare, Medicaid and Social Security, while the deficit is growing and we get increasingly indebted to our boss: the Chinese.
3
Liberals won't be happy until everyone wears a unisex leotard, herds goats and farms organically. I can't take it anymore..
6
These people who make less than $15 per hour--how many are receiving food stamps or government health care subsidies? Or Earn Income credits? This is we, the taxpayers, paying for what their employers should be paying them. Switch it from taxpayers to employers. Or just make the employers pay for all government subsidies to workers. Only fair.
1
I agree that if I, as a worker, make certain lifestyle choices or act in ways that have consequences, the taxpayer should not be on the hook to support me. But neither should my employer. This is particularly true for employers, who do not have any control over the actions or decisions that we we make.
4
The new populist government of Italy , of the extreme right + the extreme left, first law, called dignity act (Dignity for Workers)
1. Temporary contracts are limited to 12 months, in some circumstances up to 24 month
2. In case of illegitimate (senza causali) dismissal, the severance pay will increase from 24 to to 36 months
Note : Senza causali covers much more than in the US
The legislation tries to address the increasing economic anxiety of workers exposed to globalization.
That Mr. Krugman promoted
2
Whatever Krugman. Thanks for supporting Bernie in 2016...
2
Please keep up the "wonkish" and scale back the political commentaries. You explain complex issues in a straight-forward manner, and the readers of this paper should get more information. We already get enough proselytizing. Let this bright, capable set of readers form their own political opinions and help them understand the oft-byzantine technical issues that should be better understood by the electorate at-large.
Why is it that when it comes to spending money to help the American people it needs to "pay for itself", but when it comes to wasting trillions of dollars on unnecessary wars like Iraq or bailing out Bankers (but not jailing them) we can just borrow and not worry?
3
Democrats would oppose work requirements.
2
Krugman has to play some serious word games.
In his previous article about the "radical" democrats focusing on Ocasio Cortez, he equivocates and says that what she meant by "medicare for all" isn't really a single payer system. Really, it's a "public option" which is very "reasonable" and not extreme at all.
Huge problem. Ocasio-Cortez has said on numerous occasions she that what means by "medicare for all" is "single payer" including on her campaign website and in interviews.
“If we’re not going to get on the boat with single-payer, living wage, and leveling income inequality, what are we fighting for?” -Ocasio-Cortez.
Krugman should take the advice Ocasio Cortez gave to a conservative commentator and use the 21st century research tool, "Google."
2
You would never know from the column that AOC, an organizer for the Sanders campaign , ran on Bernie Sanders platform.
Whose political agenda was attacked by Krugman, culminating in his NYT OP-ED "Sanders Over the Edge "
While blessing the economics of Mr. Trump in his NYT OP-ED "Trump Is Right on Economics"
He was wrong on Sanders. And on Trump
Should we take this column as a sign he learned ?
1
Mr. Krugman,
" In fact, Medicare for All is totally reasonable; any arguments against it are essentially political rather than economic."
I'm totally ecstatic to finally read/hear you say this.
With this now in print. PLEASE begin the number crunching on how to make this happen for America.
Lets begin an open-source debate and consensus on the ways and means to move HealthCare for all forward. It is going to take some hard decisions, and some stepped upon toes. But it is the only outcome that covers EVERYONE in America, and at an affordable price for all. It is not a pie-'n-sky idea, as we've seen it work in many different countries and sizes and economy's.
So...Please Paul, begin the debate, the study, the implementation NOW, while we still have a smidgen of time. We are again back to losing healthcare, of being priced out, of going bankrupt or dying from lack of affordable care. As the richest nation the globe has ever known, our citizens deserve better.
I've asked you before Paul, I'm begging now.
Please, lets lay the ground work, before Democratic's, liberals and woke conservatives regain the reins of Gov. We need to have a system and answers before we get in control.
The Roll Out needs to begin as quick and smoothly and soon as possible.
C'mon Paul, put that award winning brain to the task of our/your generation. Make this KrugmanCare for all happen.
1
So the job guarantee ends welfare, right?
No more excuses.
1
Mr. Krugman - personally I like AOC - and no, it's not too soon. I have to say tho' it puzzles me how her use of the word 'socialist' aligns her with 'Commie' and 'Pinko', archaic political jargon from the 1940's and 50's. Still the word remains toxic...it's up (or down) there with 'Commie' and 'Pinko'. Americans have access to a plethora of 'Social Services' like Social Security, Food Stamps, unemployment benefits, public recreational areas, environmental protection - etc. The word needs to be opened up, broken down, politically cleansed and shown how 'socialist' is a part of every American's everyday life.
Methinks it is time to create a WPA-like program to accomplish fuller employment with jobs that repair, rebuild, build anew the structures and infrastructures in this country. Even though "private businesses and industries" will object, claiming that such a program affects their bottom-lines, it is time to recognize that those entities' pleas must be ignored and a publicly funded program must be pursued for the greater good (and probably at less cost). That is what a really good and decent federal or local governing body should do. There really is oodles of money available if such a WPA-like program is deemed beneficial to our republic's survival.
2
I'm not an economist, but it seems to me that a Federal jobs program, or even a batch of state ones, paying reasonable minimum wages of at least 15 dollars an hour might well at least partially pay for itself through the payroll taxes that would be collected from these paychecks, and from the additional consumer activity that would be injected into the economy from these new workers' spending, some of which might even help grow some other private sector jobs.
Plus, there'd likely be at least some savings on programs like SNAP and SSDI if more people were in the workforce under such programs.
Just a couple of thoughts.
1
So, if paying a living wage to employees would reduce employment, how is it that paying CEOs millions in quarterly bonuses doesn't have any effect on prices or production?
Be that as it may, the Job Guarantee, proposed by MMT economists, would be fully funded by the Federal Govt and locally administered by each Community. Communities would be able to decide what are their own needs not being filled by private businesses because of non-profitability.
The jobs would pay a living wage + benefits to anyone wanting to work on a voluntary basis. These jobs, guaranteed to every citizen, would not compete with private sector employment, but in comparison would force the private sector to do better for employees or suffer a loss of labor.
A JG would offer the opportunity of mobility to those stuck in blighted communities. Knowing that a living wage + benefits is available in every US Community, there would be no barrier to travel to a better locale.
MMT economist, Pavlina Tcherneva, has published a JG FAQ that is helpful to understanding what MMT economists have been advocating for years.
I can only hope that Paul Krugman would read it, too.
https://www.pavlina-tcherneva.net/job-guarantee-faq
1
On minimum wages the US is behind most of Europe. Australia is the highest at $11.83 per hour, which is 50% of per capita GDP is Australia.
If the US went to 50% of per capita GDP that would set our minimum wage at $15.30 / hour. However, if we set it at 50% of per capita GDP in the poorest state (Mississippi) then it would be $9.61 / hour. Individual states and countries could of course set higher minimum wages.
Bottom line here is that there is no excuse for not going for $10/ hour. There is a case for going for $15/hour.
The Wikipedia page below gives an excellent international comparison.
https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country
1
The trouble is that they don't just want $15/hour wages. They also want excellent health benefits, paid vacation time, and lots of employment rights.
For a normal job in the US a good guess is that the worker costs 140% of their wage once taxes and hiring and human resources costs are included. In the EU it is closer to 200% because of the high benefits. These jobs will have better than average benefits, so assume $51000 / worker/year.
To do anything useful they will need supplies. I'm guessing $30/hour for labor intensive jobs like painting or laying tile. Even for tutoring students they will need paper and ink and access to printers and computers for producing educational materials.
The program will need to be counter-cyclical, expanding in bad times and contracting in good ones. On going needs like child care or elder care will not be suitable.
Assume in good times it employs 3% of the labor force or 5 million people, and 15% in bad times or 22 million people. That will cost $555 billion / year in good times and $2440 billion/year in bad times.
In a bad recession lots of construction people get laid off so you may be able to put them to work at timber frame construction. Maybe you could refurbish public housing or build new school classrooms.
I believe it will be really hard to find jobs that are worthwhile, in the right places, don't require expensive supplies and can be filled by unskilled people. Also, the Fed will raise rates if unemployment is too low.
1
Under the FJG there would be plenty of available jobs to employ people that would serve the public purpose such as care for the sick, elderly, children, homeless, drug addicts, military vets, victims of domestic and sexual violence, animals, and the environment. All in all, there are tons of useful jobs to create. We just have to stop looking at jobs in the traditional sense.
As far as cost is concerned, it would essentially cost nothing in new taxes and therefore not bankrupt our country. Why? Because as the sovereign issuer of our currency per Article 1 Section 8 of the US Constitution, our federal government isn't constrained by money but by real resources such as land, labor and fossil fuels.
When too much money (demand) chases too few goods and services (supply) produced from these real resources, inflation sets in. For instance when aggregate demand exceeds real productive capacity or full employment, demand-pull inflation will set in. However, given that real unemployment levels are around 8% in the US when you take into consideration those who are either underemployed or have stopped looking for work, our government has an ample amount of policy space to invest in before inflation becomes a factor.
When inflation does set in, our federal taxes would help keep it under control by removing excess dollars or demand from the economy. The way I see it, is if Congress can afford more endless wars for profit, why is it unable to afford a federal job guarantee for all?
2
"But I’m fine with candidates like AOC (can we start abbreviating?) proposing the jobs guarantee, for a couple of reasons. One is that realistically, a blanket jobs guarantee is unlikely to happen, so proposing one is more about highlighting the very real problems of wages and employment than about the specifics of a solution."
That's exactly the line of reasoning you (and others) should have extended Bernie Sanders on healthcare — and what many of us who cheered him on understood when he called for universal health care. Your writing is most always insightful, it'd be even more so if you could manage to take the larger view when your personal preference is in the mix.
2
Even if you don’t act on it, being accepting of socialist ideas makes you a socialist. Period. And socialism has no place in a capitalist economy, even if it is a consolation prize to those who cannot compete in the bare knuckled, drop down drag out, kill or be killed, winner take all that is the free market.
1
I tend to think a universal basic income (UBI) is a better idea than a job guarantee. A job guarantee has two problems: first, you have to create enough jobs for all the unemployed, regardless of whether or not there's a need for the jobs; second you have to hire people who may or may not be well suited to the available jobs or to work at all. Neither of these things seems economically efficient to me. I'd rather give everyone a modest UBI (just enough to maintain a Spartan existence) and let jobs emerge as needed from both the public and private sectors and have people compete for those jobs as normal. The UBI would protect those who fall through the cracks, while providing a safety net that makes it easier for anyone to pursue new opportunities (education, a new job, the creation of one's own business) without fearing economic devastation. People who don't want to work or who are poorly suited to working are relatively few—and forcing them to work against their will or in jobs not suited for them seems to be a recipe for creating a bad employee that no employer—public or private—wants to have the hassle and expense of managing. Meanwhile, if the UBI provides only a Spartan existence, most people will be motivated to get a job both to supplement the meagre UBI and to feel the sense of personal accomplishment and satisfaction that comes with work.
10
Oh no/. that's exactly what Oligarchy wants. that's why Krugman is appropriating a #FJG now to take it off the table Exactly for Leftists/greens like you. People will not have the means to rise up for what reality needs from a salary. the huge massive means, the public purse has to rebuild human reality. can you (or the most of us) do that out of our pay check? honestly? we all plant tomatoes on out front lawns and "cooperate" to make co-ops . and we're you going to get the MEANS for that. Means of Production ore right over there buddy, right where the Krugman wants to co opt now with co opting AOC and the #FJG. http://bilbo.economicoutlook.net/blog/?p=39682
Is there any macro modeling to predict impact of higher minimum wages or a jobs programme? There is a lot of after-the-fact data, but that's only part of the story. Raising a minimum wage from, say, $7.00 to $7.25 is not going to have a big impact. Raising it from $10 to $15 could.
And where is the price point above which automation becomes viable? It's not hard to envision a totally mechanised McDonald's. Even office work is being ever more tightly systematised to eliminate "human factors". (The steady dehumanisation of every workplace is a reckless and dangerous trend.)
In my own situation, re labor force participation, when I am forced to return to the US to "retire" I will be eligible for Social Security which will pay the equivalent of about $15/hr. (I'll have little else.) That's a big dip from my current rate of NZ$45/hr but cost of living is a lot cheaper in the US, especially in a backwater like, for instance, Wisconsin. I would prefer to work at a real job (in my field) but age discrimination is an established fact as is, again in my field, gender discrimination. So I'm toast as far as getting a professional job is concerned. (I don't want to live in that country in the state its in, but I have little choice financially.) So none of the employment numbers are going to pick me up. I'm sure there are many others in the same boat, and there will be many more to come.
