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Employment Insurance reform that promotes agency

Published by Anonymous (not verified) on Tue, 20/10/2020 - 12:04am in

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Jobs

Benefits for employee initiated time away from work should be delivered through individual accounts, and a new program for maternity and parental benefits should be started outside of Employment Insurance.

More than one out of every three dollars distributed through the Employment Insurance program are for so-called Special Benefits, those parts of the program associated with maternity and parental leave, with caregiving, and with sickness.

The fact that the COVID19 pandemic is a health crisis with important job market consequences has sharply exposed and widened gaps not just in EI’s coverage and delivery of job loss benefits, but also with these Special Benefits.

Constructive reform will require rationalization of coverage for demographic and family risks and should proceed in a way that recognizes both their collective and individual nature, with a delivery design that gives citizens agency in an incentive compatible way.

This can be best accomplished by delivering Special Benefits through individual accounts, while at the same time devising a new program for maternity and parental benefits outside Employment Insurance.

Source: Employment and Social Development Canada, Employment Insurance Monitoring and Assessment Report: Fiscal Year 2018/19, Annex 5.1. https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/reports/monitoring2019/annex5.html Accessed October 16, 2020. Click on image to enlarge.

Over the course of three decades there has been an incremental and haphazard building up of more and more contingencies associated with Special Benefits, the associated rules and regulations being repeatedly revised as successive governments realize they inherently lack full knowledge of the evolving and dynamic risks millions upon millions of very different families face over their life course.

There are Maternity and Parental Benefits – including maternity, standard parental, extended parental benefits – with a host of regulations associated with which partner collects benefits, when they can collect, and for how long they collect.

There are Sickness Benefits that vary according to whether a citizen already has employer-paid benefits. These may also cover long-term or permanent disability, as well as bed rest during pregnancy.

And there are Care Giving Benefits for specific contingencies: a Family Caregiver Benefit for Children; a Family Caregiver for Adults; and Compassionate Care Benefits.

Source: Employment and Social Development Canada, https://www.canada.ca/en/services/benefits/ei/caregiving/apply.html, accessed October 16, 2020. Click image to enlarge.

Governments have incrementally expanded coverage according to perceived need, bad publicity, or political expediency, all the while layering on rules and regulations to ensure the public purse is not abused. The most egregious example of the paternalism involved is the requirement that citizens – during one of the most stressful periods in their lives – produce a doctor’s note to attest to the fact that their loved one is on their deathbed. This is a far cry from the “trust and verify” rule that was so valued in the delivery of the Canada Emergency Response Benefit.

All of this can be made more effective, more dignified, more simple by using personal accounts, designed in a way inspired by the three tiers of Canada’s retirement income system.

Just as Old Age Security and the Guaranteed Income Supplement offer an income floor for the lowest income seniors, so to would the government make an annual contribution to each individual’s EI Special Benefit Account, and in this way recognize that some demographic risks are a collective responsibility.

Beyond that, each individual’s EI premiums would be allocated to their own account, much in the way that the Canada and Quebec Pension Plans are financed on the basis of work history. Everyone would be free to use their accounts to support a period of time away from work, whenever, for whatever reason, and for whatever length subject to the balance in the account.

This reform of EI would start with a careful assessment of what is and what is not a “demographic risk.” It is reasonable to suggest that maternity and parental benefits should be taken out of the Employment Insurance program altogether, and be delivered universally as an aspect of an expanded childcare program.

Individual accounts for family events that are truly unforeseeable would have the dual purpose of recognizing that individual citizens know their own needs and circumstances better than politicians, while also promoting incentive compatible behavior. Individual accounts that can be accessed for whatever reason raise the value of having a job in order to build up the account, encouraging job finding and job holding. At the same time, the balance in the account puts limits on the duration of benefits. Any balance in the account at the end of an individual’s working life would roll over into a registered retirement account.

[ This post was published under the same title on October 19, 2020 by the CD Howe Institute. ]

‘Microcredentials’ Are Changing the Pandemic Job Hunt

Published by Anonymous (not verified) on Tue, 21/07/2020 - 6:29am in

The menu at the diner where Amy Nelson likes to take a break from work is notable for its side dishes, including caramelized bananas, cinnamon apples and mushrooms and onions.

Each can feed an appetite in its own right. And together with an entrée, they add up to breakfast.

That’s much like the radically new way Nelson and a small number of other pioneering students have been experiencing college.

