As the nation awaits President Obama’s jobs plan next month, a Duke University professor says the only real way out of the unemployment crisis is for the federal government to create a jobs program, much like the New Deal.
Professor William “Sandy” Darity, whose expertise is public policy, African American studies and economics, calls it the National Investment Employment Corps. The program would guarantee all U.S. citizens over the age of 18 a job at a minimal salary of $20,000, as well as $10,000 in benefits, including medical coverage and retirement savings.
The federally funded program would resemble the Civilian Conservation Corps (CCC) and the Works Projects Administration (WPA) initiatives of the New Deal established under President Franklin Roosevelt during the Great Depression.
The WPA, which focused on public works projects, employed about 8.5 million people from 1935 to 1943, and the CCC gave jobs to 2.5 million unskilled workers.
Unlike the temporary New Deal programs, however, Darity wants the new jobs corps to be a permanent program.
The corps would serve the needs of states and municipalities, which would establish a job bank of tasks spanning everything from preschool staffing, construction, repair of infrastructure, and sanitation work.
Darity puts the cost of the program at $750 billion. He points out that it is less than the first $787 billion stimulus package and considerably less than the bailout given to the investment banks.
“This initiative would be superior to the indirect incentive effects of stimulus measures because it would constitute a direct mechanism for job creation,” says Darity.
High initial cost of the initiative would be offset by savings from elimination or reduction of unemployment compensation, antipoverty funding, food stamps, and other programs, according to Darity.
He says the income paid to the employees of the jobs corps would also restore tax bases at the state and municipal level, as well as would help moderate the foreclosure crisis.
Kevin Hassett, director of economic policy studies at American Enterprise Institute, likes Darity’s idea and says direct hiring should be considered, particularly in areas with high unemployment.
“If the stimulus had been used all for direct hiring, instead of cash for clunkers, then it would have created about 10 times as many jobs,” Hassett told CNBC.
Ross Eisenbrey, vice president of the Economic Policy Institute, agrees that the government needs to be seen as a more important employer.
“Leaders of the private sector have no serious ideas about how to get to full employment,” says Eisenbrey. “Their ideas—free trade agreements that make it easier for global capital to shift from country to country seeking the cheapest wages and taxes, more tax cuts for the wealthy, and more use of guest workers—will make matters worse.”
Professor Darity first proposed the federal jobs guarantee program three years ago. But the momentum seems to be picking up only now, as others come out with similar proposals.
Jan Schakowsky, Democratic Congresswoman from Illinois, earlier this month introduced an Emergency Jobs bill, which is smaller in scale but similar to Darity’s program.
Schakowsky says her plan would create 2.2 million jobs and cost $227 billion over two years. The bill would give priority to the long-term unemployed, who have exhausted their unemployment benefits, as well as veterans.
Schakowsky says the bill would be fully paid for through separate legislation that “creates higher tax brackets for millionaires and billionaires, eliminates subsidies for Big Oil, and loopholes for corporations that ship American jobs overseas.”
Former Labor Secretary Robert Reich in his column recentlyalso called for re-creation of the WPA and the CCC.
Critics of federally funded programs argue that government cannot create real jobs. And recent debate over the U.S. debt ceiling demonstrated full well a lack of appetite in Washington, D.C., for more government spending.
EPI’s Eisenbrey says that, given current political landscape, the idea of a government-funded jobs program is not likely to find support on Capitol Hill.
“The Congress we have isn’t interested in full employment,” he says.
Currently, 14 million people are unemployed, according to the latest government data. The unemployment rate has been hovering around 9 percent for 28 consecutive months.