A Radical Proposal
Employment hasn’t been recovering at a high enough rate satisfy anyone. Return to full employment will likely take more than a few years. Many have been complaining about this, so here are a few radical ideas to create jobs. I don’t think there’s any question they’d work for that purpose. But I can anticipate a lot of opposition.
- Require that businesses shorten their average work week by a minimum of five hours, setting the American “standard” work week to 35 hours. Provide tax incentives for going beyond that, by as much as an additional five hours, lowering the work week to 30 hours.
- Remove the age requirement for Medicare, to allow all Americans to get on a single-payer health care system, and allow employers to drop all insurance coverage.
- Lower the retirement age for Social Security to 60. Encourage Americans to retire earlier.
It may not be obvious how these measures could create jobs. They could lead to full employment, virtually overnight, give a jolt to the economy such as America has never seen, make us all healthier, and give us a lot more free time. Let me explain.
Reducing the length of the work week would not reduce the number of goods and services that American companies need to produce. The same number of Americans would need the same number of meals and cars and iPods. But if you reduce the number of hours that each person works, in order to get the same amount of work, you have to increase the number of people. That means more jobs.
Going from a 40-hour work week to a 35-hour work week means you lose five hours of work for every employee. That means for every seven employees, you lose 35 hours of work, and have to hire another 35-hour employee. Right away, we need one additional for worker for every seven who are currently working. That’s an increase of 1/7, or a little over 14 percent.
Currently, according to the Bureau of Labor Statistics, there are approximately 142,415,000 people employed. An increase of 14 percent means nearly twenty million new jobs. And they won’t have to wait, like waiting for supposedly “shovel-ready” projects. The demand exists right now, because the work is already there. People are already needed to do it.
You might ask, How do we pay for that? How can corporations and small businesses afford to pay for one new employee for every seven they currently have? That’s easy. With an increase of 14 percent in the number of people actually employed — earning money, spending money, wanting stuff — demand for goods and services will immediately increase. Maybe not by the full 14 percent, but by a great deal. That means the sales of most businesses would also increase. Income tax revenues and sales tax revenues would increase. So would revenues from most other taxes. It’s windfall profits for everyone.
The government can, and should, provide tax incentives for this, covering most of the costs to employers for adding to their workforce, including the excess cost (or a portion of it) of keeping all existing employees at their same income levels, even with reduced hours. (Yes, you deficit hawks, that might lead to temporary increases in the deficit. Too bad. It’s called, “investment.” You’re supposed to like it when we run government like a business.)
In other words, salaried employee should stay at the same salary, and hourly employees should get an immediate 14 percent hourly raise, thus keeping everyone’s take-home pay what it is now. This also necessarily means increasing the minimum wage, by at least that same 14 percent. (Every time a minimum wage increase is proposed, Republicans scream that it will increase unemployment. Every time the minimum wage increases, unemployment drops — because it means consumers have more money, and they spend it, thus increasing demand. All economies are demand-driven.)
In addition to tax credits and tax incentives to reduce the work week and hire more workers, the feds can do one other enormous thing to lower costs to employers — implement Medicare For All, the job-creating single-payer system America so desperately needs. One of the biggest employment costs to employers is health insurance. This is also one of the biggest reasons American companies find it difficult to compete in the global market — companies in other industrialized nations don’t have this expense. No other nation on Earth would even consider giving up the healthcare system they have, and substituting the ridiculous American system. There’s a reason no one copies us.
A job-creating single-payer health care system removes one of the biggest burdens on employers. That alone could be expected to create millions of new jobs, lower costs, encourage entrepreneurship on a massive scale, and make American products once more competitive overseas. The profits of American companies would increase, demand would increase, sales would increase, employment would increase, and tax revenues would increase through vastly expanded economic activity. It’s another win-win for the American people and for American jobs.
