The country needs (a) millions of jobs, even if temporary ones (until the economy picks up more and generates more jobs on its own); (b) these jobs must be generated in short order (to prevent the current bleak outlook from affecting the outcomes of the 2010 elections); (c) the cost of these jobs must be kept low in order to not increase the deficit unduly.
These criteria can be best met if at least 85% of new funds that are allotted to the urgent employment drive were dedicated to paying wages (or cost of living for trainees)--but not spent on capital goods, infrastructure, creating new markets, or supervisory personnel.
This is possible if funds are made available to:
(a) Third sector (not for profit) institutions such as numerous hospitals, welfare agencies, schools, childcare centers, elder care, museums, etc.--if they commit themselves (i) to spend at least 85% of the funds allotted to them on wages (benefits included) and (ii) not to engage in net labor force reduction. (The last condition is needed to prevent institutions from letting go workers they currently pay for and replacing them with workers paid for by the new program.) Example: if schools add classes on teaching English to adults during evenings and weekends, they will need to hire more people (janitors included) but will not need to build more classrooms or otherwise engage in capital outlays.
(b) Public agencies, including law enforcement. In this case too, funds will not be simply allotted to various agencies, leaving them free to purchase, say, computers, but they would have to commit themselves to dedicating at least 85% of the funds to wages and not engage in net labor force reduction.
(c) Fund large-scale retraining programs in which participants will engage in full-time retraining and internships.
(d) Reimburse private sector companies for part of the wages for one year if they increase their labor force in short order.
The reasons expenditures on non-wage items should be minimized are: (a) these expenditures often generate work outside the United States, given that many of the capital goods are imported; (b) capital goods and infrastructure drives are much slower to take off then plain hiring (most of those infrastructure projects that are shovel-ready have already taken off and all such projects take off more slowly then hiring drives); (c) to prevent the funds from being used for bonuses for management, acquisitions, stock market speculations, and other activities that add few, if any, jobs.
One should deduct from the costs of the employment drive the savings that will be gained due to lower unemployment and welfare outlays and from taxes that are paid by those who work. In addition, there are the savings that result from lower rates of crime, psychosomatic and mental illness, family breakups, and suicides, which, studies show, tend to rise sharply when unemployment spreads.
One should also take into account that employment has a multiplier effect. As people return to work, they can purchase more--and thus make work for others and increase the revenues of small and large businesses.
Amitai Etzioni is a University Professor at The George Washington University and the author of The Moral Dimension: Toward a New Economics. He can be reached at firstname.lastname@example.org.
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