2
How about tying a 100% tax credit toward successful completion of of an Occupational training program? People would receive the credit as long as they were actively participating in the program.
When Bill Richardson was governor of New Mexico, the state's No Child Left Behind opened up tutoring jobs at $23-$30 per hour in underperforming public schools. College graduates who were experiencing the recession could set up their own tutoring programs with students referred to them by the school. Clearly the students in very poor migrant neighborhoods benefited from having individual instruction from people from a variety of professional backgrounds. This would work very well as a guaranteed jobs (or guaranteed opportunities) program, especially for retirees.
6
3.5 million jobs? How many people are needed to build roads and repair the tens of thousands of bridges that are falling apart? Or build entirely new transportation systems? Teachers to lower class size in cities, and to develop and run weekend and summer programs. In a country with 145 million workers and a 17 trillion dollar GDP, increasing employment by 2% from developing valuable public sector projects shouldn't be all that difficult. The failure of nerve is a bigger problem than the so-called impossibility of creating so many jobs without distorting the entire economy. Once again, we have no problems doing whatever needs to be done to bail out bankers, or sending men to the moon, so let's put people to work. Or if that's not feasible, just create a guaranteed income and be done with the problem. "Daring thinking"? Wow have we lowered the bar.
8
Why not have a Federal jobs guarantee of $15/hr in WPA and CCC type undertakings focused on infrastructure repair, maintenance and improvement? And as to the cost, there'd be offsets, such as increased tax revenues, increased consumer demand, and the economic value of the "shovel ready projects" undertaken. As with PK's argument for Medicare for All, isn't it more a problem of US political will, rather than US economic resources? Consider Emmanuel Macron's introduction of "national service" in France: https://www.bbc.com/news/world-europe-44625625.
4
This is right. There's plenty of work to do, and these kinds of jobs are, 1. not hard to learn and, 2. useful, if not critical. There would be productivity improvements from better infrastructure, and quality of life improvements. (Remember when they cut the grass regularly, or even planted flowers in public parks?)
The problem of political will is also right. But it's a really huge problem when you have things like Peter Thiel, the Koch twins, and other slavering jackals wanting to literally destroy governments that would provide these services, and the people who rely on them. This is a political will of a different kind. They've got it and they are using it to great effect.
America is improvement-free.
4
Written like someone who has never formed and poured concrete in the summer, much less winter. Ever worked steel?! 1) If it was easy, more people would do it. As anything, doing it well, is a skill and a talent. Not to mention hard labour in hostile conditions. How many years do you think most people can do manual labour?! What do you do with us when we get old and/or break down from wear and tear?! Many of us are in this boat now. 2) Useful and critical. Agreed. Pay a wage worthy of the skill and athleticism needed, and Americans will line up for the job.
As to your #2, that is applying market rules for capital and production to labor which by definition is direct from Marx’s Communist Manifesto
The true measure of the economic strength of working families is their ability to purchase the fruits of their labor (ignoring trade deficits or surpluses). The quantitative measure of this is total wages as a percentage of GDP.
From 1948-1972 the US had competition in most industries and, as a result, earnings hovered right around 5% of sales. In such an environment virtually every dollar increase/decrease in payroll results in a equal rise/fall in the price goods and services, thereby leaving the purchasing power of working families unchanged.
Unfortunately, since 1972 we have compromised competition by allowing monopolies to reform and, as a result, corporate earnings have soared to 11% of sales. This represents $1.5 trillion/year redistributed upward from working families to business owners or a pay shortfall for each full time worker of $10,000/year.
If we lose our democracy it will be because we allowed competition to be sacrificed on the alter of unfettered corporations. Working families who are economically insecure and fearful are fodder for demagogues.
12
The issue of oligopoly/monopoly is not getting enough publicity and discussion these days. It's not just price issue and income inequality; quality of product and innovation suffers as well. Competition will make America greater.
8
I almost never have a disagreement with PK, but Larry Summers a progressive? Wasn't he one of the guys who contributed to the demise of Glass Steegal? Didn't he question the ability of women to do science when he was president of Harvard? Didn't he alienate black academics at that institution, driving a major Didn't he counsel Obama to go easy on the banks during the financial crisis instead of seizing on their weakness to break the back of their power and make their victims whole as a price of a hard-ball rescue? LS may be very smart but ultimately he is an apologist of for the kind of savage capitalism even the Popes have denounced.
13
I'm glad that there is at least some recognition that forced wage payments for jobs that cannot sustain higher wages will result in job losses through competition or increase in replacement technology. However, Krugman fails by ignoring a variety of factors that have permanently removed people from the workforce including an aging population. BTW - Medicare for all is hardly reasonable. The very choice of Medicare for all is a hard left position that assumes a very high level of service when in fact we as a society have already determined that Medicaid is closer to the right level of care
1
Speaking of govt crowding out of the private sector and the cost of major public sector employment programs ... has anyone seen any good quantitative work on the effects of changes in US military hiring and compensation on overall employment/wages/hours in the private sector?
If we're talking about a large scale nation-wide employment "guarantee" for the able-bodied, that would be closest natural experiment, wouldn't it?
I agree that military pay needs to be closely examined; we could slash spending in this area by returning to the draft and paying only a stipend to cover essentials since all needs are being met by the taxpayer. And why are we allowing 70% of enlisted to be married? It’s the only job in America that pays you more if you have a spouse and kids. But as far as impact on the labor market, how much could that be when only about 1% of the population serves?
1
I'm actually wondering what you think about the jobs guarantee in terms of crowding out private sector employment. What are we going to get all those people to do? Isn't there a danger that they would displace preexisting firms, such as construction, shifting a large swath of the economy over to the public sector? If not, it would be nice to see a wonky post on this.
Another worry is that this will lead to a huge interest group with an incentive to create work for itself: once the backlog of infrastructure projects is completed, we'll have a behemoth that will keep on building. We could end up with a situation like Japan where the entire country is coated in concrete.
I'm not convinced by your argument that this will never happen and so is "more about highlighting the very real problems of wages and employment than about the specifics of a solution". If AOC is proposing this, then I'd think that she believes it's a good idea and will implement it if given a chance. Who knows, she may get that chance. The pendulum always swings back and crazier things have happened over the last few years. Why not highlight these issues with a program that has an actual chance of being a success?
"The pendulum always swings back"
We need to stop playing with pendulums that are so clearly dangerous to the health and happiness of millions of fellow humans. Pendulums swing between two points: right & left, liberal & conservative, male & female, gay & straight and black vs. white are examples we see every day.
Pendulums are dangerously limiting. Why are we stuck with only two choices when there may be hundreds of good answers?
Among all the choices we do have, I hope everyone in America makes the same choice in one area: Get out and vote, and take your neighbor with you.
I am simply so tired of seeing a lot of good hard working people suffer with low wages.
It is so sad.
Min wage workers represent a fairly small % of the workforce, Thus, their wages probably do not too often represnt a large % of the cost of goods sold in many industries, with a few exceptions.
Thus, I really don't see where job loss would be much of an issue, so long as the wage increases are gradual. However, we need to get the min wage up there to late 1960's levels when adjusted for inflation- at a minimum.
Too many people are simply working too hard for too little, these days.
The increase in these wages would boost GDP as well payroll taxes and help to support SS and medicare.
1
In a free market, if they’re not quitting in droves, the pay is just right.
1
The minimum wage in Seattle is now $11.50/hour. If one assumes that the person can earn that on a fulltime job (2,080 hours) that amounts to $23,920 annually. The take home pay for a single person making this wage after taxes, Medicare, Social Security etc is on average $16,000 a year or a net of $1,333 per month. Current average rent for a studio apartment in Seattle is $1,425 per month. Even if one shares the rent on a one bedroom apartment the average rent for a one bedroom is $2,022 per month. So exactly how does that work.
9
Your estimated take-home pay is too pessimistic.
It would actually be closer to $20,500 — and that in California, which has a state income tax.
https://www.taxformcalculator.com/tax/24000.html
I used a tax calculator as well. In Washington we have a 10.10% sales tax that is not figured in the calculation. Regardless lets use your figure, that is still only $1,700 a month It still doesn't work with utilities, transportation, health care, food, clothing.
Why would companies see a sales decline if the government put a JG in place? That makes no sense. A JG will put money into the pockets of workers, who are likely to spend it, and they spend it on the goods that companies produce, which will increase sales at companies.
Besides, if a company is not able to turn a profit by paying their workers a fair wage, and we believe that workers should receive a fair wage, then companies using a low-wage business model should close.
4
The one thing that bothers me about most discussions of the JG is that it focuses on low-skilled, transient jobs. IMHO, this perpetuates the presumption that the proles don't want/need/deserve security, or even weirder, that the market will provide it.
I've always felt that the greatest irony is that the most wildly successful "planned economy" was run under the guise of "the war on socialism". The Cold War buildup paid for the first umpteen iterations of jet engines, computer chips, and the signal processing that makes broadband possible. No private firm could have ever survived this sort of protracted ramp-up of these technologies that are now as fundamental as oil.
While doing so, it created an enormous demand for STEM people. If Eisenhower were alive and POTUS, a national grid of gigawatt-hour storage sites connected by HVDC links would have been declared a defense priority. Coal, gas, and oil (and the sheikhs and Putin) would be verging on worthless.
While the Cold War also created a lot of good hi-tech manufacturing jobs, the omens are that requisite person hours to manufacture a surfeit of consumer goods of any sort is down and about to drop even more steeply.
So we must face the hither-to unthinkable - funding for the arts, sciences, and humanities despite any lack of an obvious near-term payoff. A shorter work week. And perhaps a realization that the financial sector does not really warrant 40% of the economy's profits.
9
I'd be in favor of a federal minimum wage closer to $15, not a guaranteed job. Hwvr, gtee'ing 10 cents for every empty bottle returned has had a good effect on the environment, I must say.
4
Its interesting that you now say Medicare for All is totally reasonable, since back when Bernie Sanders and Hillary Clinton were running against each other you said Sanders was wrong to support it and Clinton was right to only want to push incremental changes to the ACA....
5
You might want to look back and see what was actually said in those days. I don't think the idea was ever objected to at all, but rather some rather shady numbers were the issue.
I did look back - perhaps you would like to too: https://www.nytimes.com/2016/01/18/opinion/health-reform-realities.html
"The question for progressives — a question that is now central to the Democratic primary — is whether these failings mean that they should re-litigate their own biggest political success in almost half a century, and try for something better.
My answer, as you might guess, is that they shouldn’t, that they should seek incremental change on health care (Bring back the public option!) and focus their main efforts on other issues — that is, that Bernie Sanders is wrong about this and Hillary Clinton is right."
...
"If we could start from scratch, many, perhaps most, health economists would recommend single-payer, a Medicare-type program covering everyone. But single-payer wasn’t a politically feasible goal in America, for three big reasons that aren’t going away."
...
etc
"Is $15 an hour high enough to get us into job-destroying territory? In high-income regions, probably not. But in America’s lagging, poorer regions there might be significant job losses."
OK, so the newly unemployed in rural areas would then have the option to move to high-income areas and earn a living wage. I don't downplay the impact on rural communities, which are already struggling to maintain their populations. But moving to an urban or suburban area and earning enough to support yourself and your family is better than staying at home in unending working poverty.
Or at least, a lot of people would make that decision, if they had the option.
1
You're not factoring in the higher cost of living in urban areas as opposed to rural.
Higher wages in the city are offset by the higher cost of food and shelter.
2
The deliberate destruction of rural cultures sounds like genocide to me. It's okay if it's a callous economic warfare instead of targeted one?
True, but the calculus changes if the wages (and benefits) in the city are boosted by having to compete with the jobs-guarantee program. You have to compare boosted city wages with unboosted rural wages to figure out if the job-guarantee program is effective.
Re : What this evidence shows is that minimum wage hikes have very little effect on employment.
Is Mr. Krugman correct ?
