Cory Booker has just recently proposed to introduce a bill that would guarantee everyone in America a job. The idea is a simple one in principle. If you want a job, and can’t get one, then the American Government will give you one. The job would include a minimum wage of $15 an hour, with paid leave, and health insurance.
This would have a number of benefits. For one thing, it would effectively make the minimum wage $15 an hour, because if you are employed at McDonald’s for $8 an hour, why would you stay there if you are guaranteed a job at $15 an hour. To prevent this McDonalds would need to raise its wage. Plus it would, theoretically, mean full employment.
With something that sounds so good, some people are thinking it couldn’t possibly be true. The main argument I’ve seen against this bill is the cost. One Forbes article put it thusly: “Another recent proposal suggests $24,600 to start and rising to an average salary in the program of $32,500. According to the Census, there are currently 50 million wage and salary workers with annual earnings below $25,000 and 72 million earning below $35,000. So let's stop right there and ask: is this a joke? The idea here is to nationalize what a quarter of the U.S. labor market and therefore economy? Half of it?”
So, how would this be paid for? Booker’s plan is very similar to one commissioned by the Center on Budget and Policy Priorities, so I’ll be using their program to answer the question. If you think it’ll be a small number the authors quickly tell you otherwise, saying “Make no mistake, this is a policy to transform the U.S. labor market.”
Right off the bat, they say “we estimate a total annual program cost of $543 billion, or just under 3 percent of GDP.” They follow up later saying “the gross cost of implementing the NIEC would be offset substantially by increases in local, state, and federal tax revenues, decreases in the uptake of existing social insurance programs, increases in the growth rate of GDP, and substantial productivity and capacity gains in the U.S. economy.” The estimate that TANF, the Earned Income Tax Credit, SNAP would all be practically unused which would be about $160 billion saved.
They also predict that the use of unemployment insurance, and Medicaid and the Children’s Health Insurance Program would have much less use. Combined those programs spend $415 billion. The authors seem less sure that the use of these programs would fall to 0, but they would see much less use. All and all these programs represent roughly $575 billion of spending, which is more than the job’s program would cost. If we just shuffled the money around, it might work even with our existing spending, and that’s before you look at the additional tax revenue.
All in all this looks like a manageable program, especially when you open up conversations about creating new revenue specifically for this program. Booker has introduced a bill which would allow this program to be tested in a number of counties so that we can see how effective it is before we try it out nationwide.
I think this is exactly the kind of thinking we need to help out those who have been left behind as our economy evolves. Although I am a huge fan of the program though, I think it will only serve us so far. Giving every person who wants one a job is fantastic, but wages will rise, and this program would need to rise wages with the times, something there is little incentive for it to do. In the end this is a step in the right direction, but the underlying problems of our system, one which incentivizes workers working for less than the next guy, just to at least make some money, is not addressed in this proposal.
That being said, I think this program is exactly the kind of thing America should be considering, and I think it could make a real impact in people’s lives.