First they get a credential in a skill they need, then another and another. Each of these can quickly pay off on its own by helping to get a job, raise or promotion. And they can add up over time to a bachelor’s degree.

“Even if I chose not to finish, I would still have these pieces and I’d say, ‘Look what I’ve done,’ as opposed to, ‘I have two years of college’” but nothing to show for it, said Nelson, who works as an information technology consultant and hopes to move into an administrative role.

The concept, known variously as “stackable credentials” and “microcredentials,” she said, “almost seemed too good to be true.”

That’s one of the reasons it’s been painfully slow to take off: Consumers have trouble understanding it. Even after she began the program, Nelson didn’t entirely get it. Then she started earning high-demand industry certifications, in rapid fire, in subjects such as technical support, cloud technology and data analysis on her way to her bachelor’s degree in data management. 

“I don’t think it really dropped on me until I sat down to update my resume,” she said. That’s when Nelson realized that each of those certifications had already increased her value on the job market.

Now the toll being taken on the economy by the coronavirus pandemic is giving microcredentials a huge burst of momentum. A lot of people will need more education to get back into the workforce, and they’ll need to get it quickly, at the lowest possible cost and in subjects directly relevant to available jobs.

The number of people in the same stackable information technology bachelor’s program as Nelson, offered by Western Governors University, has more than doubled since the start of the pandemic, from 4,410 in March to 10,711 in May, the online nonprofit says. The number taking microcredential programs from edX, the online course provider created by MIT and Harvard and the other major provider of this educational model, rose to 65,000 by the end of April, increasing 14-fold since early March alone. 

“People are looking for shorter forms of learning during this time. They don’t know whether they have two months, three months. They’ve lost their jobs,” said Anant Agarwal, CEO of edX, which had the fortuitous timing of launching a new stackable bachelor’s degree in computer science in January and three more in May — in writing, marketing and data science — and trademarked the term “MicroBachelors” to describe them.

“For them the ability to earn a microcredential within a few months and improve their potential to get hired as we come out of Covid becomes much more important,” Agarwal said.

Surveys bear this out. A third of people who have lost their jobs in the pandemic, or worry that they will, say they will need more education to get new ones, the nonprofit Strada Education Network found.

They don’t have time to waste. Among lower-income adults, who have already been disproportionately affected, one in four say they have only enough savings to cover their expenses for three months if they’re laid off or get sick, the Pew Research Center reports.

“They don’t have two to three years of runway to put a pause on their life,” said Scott Pulsipher, president of nonprofit, online Western Governors University, or WGU, which has rolled out microcredential programs in states including Nevada that supply certificates and certifications on the way to degrees in information technology and health care.

“The affordability question is factoring in, too,” said Pulsipher; the cost per credit of WGU’s IT microcredential program comes to about $150 per credit and edX charges $166 per credit for its MicroBachelors degrees, compared to the average $594 it costs to earn a credit at a conventional in-person university.

“No one planned for or designed for a pandemic but it starts to heighten the differentiated value that comes from things like microcredentials,” Pulsipher said.

harvardWith microcredentials, students first get a credential in a skill they need, then another and another. Each of these can quickly pay off on its own by helping to get a job, raise or promotion. And they can add up over time to a bachelor’s degree. Credit: Nance Coleman / Flickr

Agarwal reports edX signed up as many learners in April as it did in all of last year — it now has 30 million  — and a survey of new students found that 11 percent were already unemployed or furloughed and trying to learn skills that would help them get new jobs; edX has announced that it will offer a 30 percent discount on MicroBachelors programs to students who have lost their jobs because of the pandemic.

Even before the coronavirus hit, several providers were making a push for microcredentials. WGU and edX teamed up to create the program in which Nelson is enrolled. BYU Pathway Worldwide, an online spinoff of Brigham Young University-Idaho, has created stackable bachelor’s degrees in all of the subjects it offers. It calls them “Certificate First.”

That’s because students in these programs, and the others like it, first get certificates or certifications — short-term or industry-recognized qualifications — on their way to earning associate or bachelor’s degrees toward which the credits also count.

It’s an approach whose advocates say can help not only people who need credentials quickly to reenter the workforce, but solve a lot of problems that have been dragging down the success rates of college students seeking bachelor’s degrees.

“If you were designing [college] from scratch,” said BYU-Pathway Worldwide President Clark Gilbert, “this is how you’d do it.”