Numbers please
Quote:
The most recent study of the impact of minimum wage increase on employment, 2017, from the U of Washington, (it has been studying this topic since 2015) using the US best model city, Seattle, that increased the minimum wage in 2 steps, from $9.47 to $10 or $11 an hour (depending on business size, benefits and tips)and he again in January 2016, to $10.50 to $13, showed:
"The second jump had a far greater impact, boosting pay in low-wage jobs by about 3 percent since 2014 but also resulting in a 9 percent reduction in hours worked in such jobs. That resulted in a 6 percent drop in what employers collectively pay — and what workers earn — for those low-wage jobs.
For an average low-wage worker in Seattle, that translates into a loss of about $125 per month per job.
“If you’re a low-skilled worker with one of those jobs, $125 a month is a sizable amount of money,” said Mark Long, a UW public-policy professor and one of the authors of the report. “It can be the difference between being able to pay your rent and not being able to pay your rent.”
The report also estimated that there are about 5,000 fewer low-wage jobs in the city than there would have been without the law."
https://www.seattletimes.com/business/uw-study-finds-seattles-minimum-wa...
4
So perhaps the problem is that far too many employers are trying to get by not offering full time employment. I have friends that have two jobs in order to earn a very modest living but at least now both jobs combined pay better than their previous full time jobs they had prior to the increase in the minimum pay. Also it will be interesting to see how those businesses that have cut hours sustain their businesses or grow in future reporting. My guess is that for fear of raising prices some business owners may alienate clients/customers with poorer service. We shall see.
6
As of March 2018 the unemployment rate in Seattle was 3.1% whereas the unemployment rate for WA as a whole was 4.7%. If the increase in minimum wage is causing these kinds of 'problems' for Seattle, it seems to me the rest of the state and US could benefit from them as well...
6
UC Berkeley studied the same thing and came to the conclusion there was no loss of hours.
The UW study had one big problem. It looked only at employers with a single location. The Seattle wage scale rises higher for larger companies than smaller ones. That means an employee can leave a single location employer for a higher paying job at a multi-location employer, and if the single location employer did not replace them, it looks like a reduction in hours worked, when that person is now working their hours at a multi-location employer for a higher wage.
Ignoring that, so folks were making $125 a month less, but working a lot fewer hours to make it. Not exactly a tragedy.
3
A job that does not provide a living wage is only marginally better than no job at all. In fact, that is why such a large number of able bodied American's have dropped out of the labor force.
If a business can not generate enough revenue to pay a living wage, then it should not be in business.
9
Sucks to be the black kid who can't get a first job. Without job history or a high school degree, he'll never be able to demonstrate he's worth $15/hr.
There are plenty of people who are unemployable because they're not worth minimum wage. Setting a minimum wage has a hidden cost that Krugman ignores.
I would expect that actual job losses would prove far fewer than the usual suspects would have us believe, because I believe that the incremental wages would translate into incremental demand. Money in the hands of those lower on the Maslow hierarchy will sooner be spent than in the hands of the capital class.
4
Unemployment will increase inexorably due to AI, robotics and globalism. Policies, like guaranteed work, are simply rearranging deck chairs on the Titanic. The real issue is how to have a society in which reward is increasingly divorced from production. Labor vs. capital is a false dichotomy. The real duality is production vs. consumption; Chow can we increase if consumers lack the capacity to consume. Our culture is based on reward for work. Can we overcome this? I am pessimistic.
6
Even the Bible says that he who does not work does not eat. If one’s labor is insufficient to provide a living, then the free market says they need to suffer the consequences.
2
People don't "need" jobs, they need incomes. Most people don't even want the job they have now if they had other options for paying the bills.
Instead of creating "make work" jobs; and, I am not against them, there is a lot of work that needs doing that won't be done by the private sector, government could pay dividends to every American based upon the money America inc., produces each year. Ten percent of annual GDP would be approximately $10,000 to every adult American Citizen each and every year.
A Citizens Shareholder Dividend payment to everyone over the age of 18 would increase economic security for every American Citizen and enough of a financial safety net for some to venture out and start new businesses that would employ others.
Jobs are on the decline but the wealth that America produces each year is not. We need another method for distributing wealth and resources; such as, medical insurance and retirement benefits other than on the basis of employment.
5
It's not just the $15 an hour, it's the benefits, iron-clad protections and everything else that come with public employment.
Unless the program would pay only wages with no benefits and no civil service protections?
And then there's finding what to put all those people to work doing. In practice, there'd be a lot of people sitting around with nothing to do but play on their phones - and for a lot of people, they'd much rather do that for $15 an hour than actually work in a service job.
I'm generally progressive on wages, but a federal jobs guarantee is a disaster waiting to happen.
2
With a crumbling infrastructure crying out for attention, there would be plenty of productive jobs.
The problem is waiting too long. The population is aging, and many of those jobs would be fit only for younger workers.
I think the big problem in post WWII/FDR America we seem to have in the US is one of perception and expectations. We seem to be basing our expectations on a fairly narrow period of time when labor actually made substantial gains in society. Wages rose with increases in productivity and subsequent corporate profitability. Worker protections, shorter work weeks, overtime pay, workplace safety, child labor laws, paid benefits, et al. became more common. Unionization reached its peak at somewhere around 30% of the workforce. That helped raise the pay floor/standards for the workers as a whole.
But then came the Powell memo citing the need for the ownership class to beat back the unwashed hoards because they were threatening their hold on the economic system. How dare the middle class get expect a larger share of the pie. The next thing you know they'll want increased rights for women, minorities, etc. Reaganomics followed and ever since we've seen nothing except the continued degradation of labor. Wages flattened despite increasing/record corp profits. Pensions became 401ks. Benefits have been continually eroded. Worker safety/protections are touted as burdensome regulation. Yet somehow during that "Great" period (MAGA) of labor's rise the country prospered. We're seeing now that period was but an aberration. The GOP is NEVER going to let that period come back. With the loss of SCOTUS we better lower expectations. The GREAT period is gone until trickle down is eradicated.
6
My decidedly UNwonkish reply is that the wonkishness misses the point. The reason that Americans will defeat any attempts at job guarantees is NOT that such a program will create or lose jobs, but that it offends too many Americans, who believe that treating people as if they’re merely economic statistics is offensive. Dr. Krugman does just that, and doesn’t at all examine the expectation by millions of voters that we must manage our own lives in order that our people remain strong, independent, self-reliant and free, and NOT become enslaved to a liberal Administrative State dedicated to making the conditions for survival SO trivial in our society that people are challenged in no way to attain a basic subsistence.
This is a traditional American conviction, and one that “AOC” and fellow democratic socialist travelers will need to attack in compelling ways in order to impose their ideological agendas.
They don’t have a chance of succeeding. Liberals need to come up with dramatically different arguments, as yet un-hatched and certainly un-evangelized, to credibly support a guaranteed jobs program. The idea is NOT “reasonable” but hangs way out there over the left precipice, where liberals irrationally believe that enough Americans live to give their transparently socialist objectives a serious listen.
2
Most American bread-winners may like to be super-successful on their own merits, but millions are working two and three jobs just to keep the wolf away. They need, deserve, and would accept a little help. You must have never been on Desolation Row or even skid row.
People have pride, but they also see the writing on the wall: "I can't afford food, clothing, shelter, medical care or insurance, and a few nice little extras for my kids who are getting older every day."
And the huge numbers of lottery players indicates that many people would gladly take undeserved cash flow, because they can then help their family so much more.
Good Samaritans know this. Ebenezer Scrooge didn't. Hope you're not afraid of ghosts.
10
You just erased the New Deal and its many programs that put millions of people to work.
I doubt if your preaching about "self-reliance" would have had any impact on desperate working people during the Depression.
Your brand of bombastic rhetoric is mighty hollow to someone who needs to feed his/her family.
1
Ah, how expectedly numbing it is to see that the cheering section of iron-jawed, broad-shouldered, self-reliant, all-American freedom fetishism has again charged forward, banging tin drums and tooting kazoos to proclaim the Republic's two-fisted "exceptionalism." All that's missing here are Archie & Edith caterwauling,
"Didn't need no welfare state,
Everybody pulled his weight.
Gee our old LaSalle ran great.
Those were the days."
Yes, those were the days, indeed. Especially the ones that followed "Great Engineer" Herbert Hoover's failure to find the corner that prosperity was supposedly just around.
One wonders if today's "MAGA" maniacs seek to reprise Hoover's deed,
1
It comes down to grasshoppers and ants. All guaranteed income schemes, however disguised, are just another way to get naturally productive ants to support naturally feckless grasshoppers. The ants believe in self-responsibility, grasshoppers live by responsibility-shifting. I won't put party labels on them.
1
Both this comment and the previous one by Mr. Luettgen contains the same assumption, either stated or unstated: capitalism's losers occupy that position due only to their own fecklessness. No account is given by either gentleman to the consequences of physical or mental health issues, challenges of a difficult childhood, poor parenting, malnutrition, etc. Many more may be unable to find work because at that moment, there is less need for workers than there are workers - business cycles have victims at all levels. Others find their skills no longer in demand, replaced by automation and with few resources, personal or financial, to re-train. Others are burdened by crushing medical debt.
The real question here is, simply, what do we owe each other? How much are we willing to look away when our fellow Americans are unable to live decently through no fault of their own, whether temporarily or permanently? "Nothing" these two commenters might say, as would many others, shielded by their unfounded belief in the essential unworthiness of those in need.
I'm sorry, but I cannot agree. I don't want to live in a gated society where some have whatever they need and others fight for the scraps. That's not a great America, that's one that has lost its way. Will a few feckless souls be supported who shouldn't be? Perhaps, but I suspect they would be minimal in number. To sacrifice something that would benefit many for the sins of a few is itself a sin.
7
You mean lucky ants support unlucky grasshoppers.
Then you should fund a charity that will insulate you from such an outcome but keep yours and the governments hands out of the rest of our pockets.
1
Putting more money in low-income paychecks will not lead to rampant economic spending on throw away consumer items. It will allow folks to get the things they have been needing. Maybe repairs to their house or vehicle. Maybe some new clothes for the kids for school; or money for a field trip. Maybe an instrument for school band. Maybe some dental work.
Such spending not only results in the need to produce these items, therefore more employment for others, but also may increase tax revenues. At the same time, there may be somewhat less demand for welfare.
Opposing this logic is the desire by business interests to pay as little as possible, force employees to use government services, and maximize profits and stock prices.
The business people are happy to pay politicians in the form of campaign and other money. Great return on investment. Politicians have no problem rationalizing their selling out for money and their job security.
The beat goes on.
12
I find it somewhat funny that so many comments here claiming federal job guarantee as a "progressive" idea.
It is not.
It is an old idea tested in social experiments repeatedly in USSR and China. And it failed miserably. What was created is a symbolic full employment and a lot of people incentivized not to work, or at least not to work hard.
3
We did it here, during the Great Depression. CCC, WPA, PWA, CWA, etc. We are still benefiting from the dams, schools, auditoriums, hiking trails, and other improvements built by those agencies.
With a massive infrastructure maintenance backlog, there is currently no shortage of productive ways to employ people, and enjoy a benefit in economic growth for years to come.
13
I don't know where you get the idea that people in China and the USSR were fed without working.
Both countries required people to work and, and except for some periods of criminally bad bureaucratic decisions, were super productive.
Super productive? Then why aren’t we buying Ladas instead of Kias?
Another positive aspect of a government jobs guarantee: If he private sector has to compete for labor, this will act as a stimulus to productivity growth. Isn't our growth slowdown often tied to lagging productivity growth? Well, rising wages should provoke a response in this respect.
The increased public sector employment should also have a direct impact on overall productivity via its effect on the provision of infrastructure in transportation, communications, utilities, etc.
I'm all in on this!
2
I'm not economist, but with our fiat currency, an urgent need for infrastructure improvements across the country and a desire to put more working-age people back to work, why isn't anyone talking about a WPA-type jobs program in which wages could be adjusted for the region they're in, so as not to cause the kind of private sector job loss some economists fear? And while we're at it, why not a partnership with vocational schools to produce the management we'd need for those jobs?
8
Because Trump and GOP are explicitly trying to dismantle the social safety nets created under FDR and LBJ by shrinking the government, I am afraid that they will be successful with eight years of Trump. With the loss of social safety nets and less progress tax, the income inequality gap will only grow wider. Similar social instabilities and wars that we have experienced in the early 20th century will become more likely.
