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Policies to Increase Employment Security: Federal Jobs Guarantee, Wage Subsidies and Beyond

Paper Session

Sunday, Jan. 6, 2019 1:00 PM - 3:00 PM

Hyatt Regency Atlanta, Hanover C
Hosted By: Labor and Employment Relations Association
  • Chair: Heidi Shierholz, Economic Policy Institute

Racial Disparities in Access to New Deal Programs in the 1930s

Price Fishback
,
University of Arizona
Michelle Liu
,
University of Arizona & Experian

Abstract

During the 20th century the national government seems to have been less discriminatory than southern states and local governments in many ways. Therefore, we might expect that New Deal federal government programs were likely to provide more equal access for blacks and whites than the earlier state and local relief groups. The Federal Works Agency, for example, argued that its programs (including the Public Works Administration, the Works Projects Administration, the Public Roads Administration, and the Public Buildings Administration) actively sought to ensure no racial discrimination in employment and in the distribution of benefits. Although the national government may have attempted to create equal access to these programs based on race or socioeconomic status, its oversight was limited because nearly all of the programs were administered in conjunction with state and local authorities in some way. Local authorities had long discriminated against blacks in the form of Jim Crow Laws and segregated schooling. Prior work has painted a complex picture of the extent to which black families participated in New Deal relief programs. However, it has been stuck comparing means for blacks and whites in a handful of states, so he could not dig into the differences in treatment at the local level. We are performing a more in-depth analysis of racial differences in access to New Deal programs using county level data for the Federal Emergency Relief Administration in 1933, and for emergency work relief in 1937. Further, we will examine access to relief with individual data from 1940. Using a variety of correlates we plan to examine how much of the difference in access to relief is determined by differences in the correlates and how much is due to unexplained differences related to race.

General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India

Karthik Muralidharan
,
University of California-San Diego
Paul Niehaus
,
University of California-San Diego
Sandip Sukhtankar
,
University of Virginia

Abstract

A public employment program's effect on poverty depends on both program earnings and market impacts. We estimate this composite effect, exploiting a large-scale randomized experiment across 157 sub-districts and 19 million people that improved the implementation of India's employment guarantee. Without changing government expenditure, this reform raised low-income households' earnings by 13%, driven primarily by market earnings. Real wages rose 6% while days without paid work fell 7%. Effects spilled over across sub-district boundaries, and adjusting for these spillovers substantially raises point estimates. The results highlight the importance and feasibility of accounting for general equilibrium effects in program evaluation.

Working to Reduce Poverty: A National Subsidized Employment Proposal

Indivar Dutta-Gupta
,
Georgetown University
Kali Grant
,
Georgetown University
Julie Kerksick
,
Community Advocates Public Policy Institute
Dan Bloom
,
MDRC
Ajay Chaudry
,
New York University

Abstract

Subsidized employment programs that increase labor supply and demand are a proven, underutilized strategy for reducing poverty in the short and long term. These programs use public and private funds to provide workers wage-paying jobs, training, and wraparound services to foster greater labor force attachment while offsetting employers' cost for wages, on-the-job training, and overhead. This article proposes two new separate but harmonized federal funding streams for subsidized employment that would expand automatically when and where economic conditions deteriorate. Participating states and local organizations would be offered generous matching funds to target adult workers most in need and to secure employer participation. The proposal would effectively reduce poverty among workers during work placements, and improve long-term unsubsidized employment and other outcomes for participants and their families.

Returning to the Promise of Full Employment: A Federal Job Guarantee in the United States

Mark Paul
,
New College of Florida
William A. Darity
,
Duke University
Darrick Hamilton
,
New School for Social Research
Anne Price
,
Insight Center for Community Economic Development

Abstract

We propose the passage of legislation guaranteeing every American over the age of eighteen a job provided by the government through a National Investment Employment Corps (NIEC). The permanent establishment of the NIEC would eliminate persistent involuntary unemployment and improve economic well-being, ensuring that the United States is able to achieve full employment, as outlined by the Full Employment and Balanced Growth Act of 1978. The Federal Job Guarantee (FJG) would provide a job, at wages that lead to a higher standard of living, to all Americans seeking employment. Benefits of a job guarantee would be felt far beyond those directly employed under the NIEC. For one, workers under the program would be providing socially useful goods and services to our society. If history is any guide, we can look at the wonders built under the Works Progress Administration, which employed over 8.5 million unique workers from 1935-1943. Workers could rebuild our crumbling infrastructure, help facilitate our transition to a green economy, provide high quality universal child care and education, and more. Such a policy would fundamentally transform the current labor market in the United States, greatly altering the current power dynamics between labor and capital - particularly for those at the less compensated end of the labor market and traditionally marginalized groups. While worker compensation historically tracked productivity growth, we have witnessed a troubling divergence in their paths since the 1970s. This relationship can be restored through bold policies, such as the Federal Job Guarantee, that empower workers. Indeed, such a program constitutes a direct route to producing full employment by eradicating involuntary unemployment, and reversing the trend of lost worker bargaining power by removing the employer threat of unemployment. Since the Federal Job Guarantee achieves, and maintains, full employment it relaxes some of the burden on the Federal Reserve with regards to its dual mandate of achieving price stability and stimulating the economy. Such a policy reform will effectively allow monetary policy to focus more on stable prices.
Discussant(s)
Valerie Wilson
,
Economic Policy Institute
Aaron J. Sojourner
,
University of Minnesota
JEL Classifications
  • J1 - Demographic Economics