Businesses would love FJG – give them more customers and workers
Kelton et al 23 – Stephanie Kelton is an economist and a professor of economics and public policy at Stony Brook University – Charles Passy, a reporter at MarketWatch – James Rogers is a MarketWatch financial columnist, (“Does the Fed have a monopoly on ‘Fed’-ing?” MarketWatch Best New Ideas in Money, transcription provided by transcription service, 3/2/23, https://www.marketwatch.com/podcasts/best-new-ideas-in-money/does-the-fed-have-a-monopoly-on-fed-ing/8e219822-29cc-4569-b293-99e939c5cb8b)//CG
Speaker 1: So the jobs will come from the public sector, much like we did during the New Deal. We will create a program that will create public service, employment opportunities, job lists, if you will, in every job center with some basic guidelines of what the community might need. Now, often, these are small infrastructure projects, and God knows that all of our communities can benefit from a little extra upkeep, some extra infrastructure. There is just so much work to be done. We also have care projects. There are so many elderly who need help with trips to the pharmacy, with meal delivery. They're a projects that can be created by the public sector to fill that need. The way we do it today is a lot of this work is done by community groups. A lot of this work is done on volunteer basis. It's not a very good sustainable way to support those people in need. In fact, if anyone is doing that work, why shouldn't they be paid a good wage with good benefits? So I think that we can create the work, but we also have done it in the past, and perhaps we don't need to create 15 million jobs. Maybe we need to create five, and that extra boost to the economy is going to be a boost to the mom-and-pop shop and that community. There will be more customers, and so employment will then trickle into the private sector.
Speaker 2: According to Tcherneva, employment trickles into the private sector because more stable employment would lead to more steady consumer demand, and thus, employers needing more workers to meet that demand. And that's not all. A job guarantee could also result in fewer layoffs in the private sector. Why?
Speaker 1: Because they're stable demand, people have jobs and they have much more stable spending patterns than if they were to lose their job replaced with unemployment insurance, wait for the next job to come around the corner. It's just an entirely different mechanism.
Speaker 2: It's about business confidence. For Tcherneva, with a job guarantee, even when the economy slows down, employers should be able to rely on a steadier stream of revenue and profits. While it might be clear how a job guarantee would function in a downturn, what about when the economy is booming? How would a job guarantee impact inflation?
Speaker 1: Well, when an economy is growing, we see what happens. Now, firms are hiring. They're looking for new employees. Now who gets hired? Usually, the paradox of the labor market is somebody who has a job. Now imagine we had a public employment option. Folks will be transitioning much more quickly into these job openings in the private sector, and the public expenditure naturally contracts. You no longer have to pay the wages and support those folks in the public sector. They have now transitioned in the private sector. So as the private sector is growing, as profits are rising, the public contribution, the government contribution to the economy is shrinking, and that is also anti-inflationary.
Speaker 2: Meaning that the economy recovers faster, the government spends less, and it collects more revenue from workers and businesses, and that reduces the federal deficit. Tcherneva's job guarantee would be a new program and would not replace any existing stabilization programs like unemployment insurance, which leaves a big question. If we created a job guarantee, how would we pay for it?