6
Work, work, work, to consume, consume, consume. The only jobs that matter are the ones we create once we have acknowledged the the instrument of an equal society is people, not policies. The work that needs done in the world is the work undoing the damage that's been done in the name of fake progress and relentless destruction of the environment. This may not seem relevant to many people, but in my view some of the churn we experience is an inability to appreciate our real responsibility. Until we do, we will not organize ourselves into a problem solving collective, a real work force. Until we value the work and not the dollar, we are fighting a losing battle.
2
Just raise the minimum wage to $100/hour immediately and adjust for inflation in the future.
According to Krugman, Nobel laureate,
the minimum wage has little effect on employment.
just an instant increase in national wealth by increasing the
minimum wage.
why didn't we do this before?
fabulous idea.
2
Did you read the article before making a sarcastic comment? Krugman stated that previous minimum wage increases hadn't led to decreased employment but that they were smaller than the $15 one being effectively proposed and that there was almost certainly a wage (he proposed $30, not $100) which would impact employment so it wasn't possibly to say if this policy would end up reducing private sector employment. He rather explicitly stated he was not in favor of what you then claimed he was arguing for
However he stated that as a political position he was not opposed to this as the evidence for harm from a $15 wage is significantly less than the evidence for harm from all sorts of economic policies which are comfortably "mainstream" Plus the damage to private sector employment would be made up for by increased public sector employment so the negative would be primarily in terms of the costs of the program which could then be adjusted for or modified later while the benefits of a jobs guarantee in terms of reduced social misery (from people who want to work but can't find a job) or the opportunity to invest in public goods would be immediate and obvious
4
Go back and re-read what PK wrote and then come back with a smarter comment.
There are better ways of achieving the same objectives. First, as advocated by Robert Reich and others, a period (2-3 years) of universal public service. This would not be limited to military service, but all federal government agencies could offer opportunities. If at the end of this period, people chose to apply to remain in those agencies, they would have the opportunity to do so. Second, a gradual increase in the federal minimum wage, say to $10 for a couple of years, then to $12 and finally to $15. This would allow for time to adjust and not disrupt employment or prices unduly.
3
Then who would join the Marines to face Parris Island and several tours in Afghanistan when they can stay at home and teach volleyball to 7th graders?
1
If a rise in the minimum wage has very little effect on employment,
why not simply double or triple the minimum wage?
or maybe even increase it by a factor of 10?
It would have little efect on employment according to Krugman and it would enormously increase national income instantly by government fiat.
A huge benefit for nothing.
no effort needed.
lets do it.
long overdue!!!
2
The country would really be so much better off if we didn't have to include the far right in political and economic decision making.
3
... until they ran out of money to pay for your "solutions".
I look at this as a tax on all of us for a more equal society, I say this as an American who has lived in a high minimum wage country and seen the lack of poverty that results.
5
Chris,
what high minimum wage country did you live in that you saw a lack of poverty that results?
please tell us.
A report from post-Brownback Kansas: Kansas took in $1.2 Billion more in taxes in the last year. This is enough to start catching up on all the bills Sam left us with.
I would like to see socialists and progressives concentrate more on making state and Federal tax systems more progressive. Under Brownback's Koch tax plan the top 20% paid an effective tax rate of less than 4% and those in the bottom 20% paid an effective tax rate of over 11%.
7
Medicine is a really good program. But to place everyone in it is just another way to ha socialized medicine. And if we have that, then it is totally under government control. They make the decisions and they monitor all your health records. Already the transfer to electronic records has placed everyone's records under the grasp of government probing. In addition, Medicare doesn't pay everything. That is reason for Part D. On the top there are the supplemental plan cost. If the whole country is under Medicare, then the whole country pays for it but the government decides everything about our health care. The everybody is given a job idea, means everyone also pays for that. Not only that, by arbitrary raising wages, our goods cost more and countries who don't have that program increase their imports and we lose jobs. But Mr. Krugman may have missed the news that our increase in job creation and the reduction of the unemployed under Trump, has created a point that for the first time, according to CNBC, “there are more job openings than there are eligible workers to fill them). In the process, wages are rising. So, a country that controls every one's health care and everyone's job sounds like China and Russia not the U.S. I think before we go down that road, we ought to give ourselves a chance.
Beyond that, the dirty secret about medicare being "so good" is that it isn't. First it is highly subsidized, still punishing younger workers to benefit older retirees, and second, running a HUGE deficit every year. Second, it does not supply nor consist of "medical insurance", it pretty much guarantees you that you see a doctor. That may well end up being all the treatment you get. Approval for consultations and operations if pretty much on the "When you can't walk, come back and see me, and we'll set you up for that operation." (Exact words of my doctor).
1
Medicare is highly subsidized because of its high risk pool (old people). If you had a car insurance plan that only insured people who had 3 or more accidents, it would be highly subsidized also.
The record unemployment is the result of the Obama administration's policies. The rising stock market, now stalled, is the result of Trump's promises but wages for the working classes have barely budged. The rich get richer. Let's see where the unemployment rate goes through 2021. Yes, the economy in the first year of any administration is a direct result of the policies of the previous administration. Remember what Bush left us in 2009!
1
We need to create jobs that matter and pay them well. More elder care, more teacher's aides and teachers, more child care for working moms and dads, but pay them a respectable wage! Wages are very low in these fields and they are some of the most important jobs anyone could do; they can never be replaced by computers or machines. In addition, universal health care will help raise wages as more and more of workers' pay is being eaten up by premiums, deductibles and costs of our health "uncaring" insurance system.
6
Well, as I've said over and over and over, no other developed nation is as hostile to its own workers than the United States. And the OECD agrees.
https://www.washingtonpost.com/news/wonk/wp/2018/07/04/is-it-great-to-be...
Our current, past, and future workers are the majority of our citizens. So why is every public policy decision seemingly made with the objective of actively harming them?
Something must be done. A job guarantee at a living wage would be a good start.
10
When you speak of public employment do you also consider that under the current low minimum wage situation many of these workers are also elegible for food stamps (a government subsidy to their employers)?
If that's the case, doesn't the government already pay? If that's so, perhaps the money would be better put to public employment than to Walmart, et al.
11
with a lot of respect for you and your considerable effort to teach us;my question is where do we draw the line to separate us from communism(I am only talking about job guaranty)?
Certainly we should have better laws and regulations regarding
employee/employer relation and regionally adjusted remuneration,but again as you mentioned in parts of the country and for some jobs a mandatory minimum wage will be a job killer,which causes small business owners
vote republican.
1
Small business owners already vote Republican. And it's time we admit that, when you look at the number of business owners -- small or not-- versus the number of workers, business owners are a very tiny "special interest." So why is our entire economic policy directed at pandering to and coddling them?
4
It's not necessary to draw a line with communism, if all you're talking about is a job guarantee.
Communism is about replacing the capitalist state with a society run by the working class.
I'm sick and tired of hearing people yelling "communism" every time something is proposed that will benefit working people rather than the rich.
Because they are society’s makers and in many (but not all) cases, employees are a necessary evil.
1
AOC is smart enough to start a negotiation by proposing an ideal and working from there to get the deal done. They all have to be discussed and reasoned through. It's not the same as saying the same thing repeatedly that is wrong in every way.
2
Forget about minimum wage for a moment, and focus on the minimum number of workers any firm needs to survive. Take a fast food joint. The restaurant needs someone to staff the drive up window and take payment, and another person to fill the order and hand it to the customer. One person can probably handle slinging burgers and egg sandwiches, another can handle fries and shakes, perhaps one or two others to work the registers for sit down customers, at least one worker to keep the place clean and check the restrooms and parking lot.
Business owners are not in the habit of paying workers they don't need, so it's safe to assume they have the minimum number of workers deployed on each shift. So now let's raise the minimum wage. The owner objects, but who does she fire? If she fires the drive up window person, she loses all that business. If she fires the worker at the order fulfillment window, the customer never gets what he paid for. If she fires the hamburger slinger...you get the picture.
The business owner will never readily admit it, but she is over a barrel. Workers making minimum wage have far more bargaining power than is commonly realized.
5
"The owner objects, but who does she fire?"
At a certain price, an employee becomes more expensive than the alternatives (outsourcing, automating, reducing services (see: https://www.nytimes.com/2018/06/25/dining/san-francisco-restaurants-serv..., etc.). That's when people get fired. Unfortunately, where that price rests is unknown and variable.
Failing to realize this can lull one into a false sense of complacency about increasing employment costs. It won't have an adverse effect upon employment until it does.
...Andrew
1
I should have been clearer. The wage increase must be statutory. After all, a single non key employee demanding a raise can be fired as long as the employer is confident a replacement at the lower wage can be found. But once the law states that a certain minimum wage must be paid, the employer loses leverage. Now the choice is between eliminating key positions and losing revenue or keeping those positions and raising prices. And yes, firms will try to automate their operations as much as possible, which is why a guaranteed basic income may become necessary. If no one has a job, who will buy the burgers? The robots?
The minimum number of workers goes down as automation replaces them. The higher the wage rises, the greater amount of benefit of labor replacement in the cash flow analysis to justify purchase of the automation. Various comments state automation cannot replace x or y. If you have a nationwide extraction of business profits to pay much higher wages, you can expect accelerated development in automation. Technologies that normally may take years to become profitable could see immediate demand that would rapidly move manufacturing costs down and make the technologies available to many businesses.
Don’t ever assume that you have put the owner over a barrel. Expect an effective response that could create quite a different end state than you expect.
What would people actually do in a Guaranteed Federal Job (GFJ)?
This is a great example of where 'economics' tends to lose its usefulness in analyzing economic policy. The abstraction of 'labor costs' as a merely numerical datapoint we call "jobs", hides the reality of what those jobs actually entail. What do people do?
A private sector job, involves someone being hired by a business, or running their own business. Someone is risking their capital (or time) on the bet that they can profitably employ someone else, or themselves. A Government job, not so much.
In the depression, FDR raised spending for the purpose of increasing a shortfall in demand. Public works are wonderful. But the real benefit to this kind of GFJ program, is as a kind of universal income, more so than a productivity boost that comes from an actual need for the actual work performed in a GFJ.
So, it probably makes more sense to just bite the bullet and move forward with universal income, since that's really what this is all about. Similarly, take away the incentives for real estate speculation that drive rents ever higher, by for example, allowing renters to count rent payments towards an eventual purchase share of any property they live in, and we're starting to get our arms around the problems of homelessness and income disparity.
So Hooray for AOC and her FGJ's, and PPK (Prof. Paul Krugman, not North Korea), for all their efforts.
5
"In fact, Medicare for All is totally reasonable; any arguments against it are essentially political rather than economic."
That's funny, because I seem to recall Krugman making repeated arguments AGAINST universal healthcare and other progressive agenda items when Bernie Sanders was running on them in 2016. I guess Krugman changed his mind now that AOC is proposing the same idea?
Anyone but Bernie, right?
4
That's an oft-repeated lie about Krugman.
What he said was that he supported single-payer healthcare, but not as a politically winning proposal in 2016.
While Obama had some high ground I wish there had been a push for something like a 'Green Jobs/Work WPA.'
This is not something private industry has any plan to pull us out of.
Meanwhile we have Hoover on steroids in the White House.
3
Why not throttle the ridiculous rates of consumption and cost of living? Steel workers (in another comment elsewhere) can't make a living on fifty dollars an hour?!? That's 100k US dollars for a year! Teachers make forty thousand ... sometimes. Don't argue the three summer months off. Every highschool teacher that I met rotated summers (make up classes, truancy, band practice ...,) with every other teacher that I've met in my long and dubious career. Oh, and arm them too. Great idea.
4
We are our brothers and our sisters keepers. This means we take care of one another. This means that no one is unnecessarily and obscenely wealthy because unnecessary and obscene amounts of wealth cause poverty and cause unreasonable low wages.
3
There already is a huge problem not at all being addressed:
age discrimination---especially for women.
Yes, illegal---but we all know someone who was laid off months before official retirement (of not before)---and will never again have gainful employment.
Corporate leaders whining about lack of employees need to do three things:
---Stop discriminating agains older folks
---Start training programs that fit your needs (no-one knows the skills you need better than you do)
---Start paying living wages plus---why should invest their time with your company if you won't invest in them?
Corp. leaders: stop blaming the education system and the "lazy" unemployed--- you are the ones being lazy by not providing training and treating employees with respect.
8
Wow, when Dr. Krugman says things you agree with it's all rainbows and kittens, when not he's a tool of the man patronizing your new person of the hour.
