THE PROBLEM OF FULL EMPLOYMENT

...July 1975 Notes 1. American Economic Review, May 1969, P. 142...

...The concept of labor market dualism and its development by Doeringer and Piore represents a very useful and innovative approach to the employment problems of disadvantaged workers, as well as to the practices of employers in "primary" labor markets...

...THE HEART of the Hawkins bill lies in its provision for a Job Guarantee Office, charged with finding "useful and rewarding employment for any American, able and willing to work but not yet working [and] unable otherwise to obtain work...

...No job guarantee of public service employment is likely to be devised that fails to take account of the low-wage structures generated by business interests...

...The Standby Job Corps, whose members would be assigned "temporary residual public service jobs, 8 secures the job guarantee as part of the bill...

...Such flaws will seriously threaten its objectives, if it ever passes...

...The persistent opposition by employer representatives to increases in the minimum wage and its coverage, and the inordinate delays in adjusting the minimum wage to changes in the cost of living or to general wage movements, foreshadow the fierce opposition that a legislated job guarantee would encounter...

...Employment Service, place jobseekers in public service employment projects (which may be run by public or private contractors...

...providing recreational activities for children...

...13 The worker in the private sector would always be somewhat better off than the public service worker...

...Public Employment and Wage Subsidies, a Volume of Studies prepared for the Use of the Subcommittee on Fiscal Policy of the Joint Economic Committee, Congress of the U.S., Dec...

...and so in fact it has been used...

...The National Purposes Budget is meant to represent the framework for the President's legislative and budgetary proposals, and to project policies and programs to meet "national priorities" consistent with the attainment of full employment...

...Good public service jobs, available to all who seek them, would obviously reduce the available supply of casual or short-term or otherwise low-paid workers, compelling firms that employ such workers to improve working conditions...

...Such a public employment program would be unacceptable to most business spokesman, and would probably be opposed on ideological grounds by large sections of America's middle class...

...The situation was aggravated by a complacent acceptance of target unemployment rates set ever higher--4 percent, then 4.5 percent, then 5 percent and more of the labor force—to constrain wage bargains and resist inflation...

...The mass unemployment of the '30s not only traumatized those directly affected...

...that is such that will effectively encourage them...

...Members of these groups are the ones most likely to apply for public service employment created under the Hawkins bill, and to invoke the bill's job guarantee provisions...

...THE HAWKINS BtLL explicitly separates employment policy from policies designed to prevent or mitigate inflation...

...See Robert 1. Lerman, "The Public Employment Bandwagon Takes the Wrong Road," Challenge, January—February 1975, p. 14...

...Unlike its predecessor of 1946, it codifies the right of individual jobseekers to useful work at fair pay and mandates the creation of full employment through the federal government...

...Perhaps the bill's authors believe that fiscal and monetary policies, together with expenditure policies, can accomplish the required allocations without unduly interfering with the private sector...

...10...

...The bill would provide for compensation of public service workers, not less than the minimum wage, "that bears a positive relationship to their qualifications, experience, and training...

...Since blacks and other minority workers are much more likely than white workers to fill semiskilled and unskilled jobs-56 percent...

...A critique of the Hawkins bill is offered below...

...20 ff...

...The limits to which capitalist institutions and interests can adapt themselves to new political pressures or social-policy measures depend on specific contexts, and at best are hard to predict...

...we cannot pursue the subject here...

...This raises large questions, such as the probability that public service employment will perpetuate the low status and even the personal instability of these workers, unless substantial investments are made to upgrade them as part of structured public service careers...

...In the South, more than one-third of all nonsupervisory workers earned less than $2 an hour...

...The bill would continue the Council of Economic Advisers, and would set up various additional bodies charged with research into employment and related problems...

...One of the factors in the apparent unwillingness to stem the rise in unemployment since the fall of 1974 has been a lessened sense of economic and ideological competition with the Soviet Union...

...3 Its declaration of purpose and weak provisions for implementation reflected the presumed need for a work force disciplined by some degree of job insecurity...

...over the three months preceding May, it ran at an annual rate of 1.5 percent...

...The statistical and econometric relations between changes in unemployment and changes in wages and prices have proved to be abstraction rather than faithful reflection of reality...

...See E. P. Thompson, The Making of the English Working Class (New York: Vintage Books, 1966...

...32 percent—they are also more liable to the instability inherent in such jobs...

...We know that as we speed up the economy, employers begin to change their hiring standards...

...Peter Doeringer, "The Implications of Full Employment Policy for the Secondary Labor Market," in A Full Employment Policy for America, A Symposium at UCLA, October 13, 1973, Paul Bullock, ed...

...Considering also the kind of work that public service workers are likely to perform," carefully designed as it would be so as not to compete with work either in private enterprise or in public agencies, one is impelled to conclude that the social and economic position of disadvantaged workers will change little under a job guarantee program—for reasons, however, that have less to do with the program as such than with the kind of economy within which it must operate...

