Employer of last resort: a response to my critics.

Author:Sawyer, Malcolm
Position:Notes And Communication

In their responses to my critique of employment of last resort proposals (hereafter ELR), Mat Forstater and Bill Mitchell and Randy Wray raise a range of points, and in this reply I have decided, rather than go through them sequentially, to seek to group my responses into a number of headings and in doing so to reply to the major points which they raise. Space constraints limit my response, and a more extensive response is available on request (Sawyer 2004). I have, though, to reiterate that my critique was solely related to ELR proposals and not to proposals to expand "mainline" public sector activity in a way designed to create jobs as well as useful services. My critics write as though I was attacking those types of proposals and/or casting doubts on the possible benefits of public sector activity, whereas my fire was directed at the specific ELR proposals.

The comment of Forstater begins with many comments on my participation or otherwise in the development of ELR, and I give a detailed response to that in Sawyer 2004. Here I merely respond to the claim that I have "also been very close to the project since its inception" (emphasis added). This is simply not the case.

The Distinguishing Characteristics of ELR

In my paper I was seeking to evaluate ELR proposals but not proposals for job creation of the "traditional type," for example, those of the WPA in the USA of the 1930s. As I described in Sawyer 2003 (881-882), the distinguishing features of the ELR proposals are the provision of a job at a minimum wage to anyone coming to an employment office, and the abolition of unemployment benefits. There is the expectation that workers would leave ELR as soon as a job was found elsewhere, and hence ELR work would be designed to be, for any individual, temporary in nature. It is these features which underpin the claims that full employment could be achieved without inflationary pressures since the ELR workers would form a "buffer stock." It is these specific distinctive features of the ELR which would generate the negative effects of such a program.

Nancy Rose has argued that "[a] variety of government work programs have been developed historically in advanced capitalist countries. These have ranged from punitive workfare, in which work that is normally paid a wage is required of welfare (relief) recipients as a condition of receiving aid, to fair work programs, that is direct job creation by the government intended to put the unemployed to work. Perhaps not surprisingly given the ideological hegemony of right-wing theory and policy during the past two decades, punitive work programs have been dominant" (2002, 184). Further, "coercive participation marks JG/ELR (Job Guarantee/Employer of Last Resort) as workfare, feeding into the right-wing view that poverty and unemployment can be cured by forcing the poor to work, and therefore should be avoided" (196). It is the "punitive workfare" programs to which I take exception and not to ""fair work programs."

The negative elements which arise from the distinctive ELR features include the following:

* The jobs which are provided would typically be low skill ones involving little or no capital equipment or managerial input since these are jobs which may have to be provided quickly in the face of a downturn in demand (and in effect withdrawn when demand increases). The jobs would be undertaken by individuals on a temporary basis.

* For those who come into ELR schemes with skills, then either they will undertake jobs with lower skill requirements (and hence would be underemployed) or they will be undertaking jobs in line with their skills but at lower wages.

* Some jobs under ELR would be similar to those in "mainline" public services, generating pressures for government to shift jobs from "mainline" areas to ELR, thereby lowering their costs.

* Many of the jobs which have been listed as contenders for ELR jobs (see list in Sawyer 2003, 891-2) would not actually be suitable: this may be because they require considerable skills and so on, which ELR workers may or may not have or because they are jobs which cannot (or should not) be turned on and off as labor is available. In this latter category I would include, for example, services to the elderly as well as large construction projects.

The argument which I was putting was that there may be few jobs which would fit the ELR requirements, and those which are cited in the literature would not in fact be suitable.

William Mitchell and Randy Wray argue that for social caring jobs "it would not be sensible to make these services transitory. (They could be reassigned to 'mainline public sector' work if political sentiment changed)." The first point is quite right in my view, but any services provided through an ELR scheme would be transitory. The second point raises the question as to reassignment at what wage--still the minimum ELR wage?--and reassignment is double edged; it may well involve the reassignment of "mainline public sector" work into ELR work.

ELR would involve considerable amounts of underemployment (e.g., skilled workers in unskilled jobs) and a degree of unemployment in so far as the ELR system proved unable to provide jobs as and when required. Mitchell and Wray suggest that "ELR could provide, say, up to six weeks of pay for full-time search"--presumably paid at the ELR rate, that is, (search) unemployment by another name.

Forstater states that "anyone who doubts that public employment programs can be 'useful'...

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