It is crucial that the U.S. prepare an action plan for economic stability and growth after crises in order to help build and maintain a healthy job market across the country.
Big Picture:
High levels of employment are critical to America’s continued economic growth. Through bipartisan solutions, the U.S. will be mindful of federal debt while ensuring healthy levels of employment in order to stimulate growth. In light of recent crises, such as the Great Recession and the COVID-19 pandemic, the U.S. must prepare a vigorous response and plan of action to combat potential similar crises in the future.
Operative Definitions:
Unemployment rate: The percentage of workers in the labor force who do not currently have a job but are looking for work.
Federal funds rate: The interest rate used by banks when they lend money to each other over a short term. (A low federal funds rate encourages borrowing.)
Earned income tax credit (EITC): A tax credit paid to low- to moderate-income individuals and/or households, especially those with children.
Gig workers: Independent contractors of in-demand jobs, such as Uber and DoorDash.
Hazard pay: Additional income given to employees as compensation for working in potentially dangerous conditions.
Important Facts and Statistics:
Approximately 16 million Americans are self-employed.
As of April 2021, the unemployment rate in America is 6.1%.
Five-Point Plan:
(1) Create government-subsidized employment programs and public works projects. This will provide skills and temporary employment in industries with long-term growth prospects, such as technology, healthcare and renewable energy. New projects, inspired by President Roosevelt’s “New Deal” after the Great Depression, will focus on non-profit efforts, such as constructing public green spaces and repairing existing infrastructure.
(2) Compensate essential workers during times of crisis. Ensure that employees who are most important in keeping the basic needs of citizens met during crises are fairly compensated. During COVID-19, compensation came in the form of hazard pay. Similar compensation structures can be used in the future and can be tailored to specific crises.
(3) Establish a jobs exchange agency to facilitate cross-industry talent exchange. Provide job training opportunities for unemployed workers to assist them in finding new employment in high-demand industries. This will help fill labor shortages and maximize productivity, even after the pandemic. It will also promote high-wage trade jobs and assist those unemployed due to technological advancements in their industry or competition from free trade.
(4) Improve the legal framework for gig employment and incentivize business creation. Improving benefits, such as providing minimum wage and allowing gig workers to become eligible for employer-sponsored insurance, would allow these individuals to rely on gig work as their main source of income. It will also be important to create a more defined legal distinction between a gig worker and a self-employed individual. Provide tax and legal incentives for freelancers, independent contractors and small businesses.
(5) Extend EITC to students, caregivers and Individual Tax Number (ITN) holders. Permanently reinstate changes made to EITC in 2009, such as giving credit to families with three or more children and eliminating the marriage penalty. This will increase disposable income for lower- and lower-middle class families. Additionally, extending EITC benefits to non-dependent students will increase their income and opportunities.
Why This Initiative is Important:
These policies will help the economy and job markets recover while also considering worker concerns. This plan will improve job markets by improving benefits for workers and protections for firms. Overall, this will lead to a much stronger job market for years to come and will provide a blueprint for recovery from future economic crises.
Economic Impact (from our student economist team):
Expected cost of recovery from the COVID-19 pandemic: $20 billion per month for hazard pay. Expected annual federal costs after recovery: $43.5 billion.
Acknowledgments:
The opinions expressed in this article represent those of the individual authors, whose information can be found below.
The following student(s) worked on this nonpartisan proposal: Ralph Barsi, Texas Christian University; Brennan Merone, William and Mary College.
The following individuals worked with our student interns and contributed expertise, wisdom and moral support to the development of this proposal:
John Harvey: Economics Professor, Texas Christian University. Fort Worth, TX.
Michael Brownrigg: Former Mayor of Burlingame, California; Candidate, 2020 California State Senate. Burlingame, CA.
Note: Not all participants agree with every aspect of this proposal. To arrive at a proposal that takes multiple views into account requires compromise and difficult decisions. For individual commentary on this proposal and more details, go to JoinONC.com. We invite you to add your comments as well.
Sources:
“Increase the Payroll Tax Rate for Social Security.” Congressional Budget Office, December 13, 2018. www.cbo.gov/budget-options/2018/54805.
Konish, Lorie. “This is what the experts really want to see happen to fix Social Security.” CNBC, December 8, 2019. www.cnbc.com/2019/12/08/this-is-what-experts-really-want-to-see-happen-to-fix-social-security.html.
Desilver, Drew. “10 facts about American workers.” Pew Research Center, August 29, 2019. www.pewresearch.org/fact-tank/2019/08/29/facts-about-american-workers/.
“U.S. Employment - Statistics & Facts.” Statista, April 1, 2021. www.statista.com/topics/771/employment/.