OAC Archive: The Job Guarantee and Poverty

From the One American Committee supporters blog, “Argument and Analysis” OpenMic post,

2/16.2006, posted here for archival purposes

When I was studying Economics in grad school, I had a crusty old professor who would say, “War on Poverty? If they really wanted to fight a war on poverty, they’d give the poor money, declare victory, and move on.”

Now, solving the problems of poverty is more complicated than that, but according to the Centre of Full Employment and Equity, here in Newcastle, Australia, solving the problem of unemployment is just about that simple.

What is the Job Guarantee?  Quite simply, an American that wants a job and cannot find one goes to the public Job Guarantee Center, and they provide a job.  He or she works at the job, getting paid for every hour worked at a living wage.  That’s it.

The main problem that the “man on the street” will raise is, “how can the government afford it?”  But this is confusing a government budget with a household budget.  The real deficit problem is the TRADE deficit.  You fight against the trade deficit by making American workers more productive.  And people that keep on working are more productive than people who are unemployed for long periods.

The main problem that traditional Economic theorists will raise is, “this is inflationary”.  But it isn’t.  Wage inflation occurs when labor markets are tight and companies are bidding for workers.  If a JG employee gets a better offer elsewhere, the Job Guarantee center congratulates them and wishes them well. No bidding war, so no inflation.

Imagine what difference it would have made in New Orleans if people in poorer parts of the city knew that they could evacuate and then show up at the local JG Center and a job would be created.  Imagine what a difference it would have made to the places where people were evacuated if there was a pool of available JG workers to do all of the wide range of things that urgently needed doing.

Another area where the JG program can offer a tremendous benefit is in the environment.  There is a massive backlog out there of environmental protection and remediation work that needs to be done.  State governments and private environmental groups would bid for JG workers, with the project organisers covering the project costs and the JG program paying the worker’s wages.

I should put in the disclaimer that, while I do not work for CofFEE, I really like the work they do and I consider many of the people that work there to be friends.  If you are interested, you may read more at the Centre for Full Employment and Equity website, http://e1.newcastle.edu.au/coffee/