Levy Economics Institute Report | 2018
By: L. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, and Stephanie A. Kelton
Abstract:
Even with unemployment at relatively low levels, millions of Americans remain unemployed and underemployed. It is a problem that plagues our economy in good times and in bad—there are never enough jobs available for all who want to work. The problem is most acute for women, youths, blacks, and Latinos, although research also finds a persistent lack of employment for large numbers of working-age men. This report asks a set of big questions: What if we sought to eliminate involuntary unemployment across all demographic groups and geographic regions, by directly creating jobs in the communities where they are needed through a federally funded Public Service Employment program? How could such a radical transformation of the labor market be implemented? What would it cost, and what would it mean for the US economy?
The authors propose the creation of a Public Service Employment (PSE) program that would offer a job at a living wage to all who are ready and willing to work. Federally funded but with a decentralized administration, the PSE program would pay $15 per hour and offer a basic package of benefits. This report simulates the economic impact over a ten-year period of implementing the PSE program beginning in 2018Q1.
Unemployment, hidden and official, with all of its attendant social harms, is a policy choice. The results in this report lend more weight to the argument that it is a policy choice we need no longer tolerate. True full employment is both achievable and sustainable.