You need to figure out that the economics here are supported by statistics and historical examples as opposed to the allegorical "evidence" I see in your counter arguments.
I don't know for a fact whether the economies theories he forwards are always right, no reasonable person can (or does) claim they are. But I hope you all don't mind if I give the guy with the Nobel the benefit of the doubt over so many other aggrieved experts.
Regardless, if you all can do a little more research or post your data when you plan on going after him, it would probably add tremendously to what you have to say (maybe).
5
I don't really see how a jobs guarantee would work.
What do you do about people who show up to work drunk, or not at all. Can you fire people from their guaranteed jobs?
Public employee unions will hate this because this will take work away from unionized employees.
If you are the government, you are going have to carefully comply with tens of thousands of pages of employment law. If you don't, then you are open to multi-million dollar workplace lawsuits. How much overhead cost does that add?
Has anything like this ever been tried before? I'm not aware of any social democratic countries in Europe which provide a model to follow. In the 1930s, the US had the Works Progress Administration, which did employ millions of unskilled people for public works projects. That might provide a model, but if it was a success why was it closed down?
https://en.wikipedia.org/wiki/Works_Progress_Administration
2
There was a big war which put everyone to work!
Better idea, put forth above: basic income for all. Every time, everywhere it’s been tried, a great success. Even tried and found successful during Reagan administration. “Utopia for Realists.”
"What do you do about people who show up to work drunk, or not at all. Can you fire people from their guaranteed jobs?"
My late father, then a Republican, ran our Pennsylvania county's WPA program. At that time, Pennsylvania was a Republican state and although it was a national program, "federalism" reigned. He fired several people, but most wanted to work so much that most conformed to the rules.
As to why it was disbanded:
"It was liquidated on June 30, 1943, as a result of low unemployment due to the worker shortage of World War II. The WPA had provided millions of Americans with jobs for eight years."
By that time, my dad was a lieutenant in a rifle company, wounded in Oran, in North Africa, returned to the states for a while and later sent to Italy. I was born later that year.
As the riots and the burning of the cities occurred during the late 1960's my dad, by then a Democrat, argued that reinstatement of the WPA would help ease the frictions of society.
Let's get one thing straight first: Alexandria Ocasio-Cortez is not a socialist. She's a democratic socialist. I'm okay abbreviating AOC but not democratic socialist. There's a difference. You should try "the google" if you're still confused about the distinction.
That said, I wouldn't worry about public employment crowding out the private sector with overly generous wages. You simply peg the guaranteed wage to the cost of living. The private sector does the same thing.
A software engineer in Silicon Slopes isn't paid as much for the same job in Silicon Valley. However, the quality of life is the same or even better compared to the cost of living. Pay a higher wage in expensive locations and a lower wage in less expensive locations. You can calculate a percentage of medium income pretty easily. Why no one has figured this out for the federal minimum wage is beyond me?
I wouldn't worry about the money either. Republicans just kissed $1.5 trillion to the wind. Expand the middle class tax cut, leave the corporate tax break, claw the rest back. As the tax cut showed, you only need a majority sliver in order to enact a sweeping tax reform.
Finding something useful for people to do is more difficult. Maybe we should intentionally de-automate some jobs. You can also bet red states are going to put up bureaucratic roadblocks to make the program miserable. We might also consider Medicare for all the better use of our tax revenue. I would say these are the bigger hurdles.
3
Many jobs are not "useful" and never have been. Everybody knows the cashier who is finally retiring after 40 years checking out groceries. Yeah, you can automate that job, but this isn't going to make the potential cashiers of the 21st century become coders or nurses. There will always be people who do dreary, tedious jobs that need to be done, but that aren't leading to anything better and that don't improve. In the past, we realized that we needed to pay these people a living wage. Now we don't think they deserve one.
5
Actually, she and Sanders are not Democratic Socialists, but Social Democrats.
The Democratic Socialists of America, of which Ocasio-Cortez says she is a member, are in favor of replacing capitalism with socialism.
But neither she nor Bernie Sanders ran on a program of socialism, but of reformed capitalism.
As income inequality grew, mainly due to the tax cuts on the rich, instead of raising prices due to higher minimum wages, how about the owners or CEO's and other big shots take a big pay cut?
Before the Reagan tax overhaul anyone making over $400,000.00 per year payed 70% tax on every dollar they made above $400,000. During the late 1940's and through to 1964, the top tax rate was 91% on every dollar of income above the $400,000 income level. In those times people were still rich, and CEO's, etc. made maybe 20? times what the minimum wage worker made at that time compared to CEO's making 400 or more compared to minimum wage workers. It's time the rich stopped overpaying themselves and allow US citizens to make an affordable living wage.
5
Medicare for all may be reasonable. Medicaid for all would be better. It is actually cheaper per person. It also provides completely for the financial needs of patients.
Why the difference? Insurance companies providing supplemental coverage and medical care providers get more from Medicare. Medicare feeds the problem that Medicaid cuts off.
Which is better for the patient?
Which is better for the nation?
Which better reduces the absurd proportion of GDP we put into medical care nationally, at least 50% more per patient than any other developed nation?
We should be pushing for Medicaid for all. That we don't shows a sell out to insurance industry and medical care providers exploiting drug prices, device prices, and service prices.
If we are going to do this, a big change, let's do it right.
7
A recent article in the Times profiled a rogues gallery of Andrew Cuomo's Buffalo boondoggles. Billions poured into projects that benefited a few developer cronies and never came near creating the number of jobs promised. Commercials touting Cuomo's plans for a resurgent Upstate NY all depict gleaming, cavernous factories, staffed however by a handful of lab-coated technicians.This is an uncomfortable truth that somehow slipped through the cracks, and is the future of manufacturing - everywhere. White collar jobs will also be automated out of existence, leaving millions more unemployed and unemployable. I suggest Dr. Krugman give this matter a little consideration rather than looking at paltry incentives for jobs that simply won't exist. Forget about the GOP, barely any Democrat is willing to give this eventuality any thought.
2
I lived in Southern California for many years. There was a robust supply of off-the-books labor there, workers who didn't have green cards, but also citizens who didn't want to declare income. The size of all this is hard to measure, since not being counted is kind of the point.
This kind of employment has to be significant, since people are surviving somehow. It's not a good way to exist, but it does get people by. And it may help explain why unemployment can appear so low without wages rising. My point is, we don't really know.
5
Bumping up the minimum wage, or a jobs guarantee, is just one side of the equation. What I want to see is a cap on income.
Why should CEOs and Wall Street traders and MD's and Lawyers make more than a hard working teacher? Cap everyone at $100,000 and pop the minimum wage to $40/hour.
5
Guaranteed work sounds like a humane and sensible idea. I think Prof. Krugman is neglecting a very important market phenomenon, which is more psychological than statistical in nature. As automation takes over more work, we must take advantage of improved productivity in those parts of the economy by shifting excess productivity (unemployed people, to put it in plain terms) to formerly neglected parts of the economy.
We will have have the opportunity to match workers with an effort to meet unmet needs: education, nurturing children, making our environment cleaner, healthier and greener, building a 21st century transportation infrastructure, dedicating more effort to making things better instead of just cheaper, on and on. The problem with making this adaptation is that capitalism does not appear to have a talent for creating markets in the commons. As a result there is no demand and hence no economic base in the private sector for creating those jobs.
Government can do what the private economy cannot. Once we come to our senses about it, we, including Mr. Krugman, will see that only government can kick-start opening the economy into unaccustomed spheres to create needed improvements and the economic base to convert those needs into jobs.
5
Medicare for all with all medical treatment, other than cosmetic surgery (already not paid for by insurance), including workers comp and no fault (eliminate the rampant fraud in both) and the savings on those programs as well as health insurance in general will more than pay for the system.
5
If historical economic statistics have shown us anything it's that bottom-up policies to grow the economy - for *everyone* - are MUCH more effective than the top-down policies we've been subjected to for the last 35+ years.
Also, that EPI report that seems to show roughly 35% of the workforce making at or below $15/hr. is stunning to me. And blows the typical republican argument against raising the minimum wage that it would 'kill entry level jobs for teens and students' out of the water. We're talking about 56 million workers.
7
There are a lot of us out there. I got downsized out of a $26/hr job, then found one in a more stable industry for a starting $10.50/hr. Now I'm up to just over $13/hr. It's possible to live on it, but it takes stripping everything to essentials.
3
Like HEK, I went from $33 an hour with mass quantities of overtime available to $17.51 an hour with no overtime available. And I got a Masters degree in between. For the first four years at my job (until I had that Masters in my hand) I was a member of the under-$15 club.
2
The Earned Income Credit is, in effect, a limited guaranteed income plan. And what the EIC does is make it possible for employers such as Walmart to pay people less, with the taxpayers making up the difference.
A federal jobs guarantee might force these wages up, and if the beneficiaries have more to spend, then the economy as a whole will expand as well.
1
There is real danger with the guaranteed job proposal, the harm to the communities it is most meant to help by either eroding services or increasing cost of living is a dealbreaker.
In other words a bad idea from a progressive is still a bad idea, and more important for Democrats to reject early if we want to actually help people.
1
but wouldn't increased cost of living be balanced by higher income?
1
There should be a guaranteed income for all. Putting that into effect would eliminate a massive portion of government itself that deals with the day to day of who benefits for social programs and to administer them.
Secondly, the minimum wage should be a living wave ( at least in the $22hr range ), and furthermore have COLA adjustments automatic every year, while being taken out the hands of lawmakers that use such things as a political football, Having such certainty would help everyone conduct business where they knew all of the rules and adjustments beforehand. This would be a boom as well.
Lastly, (which is the most obvious) is that unions need to become strong again (otherwise all of the above does not really matter ) where a workers' pay comes with benefits ( like single payer health care which would decrease a massive amount of costs to businesses and workers alike ) and restrictions on executives making massive multiples of workers pay,
It all has to relative and an all of the above strategy.
Just like society itself.
16
I believe you are the first to point out the savings from being able to downsize other programs. And don`t forget the savings of the wellness factor, both mental and physical. The gain from being able to spend quality time with your family.
I think we need some kind of mandatory government-service program, which offers a stipend, living support (e.g. dormitory housing and meals), skills training, and then provides higher education funding and living expenses. Call it a "GI Bill" for everyone, in return for three or four years of mandatory "national service". The "Greatest Generation" pulled together pretty well, and represent most economic levels of the population in the WW2 draft. Perhaps a mandatory "national service" program would help breakdown the class, race, and gender barriers that still exist, despite past efforts at reduction, and current efforts to deny they still exist. The WW2 GI Bill had a generational impact on millions who enrolled in college, got degrees, and hugely impacted the economy's growth afterward. The US could benefit from a "national service" program that provided a pool of workers who could do child care, public works maintenance, elder care, and civic improvements. These people would enter the workforce after with some training, experience, and access to education to build on that for their own futures. Despite the current favor of "self reliance", we are ultimately all in the same boat, together, and if it sinks, the wealthy and the poor will drown together.
4
I have a lot of problems with conscripting people for anything less than an overwhelming national emergency. But there is one practical issue for which I see no solution.
What do you do with young mothers? If you exempt them from the mandatory service requirement the law of unintended consequences provides that you will have a significant increase in intended teenage pregnancies, a pretty uundesirable social outcome. If you do not exempt them ... .
2
This is not really about skills. It's about a refusal to hire American and more workers than jobs.
1
Enroll them, and put them to work in child care centers, low-cost daycare for working parents. There is a huge need for this in most areas, and costs currently can be 20% of more of the earnings of one parent. Lessening that burden, and providing support for the young mothers, as well as other working parents, would be one of the areas where 'national service' would improve the quality of life for the participants and everyone else as well.
We live in NYC, and make what would be an obscene wage in most of the country. Here, we're somewhere in the middle of the economic strata. We live pretty simply (no fancy anything, no big vacations, no cars) and don't worry about being able to afford food or rent.
Every day I'm baffled and saddened by the fact that so many Americans can't have this same luxury. And it is increasingly a luxury, not having to count every penny to feed one's family.
It's blindingly obvious that we need some mechanism for distributing economic largess more equitably. We're all only guaranteed this one life that we live. Nobody who works in this country (ideally the world, hey, but let's dream small) should have to watch that life wither away because of a system that is bent on enriching the rich.