More than a quarter of students in conventional college programs quit after their first year, when a degree still seems intimidatingly far off. For many, it is; more than 40 percent of bachelor’s degree candidates still won’t be finished after even six years, according to the National Student Clearinghouse Research Center, which tracks this.

“And you wonder why we’re losing those populations in droves,” said Gilbert.

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Earning credentials on the way provides a series of rewards that may make students more likely to persist. Even if they don’t, they’ll have something to fall back on that can help them get, or advance in, a job. Under the existing system, the Clearinghouse reports, 36 million have dropped out with no degrees or certificates to show for their time in college — but often student loan debt to repay.

Agarwal likens getting a bachelor’s degree in this new way to climbing Mount Everest by first hiking to the base camp at about 17,000 feet and getting acclimated to the altitude before attempting to achieve the summit.

Earning that first certificate, Agarwal said, is like reaching the base camp; stacking them into a bachelor’s degree, like getting to the top.

Early returns suggest receiving those rewards along the way is helping the so far limited number of people who have already tried microcredential programs — at edX, for example, they comprise about a tenth of all enrollment — climb more quickly.

Nearly 70 percent of students racking up industry certifications on their way through the edX/Western Governors stackable IT programs finish their bachelor’s degrees not in four or six years, but in two, the university says. That’s in part because they also get 27 credits, on average, for earlier education or life experience, another new way of speeding students through their higher educations that is available from a growing number of colleges and universities.

At BYU-Pathway Worldwide, officials there report, the proportion of students who drop out between their first and second year has fallen more than 20 percentage points, from 35 percent to 14 percent, since the start of the Certificate First program.

“That early milestone — the early win — is so motivating,” Gilbert said. “Now they understand how education works. And if we lose someone, instead of being a dropout, they’ll have a certificate. Is it as good as having a bachelor’s degree? No, it’s not. But is it better than being a dropout? Yes, it is.”

That’s what student Brian Salazar experienced. “It’s very encouraging every time you pass one of the certification tests,” said Salazar, who has already earned certifications in Amazon AWS system operations administration, IT service management, Linux and several other industry cloud and network subjects.

An IT tech in Carson City, Nevada, Salazar had already gone to community college, but “I didn’t really have many job offers after getting my associate degree.” Once he started earning all of those certifications, “I started getting lots of offers,” even without the bachelor’s degree he expects to finish this year.

Certifications and certificates can also show prospective employers precisely which practical skills students have learned, which is increasingly important at a time when only 11 percent of business leaders in a Gallup poll strongly agreed that college graduates had the skills their businesses require. Two-thirds of Americans in a Pew Research Center survey said that students aren’t getting the skills they need for the workplace. Students don’t feel ready either: Only 41 percent say they consider themselves very or extremely prepared for their careers, a McGraw-Hill survey found.

It’s no coincidence that the institutions furthest along with stackable credentials are nonconventional ones. Some traditional universities say they want to add them, too, but longstanding practices are hard to alter.

“Education hasn’t changed in hundreds of years, and whenever someone comes and says, ‘Hey, look, this is something cool,’ they don’t understand it, or they look with suspicion on it,” said Agarwal.

Some other universities are trying to embrace this change. Many have programs that already help students earn industry certifications in fields including accounting and manufacturing. The University System of Georgia in January launched what it calls a “nexus degree” — certifications that add up to associate degrees that can then add up to bachelor’s degrees. The financial and enrollment challenges they now face also are pushing colleges and universities to seek new sources of revenue.

Conventional institutions that are working to come up with stackable credentials, however, have been slowed down by accreditation requirements, occasional faculty resistance, the need for certification bodies and academic departments to collaborate and the difficulty of explaining to consumers how the process works.

There’s growing pressure on all colleges and universities to speed up the process of embedding certifications and certificates into bachelor’s degrees. That’s because, even before the coronavirus created new problems for them, traditional higher education institutions already appeared to be losing business to those quicker, cheaper credentials.

Nearly one in 10 undergraduates today is working solely toward a certificate, and more are pursuing certificates or associate degrees than are studying toward bachelor’s degrees, the Georgetown University Center on Education and the Workforce reports. This is cutting into a market for bachelor’s degrees that’s already suffering from a decline in the number of 18- to 24-year-olds.

Shifting so much attention to vocational skills concerns some higher education experts.