...They consist of the semiskilled and the unskilled, who made up close to one-third of all the unemployed in 1974 although they accounted for only about one-fifth of the labor force...

...The first part of the question cannot be answered in the abstract...

...S. Sternlieb and A. Bauman, "Employment Characteristics of Low-Wage Workers," Monthly Labor Review, July 1972, pp...

...The bill lists 19 areas for which such projections are to be made—e.g., housing construction, adequate health services, educational facilities, etc...

...Yet, why and how such "undesirable" jobs are generated is a more basic question than why people, while forced time and again to take them, often give them up...

...The details and conditions of Lerman's proposal do not concern us here, but the magnitude of the illustrative wage rates involved indicates the penuriousness of what is likely to be the compensation in guaranteed public service jobs...

...It cannot explain how and why secondary labor markets arise and disappear, or how primary labor markets turn into secondary ones...

...3. Russell A. Nixon, "The Historical Development of the Conception and Implementation of Full Employment as Economic Policy," in Public Service Employment, an Analysis of Its History, Problems and Prospects (New York: Praeger, 1973), p. 27...

...At best the 1946 Act, in the words of Alvin Hansen, undertook "a federal responsibility for the problem of employment," aimed to achieve a "condition in which job opportunities were available...

...The hourly rate for a public service job would be $2.30...

...But the bill does not prescribe formal authority to allocate resources between public and private uses...

...and more...

...Stein's remains the indispensable major work on the evolution of fiscal policy in the U.S...

...But the idea, facetiously voiced but seriously meant, that it is sufficient for public service employees to dig holes and fill them again, so long as their pay generates income flows for high consumption levels, merely underlines the need, typical in late-capitalist society, of wasting resources, including the energies and abilities of human beings...

...Lerman lists projects performed under the Canadian Local Initiatives Program (LIP), a public service employment scheme, as follows: building local community halls in rural areas...

...At the end of World War II, a broad consensus existed to use fiscal policy in order to stabilize the economy at high employment, although this consensus was conditioned by the efficacy of fiscal policy as a neutral, noninterventionist instrument...

...so to a lesser but still significant extent is manufacturing...

...The employment problem is reasserting itself...

...The dominant force in the shaping of labor markets remains capital, and this has been all the more true since World War II, when fiscal policy in most Western countries essentially succored private markets and investment...

...Since 1949, the unemployment rate dropped below 4 per cent only during the Korean and the Vietnam wars...

...The Hawkins bill represents a reaction against the link between unemployment and inflation upon which most economists and policymakers have insisted...

...13, See Robert 1. Lerman, "JOIN: A Jobs and Income Program for American Families," in Studies in Public Welfare...

...5. See Eugene Keller, "Social Priorities, Economic Policy, and the State" in The Seventies: Problems and Proposals, Irving Howe and Michael Harrington, eds...

...or the manner in which the emergence and decline of secondary labor markets has been intertwined with the evolution of industrial capitalism...

...Public employment can be a most effective way of creating jobs...

...At various times during the post-World War II era, unemployment was deliberately fostered (or was permitted to increase) as a way to exert pressure on wage claims...

...33-34...

...that additional training and upgrading occurs...

...The reasons job-guarantee provisions of the Hawkins bill are so weak may be found in the economic environment within which the bill was conceived...

...10 This language in dicates that the job guarantee part of the bill would leave unchanged the status of the worker most likely to take advantage of it, unless he is able to move up on his own...

...the subsidy would be paid to workers earning between $1.80 and $3 per hour...

...The lack of a legal mandate to maintain full employment has not meant, until recently, that large-scale unemployment would be a danger...

...But the bill does not provide for this kind of implementation...

...The fact, however, that the bill carefully delimits the area of public service employment, confining it to the usual array of "unmet" societal needs, and offers what appears to be a deliberately weak job guarantee, betrays its essential flaw...

...to advance from the Corps to other employment...

...A critical point may indeed be reached beyond which social-policy measures either cause capitalist institutions to decay or they may arouse forcible resistance among their supporters...

...The unemployment rate is to be reduced to 3 percent within 18 months of the bill's passage, and to less than that thereafter...

...7. While the rate of inflation has substantially abated, the rate of increase in industrial commodity prices still ran at an annual rate of 3.4 percent over the six months ending in May 1975...

...The Hawkins bill, were it to pass, would unquestionably strengthen the forces of social planning in the United States, and would measurably improve the situation of working people...

...20-22...

...nor did it recognize any "right" to a job, nor create planning instruments to attain and maintain high employment levels other than to call for an annual economic report and to set up the Council of Economic Advisers and the Joint Economic Committee of Congress...