The third leg of my prescription is to lower the retirement age to 60 for all Americans. Older workers are the most expensive kind of workers for American companies. They have the highest incomes, the highest health care costs, the highest level of additional benefits (such as accumulated vacation time). By lowering the retirement age, we are freeing up more jobs which need to be filled — and filling them with younger, lower-cost workers. This is an enormous win for employers (many of whom actively force workers into early retirement already for precisely these reasons). Firing everyone over 60 might be the best thing that ever happened to America.
How do we pay for that? Easy enough. Remove the cap on FICA payroll taxes. Medicare and Social Security are both paid for through payroll taxes, but income over about $106,000 is currently not subject to the tax. Removing the cap will nearly keep both of these programs solvent forever, even with expanded benefits. Any shortfall can easily be made up by taking the money Americans currently spend on heath care (mostly through insurance policies arranged by their employers) and funneling that money — that same money, no additional payments — into Medicare. We’re already spending the money. We need to spend it more wisely, channeling it into a job-creating single-payer system instead of the hodgepodge of inefficient systems we have now.
With Medicare and Social Security altered to provide a safety net for older Americans, early retirement becomes a comfortable and attractive proposition. With more free time — and at a younger, and therefore, healthier age — we can expect higher rates of consumption (more vacations at the Grand Canyon, for instance), which means higher demand for goods and services, thus still more economic activity, meaning higher profits for everyone. And more jobs. With more free time and without the burden of health care worries, we’d expect many of these active experienced people to create more small businesses, thus employing still more people and generating still more goods and services, more tax revenue, more innovation.
These three steps — a shorter work week with incentives to keep pay where it is and to hire more workers, job-creating universal single-payer health care, and a lower retirement age — would lead to an explosion of economic activity, creativity, consumer demand, GDP growth, and innovation, an incredible boost to the tourism industries, and improved health care for all Americans. It would particularly increase employment among younger workers, who have been particularly hard-hit by the Great Republican Recession.
Has such a radical prescription ever been tried? Oh, yes. This basically is how Germany has operated for the last forty years — a shorter work week (with much more generous vacation benefits than Americans have, I might add), universal health care, and a lower retirement age. It’s why Germany weathered the Great Recession far better than any other industrialized nation. France used a similar prescription until Sarkozy came along — who pretty much repealed it, leading to the economic problems France is currently suffering, thus leading now to a new Socialist government promising to return to these pro-growth, pro-employment policies.
Is America ready for such a radical proposal? I doubt it. We’re too tied to the idea that workers gotta work harder, longer, and be grateful for whatever scraps are thrown to them in the way of ever-worsening benefits (like unemployment insurance or health care) that they already paid for. We’re too married to the idea that only the richest among us get free time, and that wealth trickles down from on high, instead of being the result of economic activity generated by consumer demand (which is the truth of it).
It really is time for America to move into the twentieth century. Or is that too radical a proposal?
- Obamacare or Not, Progressives Vow Fight for ‘Medicare for All’ (commondreams.org)
- GOP — Healthcare Is ‘Socialism, Slavery’ For Americans, A ‘Right’ For Iraqis (veganmyway.tumblr.com)
- About That Single Payer Boomlet (talkingpointsmemo.com)
- Maine Governor Calls Obamacare’s IRS Agents the “New Gestapo” (thegatewaypundit.com)
- Ben Nelson: Activist Supreme Court Would ‘Pave The Way To A Single-Payer System’ (tpmdc.talkingpointsmemo.com)
- As I See It | The remedy for health care system is universal Medicare (kansascity.com)
About dcpetterson (186 posts)
D. C. Petterson is a novelist and a software consultant in Minnesota who has been writing science fiction since the age of six. He is the author of A Melancholy Humour, Rune Song and Still Life. He lives with his wife, two dogs, two cats, and a lizard, and insists that grandchildren are the reward for having survived teenagers. When not writing stories or software, he plays guitar and piano, engages in political debate, and reads a lot of history and physics texts—for fun. Follow on Twitter @dcpetterson