Short-term certificates “can be a positive force in people’s lives,” said Chris Gallagher, vice chancellor for global learning opportunities at Northeastern University and author of College Made Whole: Integrated Learning for a Divided World. But suggesting it’s okay for learners to stop before they reach a bachelor’s degree, Gallagher said — just because they’ve already received some shorter-term credential — leaves them at a comparative disadvantage.

That’s because, while their income potential may be higher than if they quit with nothing, certificate holders who stop short of a bachelor’s degree may miss out on substantially greater earnings; a typical graduate with a bachelor’s degree will earn $1.19 million over his or her lifetime, compared to $855,000 for someone with an associate degree and $580,000 for a high school graduate, the economic think tank The Hamilton Project calculates.

By comparison, workers who finish a certificate make up to a comparatively modest $2,960 a year more, on average, than those with a high school diploma, according to the Community College Research Center at Teachers College, Columbia University. (The Hechinger Report, which produced this story, is an independent unit of Teachers College.)

Lifetime earnings estimates for certificate holders comparable to those for bachelor’s degree recipients are not available. Some research, including from the public policy think tank Third Way, has found much less financial benefit from them. The value of some certificates also fades over time as job demands change. Back at her breakfast in Henderson, Amy Nelson said friends have begun to ask her about the stackable credentials model. Their interest was piqued when she posted on Facebook how many certifications she’d already earned on the way to her degree.

“I had only been doing this for one year and I had all this stuff. It just blew my mind, so I wanted to share that,” she said. “To be the girl who was maybe not going to finish high school and now to have all these degrees, it’s sort of amazing.”

The post ‘Microcredentials’ Are Changing the Pandemic Job Hunt appeared first on Reasons to be Cheerful.

Finland’s basic income never failed, our ‘jobs’ did

Published by Anonymous (not verified) on Sat, 20/06/2020 - 5:12pm in

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Opinion, Jobs

Basic income skeptics should consider which system failed when confronted with the current avalanche of suicide, descent into addiction, and hungry mouth these twin crises have created.

Working from home – the new reality, or business as usual?

Published by Anonymous (not verified) on Thu, 28/05/2020 - 9:54am in

employment estimates

In this article, Glenn takes a look at the much-discussed phenomenon of working from home. While COVID-19’s long-term impact on our working lives is yet to be seen, the 2016 Census provides an important base-line ahead of the 2021 Census to start understanding fundamental shifts in how we work.

Of the many things which are changing in our world with the COVID-19 pandemic, one of the biggest is the idea that far greater numbers of people have to work from home. With social distancing requirements closing many offices, large chunks of the workforce have set up home offices, attended meetings via Zoom, Teams, Skype and other video-conference software, and many organisations are learning how to work remotely. I’ve seen estimates ranging from 20% to 50% of the workforce now working from home.

The latest ABS national survey published on May 18th has the figure at 46% in late April. On the news every night you see various experts interviewed on their couches, with kids in the background, and “Unmute yourself” is unofficially one the most spoken phrases of the year (“unprecedented”, anyone?). There are questions about whether working from home will continue after COVID-19 passes, but for now it seems to be becoming that other much-overused phrase “the new normal”.

But how new is it? We know that part of the population has worked from home for a long time. We also know that many jobs just can’t be worked from home, but many white-collar, creative and knowledge-based jobs can. Fortunately the Australian Census has included a question on this for the past 25 years. Information from this will be vitally important in the 2021 Census, but for now, let’s get a baseline and have a look at how many people worked from home in “normal” times.

A pre-COVID baseline

The 2016 Census recorded 503,581 people working at home on Census day – 4.7% of the total workforce, or around 1 in 20 people.  This was up from 4.4% in 2011, but interestingly represented a decline from a peak of 5.6% in 1996.  So, although the prospect of widespread “telecommuting” or remote working has been discussed for many years, there is no indication of a significant move to this style of working prior to COVID-19.

It’s also worth remembering that the Census specifically asks how each person got to work on census day. So it may not be indicative of the “usual” method of travel, or working from home. In fact, with the Census being a Tuesday, that is anecdotally the day of the week when more people are in the office than any other (certainly it’s usually got the most traffic) – so even those who more often work from home may be in on a Tuesday. This is backed up by the New Zealand Census, which in 2018 recorded 11.9% of the workforce working from home, more than double the rate in Australia. The New Zealand Census does ask for the “main” or “usual” method of travel.

Industries and sole traders

But this doesn’t tell the whole story. If you look at the areas with the greatest proportion of people working from home, they are largely rural areas, with a high proportion of employment in Agriculture. In fact the top 10 are mainly remote farming areas in SA and WA.