...Public employment should first of all be productive employment, part of developmental projects, large and small—in rail transport, urban construction, small car manufacture, river valley improvement, food marketing cooperatives, and so on...

...See also George Myers, "Migration and the Labor Force," Monthly Labor Review, September 1974...

...At the least, close government control over the channeling of credit would be necessary, and probably also the creation of large "yardstick" enterprises...

...and perhaps also a changed conception of economic leadership, related to the rise of repressive state-capitalist regimes in key developing countries...

...Ibid., pp...

...This is the central issue presented by the bill: can such a right be granted, better, can it be effective in capitalist society...

...6 Yet the use of unemployment as a wage-price regulator has been decreasingly successful...

...Paper No...

...it was a clear-cut victory for the conservative bloc...

...that certification and discriminatory exclusion begin to fall away in the labor market under pressure of staffing in the primary sector...

...Section 6(b)(2)B of bill...

...l It should be noted, however, that in all countries where private property has remained part of the legal foundation of the economy, and the mobility of finance capital is more or less unrestricted, conditions of full or near-full employment have not prevented the emergence of dual (i.e., "secondary") labor markets;, nor the import of foreign labor to serve these "markets," or their export in times of recession 1e...

...The provisions include a National Purposes Budget, setting forth the full-employment goals ap propriate to the number of persons able and willing to work and looking for a job...

...To carry out this task, the agency would, in addition to using the conventional channels of the U.S...

...6. See C. G. Gellner, "Enlarging the Concept of a Labor Reserve," Monthly Labor Review, April 1975, pp...

...It did not authorize the federal government to formulate specific production goals as part of a production and employment budget, as in effect the Senate bill had done...

...yet they were adopted as a result of political struggles and pressures...

...perhaps they deliberately avoided the problem...

...In these respects, however, the forces dominating the U.S...

...Many of those with very limited job opportunities prefer to remain unemployed rather than accept what they consider undesirable jobs...

...The reasons why unemployment is so high among these groups, or why male labor-force participation among them has been declining, cannot be detailed here...

...Instability of employment had become the perennial lot of minority workers and youths, and withdrawal from the labor market among men in the prime of life was increasing...

...Its authors did not intend to address the problems of incipient mass unemployment...

...At any rate, the experience of the postwar period does not sustain their implicit assumption that fiscal and expenditure policies suffice for the magnitude of resource allocation contemplated in the bill...

...This is implicit not only in the language of the Hawkins bill but also follows from recent discussions of public employment by students of the subject...

...The assumptions underlying these policies—wages and prices being set by the interplay of market forces susceptible to the leverage of centrally managed financial flows—have also proved to be illusory...

...One of the more plausible assumptions is that many persons who have low skills, little education, and are victimized by labor-market discrimination are forced to accept dead-end jobs at low pay...

...Such expenditures, together with their multiplier effects, generated high employment levels...

...Yet, it is likely that an audacious public employment scheme is indispensable, first in order to overcome labor market dualism—the essence of which is stated by Otto Eckstein in the introductory quote...

...It eschewed any explicit commitment to "full" employment...

...In such a situation, "secondary labor markets" would contract...

...as well as register them in a "Standby Job Corps," also to be formed under the bill...

...The political context within which such ameliorative measures work may end up harming their beneficiaries—it makes a great difference whether nursing homes for the aged are run by community groups or for private profit...

...Yet, the bill lacks the boldness of creating new instrumentalities, new bodies to generate productive employment, and it basically works within the framework of the existing division of public and private economic sectors...

...The rate for blacks and other minority workers usually ran twice as high...

...and if granted, what would be the probable circumstances of its exercise...

...and second to sustain—not merely attain—full employment...

...2 Unlike the Senate bill, the Act did not give clear priority either to full or to "maximum" employment (the term it uses) over other goals...

...The provisions described so far would enlarge the federal government's reporting functions and tie the federal budget to specific goals...

...The absence of a full-employment mandate has meant that unemployment could be used as a regulator of the economy's wage and price structure...

...Politically, it represented "neither an impasse nor a compromise...

...OTTO ECKSTEIN' Twenty-nine years after the Employment Act was signed into law, a new bill titled the "Equal Opportunities and Full Employment Act" has been introduced by Congressman Augustus Hawkins...

...University of California, L.A.: Manpower Research Center, Institute of Industrial Relations), p. 30...

...it also shook the central institutions of capitalist democracy to their foundations...

...Industrial prices have held up and have risen in many instances, despite capacity utilization rates of less than 70 percent.' These are indications— and there are others—of the fundamental bankruptcy of fiscal policy as conceived in the '40s...

...9. Martin S. Feldstein, Lowering the Permanent Rate of Unemployment, a study prepared for the use of the Joint Economic Committee, Congress of the U.S...

