A strong criticism of President Barack Obama from liberals and conservatives is that his policies have not been very effective at reducing the unemployment rate in the United States. The President, along with Congress, is suffering from very low approval ratings from the general public. While Wall Street is doing very well, main street continues to suffer amid the housing crisis. The opposition party is amassing their political strategy to challenge the incumbent President in 2012. What other economic policies does the President currently have at his disposal? Well, one solution, as supported by progressives is the Humphrey-Hawkins Act or HR 870. This act is a comprehensive jobs bill similar to the legislation proposed during President Franklin D. Roosevelt’s administration (during the Great Depression). The following is a quoted summary outlining the proposed bill that would benefit taxpaying Americans:
Solving the Jobs Crisis:
HR 870: The Humphrey-Hawkins 21st Centurty Full Employment and Training Act
Although the Great Recession officially ended in
June 2009, the US economy has failed to provide
the jobs needed for long term, sustained
growth. At the current rate of job creation most economists
believe we would not recover the 8 million jobs lost until
2016. To generate the growth required to employ both the
unemployed and underemployed, we need a serious commitment
to job creation such as that embedded in HR 870-
-the jobs bill introduced by Rep. John Conyers, Jr. (D-MI).
Following is a summary of this legislation as well as a
discussion of why socialists – indeed all progressives – should
support the bill.
A Deficit Neutral Jobs Program
HR 870 would not add a dime to the federal deficit.
The jobs created by the act would be funded through a
tax on the trading of financial assets: stocks, bonds, and
currencies. The tax would be levied on both the asset itself
and on the trading of derivatives (e.g., futures and options)
based on the asset. The tax proposed in HR 870 is a very
modest one of 0.25% of value traded or $1 on every $400
of value traded. The amounts raised, however, could easily
exceed $400 billion/year.
The Jobs to Be Created
HR 870 is explicitly designed to put people, large
numbers of people, to work quickly. HR 870’s fast track
job creation focuses on painting and refurbishing schools,
community centers and libraries; restoration of abandoned
and vacant properties in foreclosure-decimated neighborhoods;
expansion of emergency food programs; and renovation
and maintenance of parks, playgrounds “and other
public spaces.” These jobs, which are the ones to be filled
during the first 9 months of the economic opportunity grants
provided for under the Act, do not require long periods of
training but instead are much like those created under the
CCC and the WPA in the 1930s. After the initial 9 monthperiod, priority is given to construction / rehabilitation / improvements
of residences or public facilities. These include
energy efficiency improvements and programs targeted at
Who Would Be Employed?
HR 870 recognizes that one of the features of the
Great Recession is the record high level of long term unemployment,
people out of work for 26 weeks of more. These
are the first to be hired under the terms of the Act. The
second category of new hires is low income workers unemployed
for at least 30 days.
Protections in the Act
Some job programs pose risks to employed workers
because employers may replace them, often at lower
wage levels, with new hires. HR 870: (i) prohibits replacement
of any existing employee with someone hired with funding
from the Act; (ii) requires that anyone hired under the
Act be paid no lower wage than workers performing the
same work; and (iii) requires that, if the Act is used to employ
people in a unionized workplace, the union must agree
to the terms of new hires. Finally, employment under the
Act must be for a minimum of 12 months.
Why Support and Organize
around HR 870
HR 870 simultaneously attacks two of the major
problems of the US political economy: a labor market that
fails to provide enough jobs – much less good jobs – to
meet our peoples’ needs and an inefficient and bloated financial
sector.It is also rooted in the understanding that a lack of
demand is the primary reason the US economy is failing to
achieve levels of growth and output that are sufficient to
provide employment for all who are willing and able to work.
The Act is explicit in its commitment to the role that
the public sector has in generating economic growth.
Jobs and the Failure of
the Financial Sector
High levels of unemployment and underemployment
in the US have been a growing problem over the past three
decades. In the period 1945 – 1975, the unemployment
rate was 4% or below during 75 months, more than 20% of
the 360 month period. However, during 1975 – 2010, the
unemployment rate was 4% or below during only 5 months,
barely 1% of the 420 month total time.
At the same time, financial sector growth accelerated
sharply, with financial sector profits reaching almost
45% of total business profits in 2005/06. It is essential to
remember that finance is a cost to the economy as a whole.
Finance, when functioning appropriately, simply enables the
rest of the economy to perform well by lending, raising and
allocating capital to businesses and households. The trading
of paper claims to assets does not help the economy to
grow although it may generate large profits for some financial
institutions, a significant portion of which ends up in the
pockets of a small number of decision makers at financial
institutions. These high rewards are a strong incentive for
the firm to take on additional risk, shifting focus and resources
into trading rather than capital raising and allocation.
Thus, taxing this socially useless activity will not only
provide funds for jobs, it will also reduce the rewards of
financial speculation and help redirect resources, especially
talented individuals, into other occupations.
How do you restart an economy that is functioning
at less than full resource utilization, as in the case of the US
today? The stimulus passed in early 2009 had some good
features and did save a significant number of jobs. However,
it was overly dependent upon indirect jobs creation,
tax breaks to businesses in the hopes that they would then
hire more workers. Households have cut back on their
spending, reducing demand for goods and services and leaving
businesses reluctant to expand output and increase hiring
to the degree necessary to significantly reduce employ
ment. HR 870, by using funds to hire workers quickly and
directly, puts money into the pockets of working and middle
class families, who will spend most of their wages on clothes,
food, and shelter, increasing growth in these crucial sectors.
The Role of Government
Finally, HR 870 uses the resources and capabilities
of government to restart the economy rather than cutting
spending or providing additional tax breaks to employers
and hoping that the result will be new hiring and a restart of
economic growth. This is an explicit recognition of the central
roles that government, the public sector, has in directing
and generating economic growth.
- West, Cornell, ed. Solving the Jobs Crisis. HR 870: The Humphrey-Hawkins 21st Century Full Employment and Training Act. Democratic Socialist of America, 27 Apr. 2011. Web. 23 Aug. 2011. <http://www.dsausa.org/pdf/HR%20870%20DSA%20Flyer.pdf>.