Full Employment and Political Opportunism

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With countless sights already set on November of 2020 as an opportunity to restore convention to West Wing operations, the race for the Democratic Presidential nomination is well underway as candidates vie for publicity and early money. Having been swept away by the spirit of competition, hopefuls have already started to angle their stances toward aggressive, far-left policies in an effort to avoid being labeled as a DINO or, God forbid, a moderate. Most notable among these trending policy discussions that can capture the nation’s imagination has been an ambitious labor plan meant to tackle unemployment once and for all.

On April 23rd, Senator Bernie Sanders (I-VT) announced his intent to introduce a bill guaranteeing every American a taxpayer-financed job. Although he has yet to explain where he would find the money to support such an undertaking, supporters of the idea envisage armies of laborers, skilled and unskilled, erecting infrastructure, caring for children and cleaning up the environment. Senator Corey Booker's team (D-NJ) has already drafted up legislation, The Federal Jobs Guarantee Development Act, which would serve as a pilot by testing the policy over three years in 15 localities with high joblessness. In addition to providing work, the plan would also offer greater parental leave, health insurance and a wage that would gradually rise to $15 per hour. Not to be left out, fellow Oval Office aspirants Kamala Harris (D-CA), Elizabeth Warren (D-MA) and Kirsten Gillibrand (D-NY) have all signed on as cosponsors.

Full employment, the condition in which all who are willing and able to work are employed, has long been the holy grail of Democrats dating back to FDR's 1944 State of the Union address when he proposed a "Second Bill of Rights" which would guarantee the right to work even as the nation reached full employment for the first time during World War II. Two years later, Congress passed the largely toothless "Unemployment Act of 1946" that declared it the responsibility of the Federal Government to ensure the availability of jobs for everyone who is willing to work. Twice since then, Congress has considered bills that would have guaranteed a job at a decent wage for every adult who wanted work. Fear of another depression prompted the first debate, in the mid-1940s, and a steep recession in the mid-1970s contributed to the second. Both bills, as enacted, failed to achieve their goal and were ultimately fought by the government as inflation rose during the Carter Administration’s tenure. Those who have tried to legislate full employment generally haven’t seen it as a market phenomenon - the product of a robust economy - but as a civil right on par with voting. Said Nobel Laureate and Harvard Law professor Amartya Sen: “Having a job confers not only income, but social recognition and self-respect, which comes with having the sense of being wanted by society.” Albeit true, it is imperative that Americans do not allow emotion to cloud their judgement at the ballot box and fall further into debt. The Center on Budget and Policy Priorities, a left-leaning think tank, released a conservative calculation of the bill’s cost at $543bn, or a staggering 2.7% of GDP. Even if it were to cause welfare spending to fall, the bill still amounts to 1 ½ times what was spent on Medicare in 2017, increasing the speed at which the country marches toward a sovereign default.

With just 3.9% unemployment in April, the country's lowest since 2000, the timing of the proposals is suspect and smacks of political opportunism. Many economists believe that the economy is already at full-employment while the Federal Reserve feels that the unemployment rate is unnaturally low and attempting to sustain it with further stimulus would result in inflation. It's also important to understand that much of today's joblessness is due to structural factors like insufficient skills, unrealistic wage demands and, most importantly, workers' unwillingness to leave stagnant areas. In the simplest terms, it's not involuntary unemployment as a product of a weak economy.

On the contrary, one of the most persuasive cases made in favor of the policy is that government employment provides a massive safety net for workers and an automatic stimulus in the event of a recession. It would also raise the bargaining power of unskilled laborers who would have greater leverage when dealing with their existing employers. However, proponents overlook the fact that guaranteed employment would subtly kill much of the incentive one needs to pursue a higher education, vocational training or professional development in general. A relevant example is found in existing government bureaucracies where it is notoriously difficult to fire underperformers or maintain ambition due to lethargic career advancement. As a result, these behemoths have become bastions of inefficiency and complacency, both of which run counter to the “rugged individualism” and working pride that initially made up the core of the American spirit. Implementation of the bill would also result in inflation in the food, hospitality and retail industries - all of whom depend upon unskilled labor to protect slim profit margins. While high-end restaurants and boutiques in cities like New York and Las Vegas may be able to weather the storm by passing off the costs to free-spending clientele who may not balk at higher prices, local mom-and-pop businesses and already beleaguered brick and mortar retailers will certainly not be so fortunate.

All said, the labor plan appears to be motivated more so by political aspirations with a touch of idealism rather than genuine interest in the long-term betterment of the country. Although it goes without saying that each of the front-runners has demonstrated extraordinary passion for job security - the question now is whether they want it for the average American or for themselves.