Job Insurance

The Safety Net Under The Safety Net

© Steven Attewell

The Realignment Project

8/27/2009

Overview

Job Insurance: The Concept

Historical Background

Finance

Organization

Employment

Results

2© Steven Attewell, The Realignment Project, 8/27/2009

Job Insurance – The Concept

For a modest monthly premium,

you get the right to a job if you get laid off

Spread the costs of a full employment program

Across the entire workforce


Job Insurance – The History Committee on Economic Security, 1934/5:

Labor Department focuses on Unemployment Insurance

FERA (Fed. Emergency Relief Admin) argues for jobs instead

Emerson Ross’ memorandum:

Option 1: contributory work insurance + Work Program

Option 2: contributory work insurance -> Work Program

Option 3: Work Program and U.I side by side


Job Insurance – Financing, I It costs approx. $40 billion to create 1 million jobs/1 year

Approx. $20-24k in salary

+12% for FICA = $26.8k per job

$26.8k x 1 million =

$26.8 billion per million jobs

+ 30% non-labor costs (vs. historical 20% in WPA)

= $35 billion/1 million jobs

(good to keep some margin for error)


Job Insurance – Financing, II How do you find the $40 billion/year?

150 million workers in U.S workforce

x $20 a month premium(split with employer)

= $3 billion a month

x 12 = $36 billion a year into a Job Insurance Fund

Thus, within a few years, the JIF can build a reserve that could create several million jobs in a recession (4 million as avg.)

With some government assistance, the JIF could dramatically speed up the process of reserve building and potentially dealing with 10%+ unemployment


Job Insurance – Organization, ILocate in Labor Department or Independent Agency:

3 Key Parts:

1. Job Insurance Fund –

Collects premiums through IRS withholding,

Deposits premiums in U.S Treasury

Office of Fund Management oversees the Fund, disperses moneys when authorized, reports to President and Congress as to level of funds compared to demand and potential demand for labor


Job Insurance – Organization, II 2. National Labor Market Board –

Chair and Executive Director is advised by board with 2 members from labor, 2 members from business, and 2 members from Congress;

Board sets national policy, authorizes funds to be spent

// to Military Base Recommendations, within 18 days

Project Design Office designs model projects, approves projects forwarded to it

Employment Monitoring Office sets number of jobs to be created to maintain employment of X% or less


Job Insurance – Organization, III State + Local Labor Market Boards (Fed-operated):

Design “shelves” of public projects

Keep track of local unemployment conditions

Hire project managers, engineers, etc.

Partner with U.S Employment Service to place Job Insurance claimants in positions

Partners with state and local government to finance non-labor costs (materials, tools, land, etc.)


Job Insurance – Employment, I After a certain # of months of private employment, a

premium-paying worker would become eligible for a spot on a Job Insurance Project

After applying through their local Employment Office, workers would be hired through the local Labor Market Board (either by random lottery, order of application, etc.) and assigned to a project in their area, attempting to match skills where possible

however, there would also be regional projects open to deal with the problem of spatial mismatch


Job Insurance – Employment, II Terms of Employment:

Workers would be hired for a 6-month contract, after which they would be required to do a job search (if job search failed, then they could re-apply for another 6 months)

Pay and Benefits:

Pay would be approx. $20-24k a year

Job Insurance would also provide health care, pay FICA Prevents disruption in coverage; maximizes payees/retiree


Job Insurance – Employment, III Conditions of Work:

32 hours work/week, 8 hours/week in job training/higher education (to improve and maintain skills and employability)

Workers would operate under basic Just Cause setup; however, absenteeism, performing below expectations, or insubordination would be grounds for termination (J.I is about the right to get a job, not the right to keep it)

Worker’s Rights:

Workers would work under a J.I Worker’s Bill of Rights, establishing basic rights of fair treatment

Workers would also have the right to organize under the NLRA


Job Insurance – Results

A Job Insurance program could:

…permanently reduce unemployment to 3-4% or below

…permanently reduce poverty rates to as low as 8%

…increase average economic growth by anywhere from 1-3%


Conclusion Job Insurance can massively reduce economic insecurity,

unemployment, poverty

Job Insurance is a deficit-neutral mechanism for expanding and strengthening the Social Security System

Job Insurance offers a uniquely American solution to the modern social question


Job Insurance

Economy & Finance

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