Is a jobs guarantee the way to fix this? I don't know. I'm willing to try this, or a UBI, or a higher minimum wage, or some better idea that hasn't been floated yet. What drives me nuts is doing absolutely nothing, yet here we are.
20
The decline of labor unions has coincided with rise of inequality over the last 40 years. Coincidence? Anti-union conservative republicans would like you to think so.
6
If the concern is getting people to work - called employment - then the easiest way to get to "full employment" is to bring back slavery by cutting all social safety net. Any one caught without a job will be left hungry so they will be working for food and lodging. Problem solved. I am sure Kudlow will love that.
If, on the other hand, the purpose of an employment is to have those employed being able to make a decent living, then a job guarantee program will at least start a meaningful debate.
Don't tell me about moral hazard. Which banker that helped cause the Great Recession has gone to jail, or even publicly found to be culpable? Where is the moral hazard on that count?
9
A greatly expanded earned income credit along with a (modest) guaranteed income seems better. Turn a $12/hr job into a $17/hr job. Since companies aren't out the extra money, they have no incentive to eliminate jobs. Of course it requires higher taxes on the people whose skills and talents (or inheritance) fit well into our economy, but that's what the structure of our economy has led to. Let technology and the market efficiencies still govern job creation and destruction, just get more money into the hands of those who do work hard but have been left behind. And give them the money in their paycheck, not collected as a refund a year later.
4
Yes, ALL programs are economic, not just political: who is going to pay for Medicare for All? Since the rich refuse to pay their taxes, the rest of us will pay for it. My tax burden here has become unbearable and unsustainable. Looking at homes in (ugh) Florida. I love these programs, it's just that I pay for them, and the rich do not. Even when the rich benefit, since I subsidize so many things for them, including tax breaks that they get, which I don't get. Basically you are expecting what is left of the middle class to carry the rest of the nation, rich and poor, on our backs. When everything we have has been taken away from us, and we become poor, who is going to pay, since the rich don't ?
3
Medicare for All would be LESS expensive for you. For profit health care is the most expensive in the world.
2
If the job creators don't come through and use that great wealth we let them keep to create jobs, and also perhaps jobs with a living wage, they have shirked their responsibility, and I say we take their money from them (taxes) and create them ourselves, that is, with the government. Period.
11
My conservative friends argue that substantially raising wages from the bottom will cause businesses to raise prices which will cause inflation. I can see some of this for sure, but I don't see this happening so much with the biggest firms. Hopefully this has been studied.
It is nice to see the Economics expert back writing Krugman's column. I sincerely hope he doesn't wander back into the know-nothing wilderness again.
But let's not beat round the bush. The quite a few working-age adults, namely those over 50, would like to work, apply for jobs, and are lucky if they get a call or email acknowledging their application. It is almost too much to hope for to get an interview. So this guaranteed jobs proposal would need to include legal recourse for people who experience age and other types of discrimination.
I eagerly await the next column on what else I can do to fix this broken economic system.
4
I am sure that there will be much gnashing of teeth and rendering of garments by conservatives over AOC's federal jobs guarantee ideas, claiming no doubt that it would be the end of 'capitalism as we know it'. But even though, as Dr. Krugman points out, such a jobs guarantee is unlikely to happen, would ending 'capitalism as we know it' be such a bad thing. For what has it brought? The concentration of wealth in an extremely small but ridiculously politically powerful minority. The collapse of a middle class upon which capitalism depends. A growing disadvantaged class that keeps being pushed into the periphery by the policies the wealthy class want and support. Global warming and the degradation of the environment.
Unaddressed in a meaningful, sensible way, these fruits of capitalism could well spell the end of 'capitalism as we know it' anyway, so we might as well begin to dismantle it now rather than let it simply blow up.
25
But it can't be sustained UNTIL THE RICH PAY THEIR TAXES.
5
without capitalism it is very unlikely that you are sitting around typing those comments on your smart phone, in a likely comfortable living or working space next to all your other toys...ask Russia how it worked out...and I know SOCIAL Democrat is not being communist...blah blah, but I'm not wonkish, I just love in the real world and a federal jobs guarantee is a step to close to communist ideology.
Medicare for All is a no brainer.
The biggest challenge with a jobs guarantee, as with any large federal program, will be: who decides what jobs get created, and how is the money allocated?
An intelligent solution would emphasize local jobs, created and administered within local communities based on the needs perceived by the communities themselves.
Any attempt to determine, at the federal level, what percent of money should go to X category of jobs is doomed to be wrong. But if you allocate the money to localities based on economic need, but let them decide what kind of jobs to create, you'll actually foster local community cohesion.
The program should also involve hard-to-cheat formulas based on generally agreed-upon measures of need—but, given the nature of political negotiation, I'm not holding my breath on that one.
1
It would be nice to see robust infrastructure spending and an increase in minimum wage. I would like to see the minimum wage be based on regional mean/median incomes, or driven by local cost of living (Cost of living can be dangerous, but not if the increases aren't automatic). This way you could preserve employment in struggling areas. Increasing infrastructure projects is attractive, because the improvements are needed in low income areas more than high income areas. Also, they have the double benefit of improving the neighborhoods of the poor and lower income while offering employment to the people who live there.
I would have included unionism in the past, but I think unionism is not needed if you have a government that protects its workers. The boogeyman of French style employment laws will be the argument against this, but those are arguments that deal with the degree of government interference; instead of the fundamental premise.
Both infrastructure improvements and minimum wage increases are popular, so politically it should be a viable. What also makes me think that this is viable is that FDR used this strategy and it helped him build a coalition that got him four terms in office.
3
"What’s wrong with this argument? The key point is that all those sub-$15 workers aren’t just sitting around collecting paychecks: they’re producing goods and (mostly) services that the public wants."
Right Paul, you do have to wonder about why we (society) think it acceptable that home health aides make $10 per hour, and the guys at say Home Depot make $13?
I see Krugman completely omits the massive decline in the purchasing power of the federal minimum wage over the last 40 years. Not a surprise.
(No, I don't want to read a response about how much less a VCR or computer costs in 2018 than it in 1978. Try: Food, rent, car insurance, medical insurance+deductibles.)
16
We're saying to them that we don't value their work. But employers have never truly valued the work their employees do, not the ones on the lower rungs of the "career ladder". In fact most of us are not valued as employees. We're replaceable and we all learn it when we're downsized. We also learn how little help there is out there for unemployed people.
Whether you've worked hard for 5 years or for over 30 years, if you can't find a job the response is always the same: it's your fault you can't find a job, you made the wrong decisions, and you deserve whatever misfortune befalls you while you're unemployed. And don't forget that once you are unemployed, no matter how competent you were at your job(s), now you're an incompetent, bumbling, worthless fool. Welcome to the American way of discarding people.
26
Thanks. Your letter is much better than Krugman's article, and should be published on the front page.
hen3ry:
Okay, but Krugman misses the fact that people have become even more discardable in the last 40 years in the USA.
The idea of an adult, which a college education, working two next to minimum wage jobs in 1977 would have been outlier.
Right, Krugman is clueless, and has no idea how much say the grounds people at Princeton (where he worked for decades) lived on. And Princeton University is better than Walmart for that kind of labor.
1
Good news on the Sam Brownback voodoo economics experiment. Voters in Kansas cleaned house of a lot of the Tea Party in the 2016 elections - mostly in their state legislature, but also dumping Tim Huelskamp from the US House. (He's now running an anti-regulation pressure group).
How much better are things in Kansas without Tea Party controlling the legislature? Even the Topeka Capital Journal - far from a liberal rag - is warning voters not to return to Brownback's deluded approach:
"Editorial: Kansans should be wary of return to backward tax philosophy"
"The tax experiment came at a significant cost. The absence of income earners paying their fair share led to cuts at our state’s universities. We saw the hollowing out of state government services. Highway maintenance was reduced from 1,200 miles annually to 200 miles.
Because of the infusion of tax dollars from those who got a five-year break from paying taxes to the state, Kansas is slowly recovering. This year’s budget included additional resources for schools, including community colleges and universities. The Department of Children and Families received more money to help address the staffing challenges it has been under that resulted in devastating outcomes for some of the families they serve.
The Legislature did the right thing when it voted to end the Brownback experiment."
http://www.cjonline.com/opinion/20180704/editorial-kansans-should-be-war...
19
New Jersey has the highest property taxes in the nation, and they keep going up. I also got a huge pay cut (more than a month's pay) years ago, and my salary has never gone back up to where it was. All this money bled out of us, and the state is still bankrupt and crumbling. Kansas is bad, but NJ is worse. There must be a better solution. There are all different kinds of tax fraud and we keep paying and paying to bail out all the different varieties of tax idiocy, because the rich won't pay their share.
2
Why not ??? And what are the unfilled or underpaid JOBS : For childcare and Home Care for Seniors and/or those with Disabilities. A much better place to spend money than Tax Cuts for Millionaires. Greatly useful to our entire Society, not just the top Ten Percent. Just saying.
18
NAFTA or not - in which world was $ 50 /hour a sustainable wage for a steel worker ? free trade or not ,after investing in a steel furnace any country could make steel . It was not a secret process. Just apply the same logic to any old style low skill , high investment industry . Closing borders would have slowed the process, not stopped it. there was no way to keep the wages in those industries way above the world average. The failure has been to distribute the gains of free trade, something Clinton tried but was ultimately cut off by the congress
3
rw:
Which steel workers are being paid $50 per hour in wages?
5
In what world is it sustainable to pay a CEO $100 million or a Football coach $45 million?
Do you know what the average steel worker goes through in a day? Do you understand the hazards of the job? Then if you are a free marketeer, how much would it take to get you to work in a steel mill?
2
@rw Charleston: 100k for a 50 weeks US dollars is not a living wage? Where?
As technology advances and more and more labor is performed by machines, there is a real issue of how you prevent massive income and wealth inequality. At some point, I think we will have to consider some sort of guaranteed basic income program. That might take lots of different shapes and forms, but I think it will have to be considered.
22
The male of very ancient times saw the value of reproducing lots of male children to be workers so that male employers could acquire lots of wealth, and, later on when money was invented, unnecessary and obscene amounts of money as well as wealth. These males went as far as to ban all forms of sex except heterosexual, banning the other forms so that the sexual reproduction of workers and child bearers would increase the powerful and greedy males' wealth, including monies.
To this day, males, [and females who buy into this greed-determined system], continue to amass unnecessary and obscene amounts, and they continue to underpay their employees. Furthermore, to get their employees to work for them for substandard incomes, the employers pit their employees against persons whom are identified as immigrants, doing this by threatening to hire the immigrants for lower wages if the employees do not continue to work for substandard salaries. And, the employers, in any case, hire non-nationals thus increasing their own unnecessary and obscene amount of wealth and money.
Solution: Stimulate the economy by using the obscene and unnecessary amounts owners get, [over and above what they realistically and reasonably acquire, using the extra monies for the purpose of eliminating poverty and sub-standard wages.
Employment guarantee is very Stalinist ida:
you are one step away into forced labor. So we will have to hire people to cover the holes the other half was hired to dig. Second, you no longer have the right to choose what you want to do nor the right to negotiate your compensation. You just end up killing all initiative, motivation and will see a massive drop in productivity. It is simpler, cheaper and less damaging to the economy to make a monetary handouts or just make steeper tax refunds to lower income earners.
5
Yes, you should choose your Job - no forced labor. But, if there was a Maximum Wage the economy could work. Make millions, pay more tax. Unfair? No - and it worked - until recently...
3
The GOP in many states are mandating work in order to get needed food, medical care, and shelter. This is forced labor. So just who is the Stalinist?
Forced labor? What do you call putting workers on notice that they had better take whatever crappy job is on offer or suffer the indignities of poverty, even homelessness and starvation?
Cutting social safety nets is the whip in the hand of our plutocratic masters...and one of the primary missions of the modern Republican Party.
Let's not forget incarceration, either. The U.S. jails people at five times the world's per-capita average, seven times more than Canada. Even though they have identical demographics, U.S. and Canadian crime rates differ only insignificantly. So our draconian "justice" system is not for crime prevention. It's to provide that "labor discipline."
The idea that we don't already have "forced labor" is absurd.
Meanwhile, that "massive drop in productivity" didn't occur with the New Deal programs. They produced quite a lot (see https://livingnewdeal.org/).
A Job Guarantee provides its clients with self respect and the economy with actual productivity, even in areas that are not profitable (infrastructure, child care, etc.) but that contribute to the overall economy.