Top 10 LGAs by proportion of employed persons working at home, 2016 Census

LGA
% Working at home

Dumbleyung (WA)
29.9%

Karoonda East Murray (SA)
27.7%

West Arthur (WA)
27.4%

Woodanilling (WA)
27.4%

Croydon (Qld)
26.8%

Etheridge (Qld)
24.8%

Mount Marshall (WA)
24.1%

Kent (WA)
24.1%

Kulin (WA)
23.7%

Unincorporated Far West NSW
23.2%

Elliston (SA)
23.2%

This doesn’t represent telecommuting – just people working on their own farms. Agriculture has by far the largest percentage of any industry, at 27.1%.  Likewise, industries such as Construction have a relatively high proportion due to sole traders – tradespeople who use their home as a base. But the next highest is Professional, Scientific and Technical Services, at 12.9%.  These examples are largely  “home based businesses”, and are shown in our social atlas making up 2.8% of Australia’s workforce – or a little over half those who worked from home on Census day. Those working in them are likely to be sole traders or small employers and are working at home in their own business.

The phenomenon we are currently seeing, by necessity during the pandemic, is greater numbers of employees working from home. The Census does record this, but you need to drill down a bit further to see it.

Employees working from home

Restricting figures to just employees shows quite a different picture. While the highest percentage is still in Agriculture, it’s only 5.1%. Next highest is Professional, Scientific and Technical Services at 4.8%, and Information, Media and Telecommunications at 3.9%. (You would think that the telecommunications sector would be one of the easiest to work from home, but still only 1 in 25 employees did so in 2016.)

What this shows is that really, working from home as an employee – before COVID-19 – was very much the exception rather than the rule. Any areas with high WFH rates are largely due to the influence of home-based businesses, which are prevalent in Agriculture, but also in more affluent suburbs, where people may run a consultancy from home. For example, Boroondara in Melbourne and Mosman in Sydney show relatively high rates (but still only around 5%).

As expected, service and knowledge industries do have a higher rate of working from home, but in no industry does it exceed one employee in 20. Bearing in mind that this is based on Census being on a Tuesday, it’s likely that even on other days the rate is not more than double what’s shown here (and anecdotally, with 2016 Census having well known collection issues, many answered well after the day and may have responded with their “usual” method anyway).

So up to 2016 at least, the likelihood of any employee working remotely from home or elsewhere was quite low. This makes the change we’re seeing now with COVID-19 more remarkable. Obviously a large proportion of those jobs can be done from home, but the workplace model really has not supported it until now. We don’t know how many are working from home, but even the lowest estimates of around 20% of the workforce would represent approximately a 5-fold increase from the numbers seen in the 2016 Census, while the upper range estimates would give a 20-fold increase.

Looking forward

This is quite profound, and it begs the question – “When (if) we return to normal, will people go back to the office?”. We are currently seeing the economy starting to open up again.  For jobs that can be worked remotely, will employers allow, and will employees choose to continue working from home? There are certainly some advantages, with less commute time and potentially less distractions. But there are plenty of downsides as well, with difficulty separating work and home life, and lack of social interactions based around work.

The implications could be enormous if this continues. Many commentators have been talking about a shift to home-based work, and a reduction in the need for office space, transport infrastructure etc. for decades. Could a virus be what finally makes it mainstream? But how mainstream is mainstream. By the 2021 Census, will we see a modest increase to 10% WFH, which would still be more than tripling of the 2016 numbers? Or will it be a more drastic 30-40%, and a big shift away from office based work for all white-collars?

We don’t have those answers yet. Even here at .id, we are still discovering how it’s going to work at our company in the long term. But you do have pre-COVID-19 baseline data for this in the community profile and social atlas tools.

The community profile for Local Government Areas includes the Method of Travel to Work section (under “What do we do?”), which includes home-based work. Here is a link to the page on our Australia profile, but it exists on all our client sites.

Also, on the social atlas (atlas.id), there is a map under the “Transport” section, which shows where people work at home in a home-based business.

If you need any further analysis, please get in touch with us. Some examples of this work are on the demographic consulting page.

A Post-COVID Vision: The Full and Sustainable Employment Act

By Brian Czech

If COVID-19 has taught us anything, it is that the Great God of GDP is a false god after all, impotent as Baal. The mighty American economy, with unprecedented GDP, has been knocked to its knees by one of the lowest conceivable life forms, a mere virus possessing not a single strand of DNA. Politicians who thought their legacies would be associated with “the greatest economy ever” now look like ridiculous priests of a sham religion.

