Commentary

Jobs-for-All Plans Would Be a Colossal Federal Failure 

By GENE MOYNIHAN | Aug 01, 2018

Well, it had to happen: Bernie Sanders along with two other senators, all of whom appear to be potential Democratic presidential candidates into 2020, have come up with plans to guarantee jobs to all who want them.

Although there are only vague details of the plans available, the idea is that the U.S. government would guarantee a job to anyone who wants to work. Hired by the U.S., these workers would be paid $15 per hour and receive a full range of benefits including paid vacation, paid maternity leave and I assume be eligible for the Federal Employees Retirement System. That’s an annual paycheck of $31,000 and benefits roughly worth about $10,000 a year, or $41,000.

Let’s focus on the Sanders plan. The cost of the plan isn’t available, but some sources have estimated it would cost $500 billion or more, and involve as many as 15 million workers. Not to worry about the cost – folks earning $200,000 a year and up are targeted to pay a big chunk of the bill. Anticipated reductions in unemployment benefits, food stamps and other social programs would provide an unspecified amount of the money and, as usual, taxpayers would provide the balance.

To help understand this job plan, let’s review some data about unemployment. The rate of seasonally adjusted unemployment, as of May 2018 (U-3), is 3.8 percent, or 6,065,000 individuals unemployed. A broader measure of unemployment (U-6) which includes those marginally attached to the labor force, discouraged workers and workers employed part time for economic reasons was reported at 7.6 percent, or a total of 12,277,000 people out of work.

An important point to keep in mind is that about half of the 155,474,000 employed people in the U.S. earn less than $30,000 a year. In addition, 21,095,000 individuals were reported working part time for non-economic reasons.

Given the lack of accuracy of estimates coming out of Washington, D.C., a major question about the guaranteed jobs plan is how many people would really be involved and how much would it actually cost?

The government would have to provide jobs for the 12,277,000 unemployed people in May.

Then there’s the homeless population. According to the Department of Housing and Urban Development, in 2017 there were an estimated 553,747 homeless individuals in the U.S. Approximately 438,913 were 18 years or older. About 257,528 of that number were living in some type of shelter and the remaining 181,375 were unsheltered – living on the street, in cardboard boxes, makeshift shelters in back alleys, abandoned buildings, under bridges, etc. About 87,000 of these individuals had patterns of chronic homelessness.

How many of these homeless are employed is anybody’s guess. It’s reasonable to assume the number isn’t high. This raises the question of how many of the 438,913 homeless adults would opt for a U.S. government job paying $31,000 a year and about $10,000 worth of benefits and possibly a retirement plan – all at your expense? For this analysis let’s assume that half, 219,456 people, would take advantage of the opportunity.

There is another group to be factored in – the 21 million people working part time for non-economic reasons. Approximately 15 million of this group are between the ages of 20 and 64 and have a median weekly income of $250, or about $13,000 a year. It’s difficult to even guess how many of this group might be motivated by the idea of picking up an easy compensation package worth $40,000 a year. Let’s assume that one million of them would figure out that $41,000 a year was better than $13,000.

Next, let’s consider the remaining 54 million of the 75 million workers earning less than $30,000 a year, some with only nominal benefit plans or none at all. How many of this group would welcome the opportunity to jump on a “$41,000 gravy train”? My guess is a lot – let’s assume 10 million.

Adding all these groups together results in potentially 23,219,000 people who might possibly take advantage of the “guaranteed jobs plan” and be put on the government payroll. That’s as many as the current total number of federal, state and local government employees and almost twice as many as the 12,673,000 employees in manufacturing jobs in the U.S. Now, let’s do the math: 23,219,000 persons at $41,000 a year gives us a total of almost $952 billion.

What work would all these workers do? The party line is construction, health and home care and clerical work for starters. Modern construction no longer uses picks and shovels, but specialized heavy equipment requiring training and years of operating experience. Home and health care workers must be licensed and have the compassion, the desire and ability to handle aging and handicapped people. Clerical workers? These days a bachelor’s degree is a must just to get a job interview.

Normal logic is to define the job and then find the person with the necessary skills to fill it. The jobs plan starts out in reverse. It begins with a large number of individuals with assorted skills, some with no skills, and then someone has to figure out what they can do that makes sense. What happens if a worker in this program can’t seem to do the work assigned? Would that person be terminated and be returned to an unemployed status, defeating the purpose of the plan?

A major source of concern among employers is the shortage of trained workers. The latest data indicates that the U.S. has more jobs available than there are unemployed workers. Under the guaranteed jobs plans, with more workers than jobs, perhaps what work is available would be “rationed.” Workers would be told to stay at home until an opportunity to use their skills to do meaningful work becomes available, and be paid while waiting. It’s the old communist joke “Everybody has a job, but nobody works.” Or to quote Polish humor, “Whether you’re standing or lying down, you get paid.”

Who would manage the jobs program? The potential for fraud in a program like this is real. You’ve heard it before – relatives and friends in “no show” jobs, dead workers on the payroll, etc. If we can question the integrity of the U.S. Justice Department and the FBI, what hope is there for a program with close to a trillion dollar budget and 23 million people involved?

Not mentioned about the guaranteed jobs plans is the impact they would have on small businesses that are labor intensive, such as restaurants, fast food operations, retail stores and the like. They would be forced to raise wages and benefits to compete with the U.S. government, a battle many would lose, ending in business failures.

In evaluating the material presented, keep in mind that these are preliminary estimates based on incomplete information about the plan and that the final costs could end up being less or much more than estimated.

In addition, a plan like this is a move toward socialism and could have serious implications for life in America as we know it, not just employment, but productivity, politics, the armed forces and education, to mention a few. Of course we can expect higher taxes and inflation.

Take education, for example. If students know they are qualified for a lifetime government job, why study? Why go to high school, college or aspire to the professions? Why join the armed forces? It is clear that there is a lot more at stake in this plan, much more than is apparent.

Bernie Sanders seems to be getting his ideas from a combination of Sir Thomas More’s Utopia (1516) and the Communist Manifesto (1848) by Marx and Engels. Utopian socialistic experiments, such as the proposed jobs plan, have been tried from time to time and all have failed miserably. This one would also fail.

Gene Moynihan lives in Manahawkin.

 

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