Basic Income Guarantees, or tax rebates do none of that.
Besides, we've acknowledged its worthwhile to prop up commodity prices (soybeans, cheese) by purchasing the surplus. Why not purchase surplus labor? Even Krugman's suggested figures say it will be cheaper than yet another weapon system.
I don't know if there's any best way to provide guaranteed income to low wage earners. There are so many problems created by families where mom works, dad works two jobs, no one is home to supervise the kids. This is not a good situation. I've thought that supplemental benefits to cover the basics as a possible program that we could implement and measure. What do I mean by basics? Childcare should be at the forefront. A family must know that their young children are being cared for in decent learning environment while mom and dad are at work. Dental care and healthcare should be covered by government. Everyone benefits from a healthy workforce. Workers wages should go to cover their food and lodging. If they can't earn enough to cover these expenses, supplementary payments should be arranged. The US doesn't provide an adequate safety net. This must change. BTW, I veiw myself as politically conservative. I'd rather see tax revenues spent on our citizens than constantly wasting good money after bad on Mideast military actions. Certainly, some of this money could be channeled towards the health, education and welfare of our citizens. I'd also like to see our high school programs extended to cover two year college degrees. Do away with summer vacations and most likely the longer school year could cover a substantial amount of the additional two years of education.
12
It's heart-warming to hear Krugman actually support a progressive idea. He spent the whole last election cycle denigrating Sanders' progressive proposals, even though the proposals never went beyond traditional Democratic Party New Deal policies.
Krugman stated time and time again that he supported single payer but he apparently felt that Sanders and other politicians shouldn't even mention it because it would be hard or impossible to enact. Now he has good words to say about government-guaranteed work even though a Democratic super-majority controlled congress would never even pass it.
Is this a sign that Krugman will declare a cease-fire in his war of words against progressive policies?
Maybe Krugman will even recant his support for sweatshop labor and (gasp!) begin to acknowledge that globalization is just part of the class war of the wealthy against working people?
Who knows, maybe he will start to tell the truth about the economy, that independent economists have been claiming for years: the so-called "recovery" is only working out for the top 20% - that 80% of Americans are living more or less precarious existences that will never permit them to take part in the American dream?
https://politicsmaven.io/theintellectualist/news/study-by-mit-economist-...
18
It seems like nobody outside the top 10% has any money except the money they need to pay off current loans. If there is a private sector solution beyond minimum wage, what would it be? The only way us rich folks will spread the wealth (and we do have huge amounts of wealth) is by paying higher taxes. I suppose private contractors could get the loot to create infrastructure enhancement jobs and solar panel installation jobs. Maybe then the lobbying for their positive project funding would perpetuate their programs, like the lobbying for prison funding and the military does now. I see no hope, so I trudge along registering youngsters to vote.
5
It may be that much of the extremism of the republican party is driven by inequality. We may be able to resurrect America by getting more money into middle class and working poor communities. We need economists like PK to evaluate job guarantees. If it is not reasonable or possible, then what is the next best thing?
4
If this column counts as "wonkish" then we're in a lot of trouble.
10
In 2014 our Foreign Minister and chief Nafta negotiator Chrystia Freeland published Plutocrats: The Rise of the New Global Super Rich and the Fall Everyone Else. Here she is in 2015 interviewing Lawrence Summers after she is elected to parliament.
Freeland is an economic journalist who spent much of her career in Russia. There is nothing to indicate that the GOP political, social and economic philosophy is anything different from that of the Russian oligarchy. Nobody is playing Donald Trump his hymnal is the same as that of Putin. Russia and the GOP are as one and from here in Canada our job one is how we ameliorate the pain of separation from an economy ten times our size.
https://www.youtube.com/watch?v=TRuEBoN5xQ4
1
Albert Yang, 2020 POTUS candidate, is running w/Univ. Basic Income (UBI) as his primary plank. See book "Waging war against ordinary people". Unmentioned here, but a prime mover is the impact of AI-driven job destruction. Its significant and represents a technological shift > industrial revolution.
Great to hear from Dr. Krugman that "OCL" isn't crazy or foolish. What about him?
This is the man who in 1993 wrote, "it is as hopeless to try to argue with many of NAFTA's opponents as it would have been to try to convince William Jennings Bryan's followers that free silver was not the answer to farmers' problems" -- as if only idiots could object to, say, gutting the salaries of most American working people in the interests of an investors' rights agreement which freed capital but didn't actually do much for trade. And which was an absolute disaster for labor, both here and in Mexico....
And which, eventually, brought us Trump.... Was no one thinking in 1993 of the social consequences of decimating the American working classes? Not Dr. K, in any event.
6
Krugman is a pro-business liberal - liberal on social issues but centrist on economic issues, just like the Democratic Party. International trade is his area of expertise, so he certainly knew the effect the various trade pacts would have on the middle class.
He didn't care then, and I doubt that he really cares now.
1
Slightly tangential: US "democratic socialists" in general are no socialists and they shouldn't call themselves such. Paul in his post-revolutionary stint in Portugal must have come across a lot of socialists in all their different shades "of grey". What united them all iscentral idea of "socializing" the means of production, i.e. end the private property of businesses. At "best", cooperative ownership by all workers in a factory would be envisioned. The democratic socialists were the ones that would aim to bring this about by electoral means, others indulged in rationalizing all sorts of coercive means.
What AOC and others are pursuing in the US is mitigating the social effects of a capitalist economy, or as at the time people would have said with unwarranted disdain: creating a social "repairshop" for capitalism. That even this model of social democracy has been and continues to be under assault by the proponents of unfettered capitalism is bad enough. One of the tools to discredit social democrats is to confound their "very reasonable" policies with the - let's face it ─ failure of socialist economic models. (Too many social democrats caved.) US social democrats should therefore not allow themselves to be identified with the failure of the model of a socialist economy.
It is no highfalutin hairsplitting to underline the fundamental difference between the models of a socialist economy and of a state of social welfare with an underlying capitalist economy.
3
What we need is a decrease in the minimum wage, say to $2/hr, and an earned income tax credit of say $10/hr, paid weekly. One of the most serious threats to society will be the lack of jobs as artificial intelligence and robotics take off. We need policies to maximize employment.
2
Or minimum income for all.
On many issues, the differences between moderate and progressive Democrats appear minimal. When I took the "I Side With" online quiz, I was in agreement with Bernie Sanders and Jill Stein on about 95% of issues, but surprisingly to me also with Clinton on about 90%. This quiz is about broad positions on issues not policy details, but it still suggests there are not huge differences between the middle and the left in terms of what they purport. I think the real difference for many voters comes down to trust. The establishment moderates like Clinton have been hobnobbing with the elite for so long, it is difficult to believe they won't cave on issues when politics get tough. Maybe progressives will end up caving too, but it seems a better bet they won't be as easily bought off by bribery (umm, I mean campaign donations from the extreme wealthy). Only way to find out is to elect them. We already know what moderates do.
1
Only Socialist societies have ever given workers the right to employment.
From the capitalist point of view, that millions are unable to find work is highly desirable. The "reserve army of labor" (as Marx described it) serves to keep wages down, hours long and workers too terrified of being fired to organize Unions--all great for corporate profits, high CEO salaries & stock dividends.
The point of the capitalist system is to make profits for the owners, not to improve the lives of the workers, despite well meaning liberals like Mr. Krugman. This is a contradiction only Socialism can overcome.
34
Democracy is more powerful than Capitalism if we don't allow the capitalists to corrupt our democracy with their ever growing wealth.
Krugman strangely does not mention the effect on international trade. Some private businesses would be able to raise wages - if they don't face international competition. It would seem that a first-order effect would be to increase job outsourcing, and the government would have to pick up those who lose the jobs. The effect would presumably be even greater than that from a simple minimum-wage increase. Like many other US economists, Krugman still has not faced up to the fact that wages are nowhere near equilibrium internationally. If American workers' wages are not to be dragged down there has to be some intervention in "free markets" on their behalf - or at least things can't be run always for the maximization of profits.
2
That 's what the exchange rate is for. Ceteris paribus, the dollar would depreciate to reset the competitiveness of US wages. Over time output should rise because of the rise in participation, and the share of national income going to labor will also rise. Aggregate trade values should be about the same.
1
A data series on Living Wage Unemployment Rates (LWURs) would be useful. If we add together the roughly 4% official unemployment rate to Baker's 25 % or your 33% of workers paid less than $15 the estimated LWUR is around 29-37%.
This is very rough, of course. A credible source should work out the definitions and run the numbers, both historical and in cross-section. It would be interesting to see where we are now compared to past years and to other countries.
I would not be surprised to find we are not doing too well relatively with Living Wage Unemployment, but I would like to see the numbers.
1
"The public will still want those services even if the government guarantees alternative employment, so the firms providing those services won’t go away; they’ll just have to raise wages enough to hold on to their employees, who would now have an alternative."
See, here is where I think Krugman goes off the tracks. After this, he forgets completely about what the people who went and got public jobs are doing, what they are producing. Like conservatives, he seems to think half of them will be digging ditches and the other half filling them in.
No, they will be producing goods and services or doing stuff like research that facilitates production. This implies two things:
1. The wages paid them by the government will stimulate the production of still more goods and services.
2. The production of more stuff will soak up the new money so that prices will not rise too much.
So to answer the question where does the money come from to pay these people, why the federal government (thru the FED) can simply create it, and there will NOT be excessive inflation.
The fact is that the economy works best when more people are working, producing, and spending. It is a win - win - win situation, but it takes more money to get there. Fortunately we will run out of money only when the NFL runs out of points.
23
Politically a jobs guarantee is better than guaranteed minimum income (which is the other leftish proposal for reducing income disparity and addressing automation) because we would be paying people to work. The country needs a lot more child care workers and people to help the old and disabled. How about a "robot tax" to help fund these public jobs.
7
$15-hours have led to major job losses in Seattle. Job guarantees have been the main reason for laggard economies in Europe. Macron is trying to curtail them, with massive resistance from the unions. This is simply bad economy.
3
"$15-hours have led to major job losses in Seattle."
That is an old, tired mantra of conservatives and it has to stop being said. It may have been true for about the first year the minimum wage was raised in Seattle. But since then things have changed and the Seattle job market is booming. I've been there recently and have seen it. You should see it too.
35
The study showing the "job losses in Seattle" has been questioned and even at least one author is recognizing that the evidence is weak at best.
15
Substantiate your clime of "massive job losses in Seattle" with some credible data.
8
The first paragraph bugs me. PK furthers the myth that Democratic Socialist are way out of the main stream. It seems to me that if you look at polling their ideas have majority support. The people who control the media just won't admit it. Let's not dismiss the Democratic Socialist out of hand.
48
Why does it bug you that Dr. Krugman says Ocasio-Ortiz's ideas are reasonable? How does that further "the myth" about Democratic Socialists? I just don't understand your comment, although I get it that you like the candidate.
More importantly why use the labels socialist or liberal let's try the label humanitarians. For Republicans we can use anti socialist or anti humanitarian. Perhaps even pro oligarch.
It bugs me because I hear him saying that her ideas are reasonable in spite of her being a Democratic Socialist. It seems to imply that one would expect Democratic Socialist ideas to be unreasonable.
If I remember correctly, FDR proposed such a program but chances of anything like that in Trumpland & Republicans is a fantasy. Minimum wage should be increased and be automatically adjusted for inflation. Of course, this only one issue of a spectrum of social/economic concerns that are not being addressed as the U.S. becomes increasingly an "outlier" compared to other advanced nations.
11
don't boo, vote. Obama said it best.
I made the move to public sector employment after many years in the private sector. I wish I had done it earlier--not because it is so high-paying (it isn't) but because of the respect the employer gives to its employees. We are involved in decisions that affect us. Things are communicated before they are enacted. Sometimes policies even get changed based on our input. Yes it take a little longer to get rid of a low performing employee, but when they do get fired, you know that they have had a chance to improve their performance and that they haven't been fired just because somebody else will work more cheaply.
This used to be how private employers ran their businesses, but not anymore. The corporate $$ mentality treats labor like a cost--the public sector mentality thinks of labor as an asset.
96
This is the same experience I’ve had in moving from private to public sector employment. The big difference is the pay. I make about 1/3 of what I did in the private sector. And the benefits are worse.