...Thus a job guarantee of relatively good public service jobs would significantly raise the labor costs of many private businesses...

...or, in better times, to hold one...

...But the presentation of the concept by the authors and their adherents lacks historical dimension...

...economy have exercised a tacit but potent constraint upon the bill, rendering it virtually inoffensive to their larger interests...

...High unemployment among men and women in this 'secondary labor market' in part reflects their rejection of the jobs that are available...

...For example, Robert I. Lerman, formerly on the staff of the Joint Economic Committee's Subcommittee on Fiscal Policy, cites evidence, admittedly fragmentary, that the relatively high rates of pay offered under existing public employment programs tend to screen out disadvantaged unemployed workers...

...New York: Harper& Row, 1972), pp...

...Many others who take these jobs soon quit...

...But let it be said at the outset that, were it to pass, it would rival in scope such landmarks as the Wagner Labor Relations Act, which established the right of workers to bargain collectively, or the Fair Labor Standards Act, which set floors under wages and hours...

...2. Alvin H. Hansen, Economic Policy and Full Employment (New York: McGraw-Hill, 1947), p. 107, 108...

...Altogether, 25 percent of all nonsupervisory workers earned less than that rate at the time...

...Hourly earnings, including the "low" standard used here, have risen since 1970, but the relation among earnings rates is unlikely to have changed significantly...

...September 18, 1973, p. 32...

...Developments during the current depression, although not traceable to the intent of policymakers and largely out of their control, demonstrate this point: wage rates in the automobile industry, for example, have remained unaffected by the near-30-percent unemployment experienced in the industry...

...For an elaboration of the theory of secondary labor markets, see Peter B. Doeringer and Michael J. Piore, Internal Labor Markets and Manpower Analysis (Lexington, Mass: Heath, 1971...

...4. Herbert Stein, The Fiscal Revolution in America (Chicago: University of Chicago Press, 1969), P. 196 and 197 ff...

...9 ff...

...Most measures ameliorating the conditions of workers have been thought by radicals and others to be incompatible with capitalism at one time or another...

...they attempted to deal with what had become permanently high unemployment in otherwise prosperous times...

...It should become a "commanding height" of the economy, an integral part of its infrastructure...

...It is easy to identify the groups who experience such difficulties by their high unemployment rates, even though these rates tend to understate the dimensions of the problem...

...IT IS CONCEIVABLE that the job guarantee and public service provisions of the Hawkins bill will lose in importance as the full-employment policy to be pursued leads to a rising demand for workers...

...in most nonwar years it exceeded 5 percent...

...14...

...30, 1974, pp...

...It stressed "free enterprise" as the framework within which the level and composition of employment would be determined...

...It therefore deserves support...

...The rationale for the public service employment to be created under the Hawkins bill is to provide useful and steady employment for the growing number of persons who find it increasingly difficult to obtain a job...

...8. Section 6a of the bill...

...teaching handicapped persons to refinish furniture and to make clothing and needle-point tapestries...

...THE 1946 EMPLOYMENT ACT represented an emasculated version of the 1945 Full Employment Act, passed by the Senate but rejected by the House...

...For example, 51 percent of all retail workers had earnings definable as "low" in 1970—less than $2 an hour...

...4 Furthermore, the Cold War with the Soviet Union required a high-growth economy, able to digest large budgets to meet "external challenges —a costly conventional and nuclear warfare capability, a vast space exploration program, generous foreign aid, expensive research projects...

...These rates, furthermore, are understated, since many workers withdraw from the labor force when job opportunities become scarce...

...Like these laws, the Hawkins bill would further limit the power of capital and the reach of business-dominated government policy...

...12 Lerman has proposed the creation of a program of guaranteed public employment supplemented by wage subsidies to workers in low-paid private jobs, structured so as not to encourage these private-sector workers to quit in order to take a public job...

...107 ff...

...The Standby Job Corps would in effect become a type of "secondary labor market" for public service employment...

...The acceptance of the right to remunerative work and the provisions for enforcing this right effectuate the separation...

...The second part of the question will be discussed here in relation to the key provisions of the Hawkins bill...

...nor the movements of legal and illegal aliens (the restriction of the job guarantee to American citizens would expand the "secondary labor market" job opportunities of aliens...

...There is much in the current economic literature, as well as in ''conservative" thought, that indicates the emergence of such resistance...

...repairing appliances for indigent people and helping them move...

...providing sheltered workshops for disabled persons...

...Such industries as retail trade, finance and insurance, and services are heavily dependent on low-paid workers...

...Full-employment policies would be mandatory upon the government, and they would have to be pursued within a framework of national goals...

...they begin to open up all kinds of job opportunities to groups that were previously excluded...

...The bill was largely conceived in the early 1970s when unemployment, while high by the norms of other industrial countries, stood at less than half of current levels...