From The Washington Post:
By Jeff Stein | April 23, 2018 | 1:27 PM EDT
Sen. Bernie Sanders (I-Vt.) will unveil a plan for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker¹ “who wants or needs one,” embracing the kind of large-scale government works project that Democrats have shied away from in recent decades.
Sanders’s jobs guarantee would fund hundreds of projects throughout the United States aimed at addressing priorities such as infrastructure, caregiving, the environment, education and other goals. Under the job guarantee, every American would be entitled to a job under one of these projects or receive job training to be able to do so, according to an early draft of the proposal.
Sanders joins two other rumored 2020 Democratic presidential contenders who have expressed support for the idea of a jobs guarantee. The push reflects a leftward move in the party’s economic policy, away from President Barack Obama’s use of public-private partnerships or government incentives to reshape private markets and toward an unambiguous embrace of direct government intervention.
Job guarantee advocates say their plan would drive up wages by dramatically increasing competition for workers, ensuring corporations have to offer more generous salaries and benefits if they want to keep their employees from working for the government. Supporters say it would also reduce racial inequality, since black workers face unemployment at about twice the rates of white workers, as well as gender inequality, since many iterations of the plan call for the expansion of federal child-care work.
“The goal is to eliminate working poverty and involuntary unemployment altogether,” said Darrick Hamilton, an economist at the New School who has advocated for a jobs guarantee program along with Stony Brook University’s Stephanie Kelton and a group of left-leaning economists at the Levy Economics Institute at Bard College. “This is an opportunity for something transformative, beyond the tinkering we’ve been doing for the last 40 years, where all the productivity gains have gone to the elite of society.”
The maximum allowable Social Security benefit is currently $2,687, at age 66; the maximum allowable benefit amount is only payable to those who had the maximum taxable earnings for at least 35 working years. That’s $32,244 per year. $15.00 per hour for 2080 hours per year² is $31,200 per year. In other words, the esteemed Senator Sanders wants to bring the top Social Security pension — most are significantly lower — down to close to the earnings of a minimum wage worker.
About the only positive thing I can see in this ‘plan’ — it hasn’t been released yet — is that it (supposedly) will require the recipients to actually work for a living. That places it above the ‘guaranteed annual income’ ideas which have been floated.
Under the early draft of Sanders’s job guarantee, local, state, and American Indian tribe governments in every section of the country would send proposals for public works projects for their areas to 12 regional offices that encompass the country. These 12 regional offices would act as a clearinghouse for these projects, tasked with sending recommended projects to a new national office within the Labor Department office for final approval.
This sounds a lot like the Depression-era WPA-CCC programs . . . except that we aren’t in a depression. Senator Sanders’ proposal foresees hiring millions of Americans, with that number increasing during recessions and — supposedly — decreasing during economic boom times. But that would mean skyrocketing private sector wages, to attract workers away from guaranteed government jobs, complete with “paid family and medical leave, and offer the same retirement, health, and sick and annual leave benefits as other federal employees.” This would push inflation to seriously high levels, eroding the current savings of Americans. And since pushing the minimum wage to $15.00 an hour — even if that wasn’t done officially, who would stay with a lower-paying job when there’s a guaranteed government one for $15.00 plus benefits? — does not guarantee that Americans now working for more than the minimum would see their wages go up proportionately, it will bring many more working Americans closer to minimum wage status.
Let’s do the math. A worker currently earning $20.00 an hour, is making 2.76 times the current minimum wage of $7.25. (20.00 ÷ 7.25 = 2.759) For that worker to continue to earn 2.76 times the minimum wage — meaning: maintain his current lifestyle — he would need to see his wages rise to $55.20 per hour.(20.00 ∙ 2.76 = 55.20) What company would do that? If such an economic regime were put in place, that company might, after inflation settles down, raise the $20.00/hour worker to $35.00, which would seem like a huge raise, but he would, in fact be closer to the minimum wage, only 2.33 times the minimum (35.00 ÷ 15.00 = 2.333). He would see, in effect, a 15% decrease in his real wages/lifestyle. (2.33 ÷ 2.76 = 0.845). Senator Sanders seems to want to address income inequality by making everybody poorer rather than richer!
I suppose that one advantage of all of that inflation would be the real value reduction of the national debt!
It will be interesting to see Senator Sanders’ full plan, to see just where he gets the money to do this. Given that even the Republicans no longer see deficit spending as any big deal, I suppose it’ll just be created out of thin air.
¹ – Who qualifies as an “American worker”? Would it just be American citizens? How about legal immigrants? Right now, the Democrats are heavily invested in illegal immigrants.
² – Forty hours per week, for 52 weeks per year.
Cross-posted on The First Street Journal.