2
This whole new philosophy about employees started under the Reagan administration. The philosophy back in the day was: treat your employees well and they will treat your company well. Then the philosophy changed to they are only a bottom line cost, and began treating employees like garbage. Throw them away after they have been used. Now the employees are being blamed because they don's show loyalty to their employer. Why should they? Of course not all employers do this, but its rampant. Its really sad because now, people never know when the next shoe will drop. Welcome to America.
5
I know exactly what you are talking about. What I can tell you is that the employer attitude is different in the Nordic world where there is no such thing as "employment at will" and unions are strong and ubiquitous. But getting from here to there would first require somehow restoring the US voting class's faith in government as a high functioning enterprise.
2
Isn't there a compromise on a guaranteed job that might work better than an absolute guarantee? For example, a state could be subsidized by the federal government, much like medicaid, if it offered a certain number of jobs based on the prime age unemployment rate at some level based on median income for the state. Thus we could set a target unemployment rate for the prime age and we could do so at a living wage in the region. A guaranteed job has some problems like what do you do to someone who's not doing what they are paid for. But making sure there are a reasonable number of jobs -- particularly in a recession -- that anyone could get if they tried hard enough is a fine goal and quite achievable.
2
"Second, there are quite a few working-age adults who aren’t in the labor force at all, and at least some of them aren’t working because they see no job opportunities at all."
A good number of us aren't being hired because of our age and experience. We're looking for jobs. We might even be getting interviews. Those interviews usually go well and then we're subjected to the deafening silence of rejection. Why? Not because we don't have the skills or ability but because of our age. We cost too much. It's more than frustrating to be rejected over and over when we know we have the skills, can learn, want to work, are competent, etc. And to hear companies whine that they cannot find skilled Americans is adding salt to the wound.
We can't draw full social security until we're in our late 60s. But we can't find jobs once we're unemployed in our 50s. It makes no sense for us to go back to school and incur or increase those debts, not when we cannot reverse our ages. At an age when we should be earning the most we're tossed aside, told we're useless, and forced to draw down our cash reserves, if we have any.
Apparently Americans with the best jobs prefer to see other Americans with bad or no jobs. There is nothing done to help us. We're told it's our fault as if we're supposed to apologize for aging. Business hiring practices are creating the next crisis: people born after 1955 unable to afford anything but street life.
158
to go further, it's not that we 'cost too much', but that we 'MIGHT cost too much so we won't bother to talk to this one'. It's the pathetic dark side to our twisted perversion of American capitalism. There's a ton of talent out there that is non or underutilized solely due to a perception rather than the reality. keep your chin up, hen3ry. it is not easy.
1
Paul Krugman is very adept at throwing wonkish cold water over policies for the greater good. In the world of the neoliberal technocrat, math must always trump morality.
So, if people with disposable incomes are to continue enjoying the privilege of buying stuff on Amazon, those low-paid Amazon workers will have to continue scraping by. It sure beats having no job at all! And just think, if there were guaranteed jobs paying a living wage, those Amazon jobs would go up in smoke and the wage slaves might end up living in their cars.
Oh, wait. Many of them already do live in their cars. According to a new report, even workers in those "lagging, poorer regions" that Krugman writes about cannot afford to rent even a modest 1-bedroom apartment. As a matter of fact, rent is affordable in only 22 of the 3,000 US counties studied.
This crisis goes so far beyond minimum wages and jobs - which are mostly just "gigs." When Jeff Bezos, the richest billionaire in the world, can get away with paying his online crowd-sourced "Mechanical Turks" workforce only one penny per task, we might as well just admit that slavery is coming back, and with a vengeance.
And meanwhile Krugman pats Alexandria Ocasio-Cortez on the head, deigning to call her ideas "reasonable" while snidely suggesting that her very name be abbreviated because it is just so exhausting to type out. Almost as exhausting as pretending to jump on the socialist bandwagon while denying that it's even socialist .
58
Here's a link to the aforementioned report by the National Low Income Housing Coalition:
http://nlihc.org/press/releases/10895
5
Karen - "the Socialist bandwagon"? Socialism is based on everyone being able to make a living. I don't believe in 99% of the citizens suffering for the benefit of 1% of the citizens. I'd rather have everyone be able to get by - technically, that makes me a socialist, but in a good way.
7
I don't mind the abbreviations; I've used them for AOC, HRC, JFK, MLK, and MMV. (Not for "covfefe", anymore; he's repeatedly waived and forfeited even that measure of respect.)
I do VERY much mind that Krugman regards her run as merely an advisory advocacy run that (like Bernie's) she's supposed to lose and the establishment Democrats are supposed to learn from[1], instead of one that she should win and that I hope she very much does so she can implement the jobs guarantee.
Voting is about picking the right people for the job. AOC is among them.
[1] And then promptly forget and make up folk tales like "all those misogynist Bernie bros" or "all those people who insisted on Bernie or 'covfefe'" about.
A famous 19th century political economist observed - history repeats itself; first as tragedy and again as farce.
The Full Employment Act of 1946 stated (in part) "Congress hereby declares that it is the continuing policy and responsibility of the Federal Government to use all practicable means...with the assistance and cooperation of industry, agriculture, labor, and State and local governments,... conditions under which there will be afforded useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maximum employment, production, and purchasing power." We can see how that has worked out over the intervening seven decades.
Democratic socialists like AOC are advocating the same thing thing only now adding a job guarantee. (It should be noted that the draft of the 1946 act said everyone had a "right" to a job but that didn't make it into the final text.) It remains to be seen how that works out.
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Well the fact is we had something like full employment from the late forties to the late fifties. I take it that Trump is essentially promising to bring that back.
Just a couple of problems: he has no idea how to do so & our position in the global economy has changed so much that we probably can't get there the same way we did back then.
Can we get there at all? I don't know but if we could have honest conversations about it we might have a chance. Unfortunately the right-wing Republicans have so poisoned our discourse that honest political conversations are going the way of the passenger pigeon.
3
Of course, the famous economist was Karl Marx.
3
You win the prize! OK, in what context did he say it?
There's plenty of work for people to do. In my state, and every state, we have a huge backlog of road maintenance if nothing else. If done right the investment in a job guarantee is returned in the work that the people who get those jobs do. They get gainful employment. We get improved roads and safer bridges. Taking some work back from contractors we'll probably save money in the long run.
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It isn't even necessary to "take back the work from private contractors", just fund infrastructure through federal tax revenue, something that the Republicans have prevented for more than 10 years. With the tax discount to corporations and the wealthy doled out last fall, they made other choices.
A job guarantee chills the blood
Of Koch brothers et al, a clear dud,
And minimum wage
Made Trump turn the page
And every right wing fuddy dud.
We need a working class renewal
With min wages as a real fuel
A pro-union surge
Quashing the right wing urge
And a job guarantee as a rule.
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When I was an elementary school child, there was radio program, "Cavalcade of Progress", the sponsored by DuPont, with then then slogan, "Better things for living through Chemistry". One of the most memorable episodes was on the promise of factory automation and some of the glorious promises that it would bring, such as a drastically shortened workweek. What a boon it would be to the travel, leisure, education and hobby sectors of the economy! Unfortunately, what we have is far fewer good paying jobs with those remaining employed working far longer hours without overtime pay!
So, a good start towards job guarantee would be shortened workweek with living wages! A boost to the above listed sectors of the ecomomy would more than offset any increased costs, and a vastly improved social fabric that good work provides!
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Good point. Just asking companies to pay overtime for all employees and dialing back the working cultures that ask people to put in more than 40 hours at the office would help. If four employees are putting in 50 hours, that means the business probably needs to have five people working 40 instead.
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And pilots make only $40K, as do EMTs, and teachers. How is a family supposed to make do on that money? Everyone I know is carrying the work load of at least two employees, and it takes two people doing that to keep households above water. We need a real Right to Life movement--for WORKERS!
5
One of the negatives put forward before on the concept of the five people angle was the cost of each employee. But those cost would go away with full employment guaranteed. especially when you also bring single payer into the plan. There are so many benefits that come to fruition when you have a stable work environment for all.
The Great Recession changed a lot about the employment landscape, not only where the basis for employment is concerned, but wages, and the demand for new graduates in their fields. In the next 20-30 years, we will have gone through more changes as automation becomes even more pervasive. Who knows what long-term catastrophies the Trump un-reforms will cause, between rolling back worker rules and making colleges white and private again. Then, there are those who were in their late thirties and fourties when the Great Recession hit. They likely won't have a safety net in their golden years. As it is, people in their seventies are still working out of necessity, with housing costs being the main reason.
There will be a need both for guaranteed income and some sort of worker program. Capitalism must change. We're in a hypercapitalist phase now, in this age of the Ferengi. It may not last, but many won't survive after the recession.
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https://www.rimaregas.com/2017/01/02/new-year-ruminations-lucky-among-95...
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FDR said this during WWII: Roosevelt insisted that people in all nations of the world shared Americans’ entitlement to four freedoms: the freedom of speech and expression, the freedom to worship God in his own way, freedom from want and freedom from fear. How far we are from that now.
We're afraid that the future will be worse than the present. We're listening to free speech that is hate-filled, an incitement to violence, and that frightens us into silence.
We want to be able to support ourselves and our families. We want to feed ourselves and our families. We don't want to see our children and grandchildren and neighborhood children going hungry. We want to be able to get medical care when we need it, not when we can afford it. And for those of us who are in our 50s and 60s, we want to be able to stop working so others can move in and work.
A funny thing happened on the way to the 21st century. Those of us born after 1955 were considered excess baggage by society. We came of age in the late 70s and early 80s onward. We weren't offered decent pay, decent benefits, or decent jobs. We never caught up to the Americans born earlier. We were not able to save for anything because of repeated bouts of unemployment, downsizing, etc.
In America we do not value people. We value money, cheating, and lying. We do not value intelligence. We value glibness. We value popularity over substance. We're paying for that now.
44
The GOP vision is that the working class must struggle from cradle to grave if they are to survive the hypercapitalism phase now imposed by the money class. The survivors will be permitted to live under feudalism as this is the end game of hypercapitalism.
12
One more comment on your comment Rima Regas: it's not hypercapitalism we're going through. It's cutthroat capitalism with the emphasis on cutthroat. What do you call it when businesses downsize for no reason, when people are fired for no reason, and when salaries for the average worker are kept too low to do more than survive? It's a scheme meant to demoralize 99% of us and it's succeeding quite well. If we have to hold down multiple jobs to survive or be on call 24/7 no matter what or be fired, it's a cutthroat sort of world.
And our health care system is not about health care. It's about wealth care. I could go on but I'll restrain myself.
We're back to the days of the robber barons. I do hope that the people who have voted for this enjoy the irony of losing everything that they thought they were protecting. Why? Because the world we live in is far more interdependent than Americans want to admit. We're not the center of the planet. If things continue the way they are we'll be the last place on the planet anyone wants to live in or come to.
4
So essentially the outcome of a jobs guarantee would likely be the automation of the lowest-paying jobs, using the surplus to fund higher-paying public sector jobs for the displaced workforce, followed by the fiscal stimulus of several million people going from unemployment to a living wage? Sounds terrible.
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Ah but we'd have to tap that "surplus" with....taxes. Are the Dems ready to call for tax increases? They should be on a policy level for sure but the polotics may make them hesitate.
So, Eric, are you ready to support higher taxes? Please don't say we can get all the money we need from
the Koch brothers & their ilk. We should raise their taxes through the roof for sure but any of us with decent incomes should be willing to pay more to actually make this country great.
There would be more employment at higher paying jobs, hence more tax revenue.
You're under the mistaken impression that the Federal Government is provisioned by the taxes it collects. Where do taxpayers get the dollars they use to pay those taxes if government doesn't spend them out into the economy first?
It's really "spend, then tax," not "tax & spend."
BTW, this is extremely obvious. The Federal government makes the money, and can make as much as it wants. Witness the $16-$29 trillion in credit the Fed extended to the fraudsters on Wall St. in 2007-8 (and where's the inflation?).
Taxes are necessary because they make the money valuable (it's not backed by gold since Nixon closed the "gold window" in 1971). Fiat dollars provide relief from an inevitable liability -- taxes. That's why they exist. And "borrowed" money reduces the money supply / demand, so it's a means to control inflation.
Sovereign fiat money creators (dollar, pound, yen, but *not* euro) do not need the revenue or the borrowing to provision themselves.
BTW, the above is straight out of Minsky and his Modern Money Theory followers, just as the Job Guarantee is.