GDP exceeding $21 trillion in 2019 ($87 trillion globally) has been powerless to cure the sickness, financial trauma, and fear experienced by millions of Americans and billions of souls worldwide. Adapting to the new reality of a COVID-infected world and the uncertain hope for a vaccine is depressing in the best of scenarios and devastating in the worst. Yet adapt we must, and that includes public policy as much as individual behavior.

Coronavirus briefing. We need a Full and Sustainable Employment Act.

Pushing for growth vs. protecting the public: COVID-19 as the latest episode. (Image: CC0, Credit: The White House)

The CDC, NIH, and WHO have provided recommendations for lowering the spread of the virus and helping infected patients survive. Politicians are attempting to balance such recommendations with the concern for a healthy economy. The problem is that virtually every major politician in the USA, as well as a majority of politicians in the world, think of economic health in terms of GDP growth. For that matter, so do the economists advising these politicians and appearing on mainstream media. Their “adaptation” to the COVID-caused recession is nothing more than a hapless attempt to get back to business as usual; that is, growing the GDP through fiscal and monetary “stimulus.” In other words, it’s no adaptation at all!

Common sense and a pair of eyes is enough to recognize that the need for social distancing—effective adaptation to COVID-19 at the individual level—translates into lower levels of economic activity and a lower velocity of money. Unfortunately, politicians are now handling public health as they handled environmental protection for decades, acting as if we can have our cake and eat it too. They seem to think that, with enough Plexiglas panels on factory floors and retail counters, we can stimulate the economy back into $21-trillion territory without suffering a pandemic death toll. We can expect claims of “there is no conflict between growing the economy and protecting public health,” echoing the decades-old mantra that “there is no conflict between growing the economy and protecting the environment.”

Will we be fooled again by the win-win rhetoric? I don’t think so—at least not nearly so many of us—because this time the threat of the growth obsession is a direct, imminent matter of life or death. As employees are prematurely pressured to return to work “for the economy,” knowing fully well that doing so increases their odds of contracting the deadly virus, surely they will rethink what “the economy” is really for and who is behind the push to “stimulate” it.

There will be a significant percentage of individuals who decide more or less happily never to return to the jobs that dominated their life pre-COVID. Many will wrestle with trade-offs, such as extra gardening and more childcare, and certainly less luxury goods and entertainment. Some will have saved enough—and were cautious enough to avoid debt traps—such that they may find the new lifestyle to be empowering and even more joyful than the old 9-to-5 grind. They won’t be contributing much to GDP, but they’ll be healthier and happier, and will hardly be a burden on the nation’s infrastructure and budget.

Unfortunately, many others will be desperate to return to work or find a new job. They may have little means of subsistence—no lawn for a victory garden—and some will be threatened with homelessness when they can’t pay the rent. Even they, however, will see through the lie that “there is no conflict between growing the economy and protecting the public from COVID-19.” They are victims of an unfair capitalist system who must go to work “for the economy” and risk their health in the process.

The experience of individuals far and wide, then, will be conducive to a sea-change in attitudes toward the economy, GDP growth, and the government’s role in defending its own taxpaying citizens.

A New Economic Policy for 21st Century America

A new policy vision for the post-COVID economy entails replacing the current policy. So, what exactly is the current policy? What is it that steers us constantly, relentlessly back onto the GDP growth path? Let’s take a short trip down institutional memory lane…

Harry Truman and the Full and Sustainable Employment Act

President Harry Truman signed the Employment Act in 1946; a first step in the formal pursuit of GDP growth. (Image: CC0, Credit: Abbie Rowe)

As a response to the Great Depression, Franklin Delano Roosevelt gave Americans the New Deal. Most of the work programs were cultural successes and employed significant numbers of young men. Yet the Depression wasn’t “solved” until World War II, with the mobilization of the civilian labor force and technological progress spinning out of war-time laboratories. Most Americans know this basic story of the Great Depression, New Deal, and World War II, but few seem aware of the Employment Act of 1946. We must be fully aware of it to move toward a new economic policy for the 21st century.

The Employment Act was a Keynesian adaptation to the experience of the Great Depression; that is, it was largely a result of John Maynard Keynes’ General Theory of Employment, Interest, and Money. Prior to Keynes, economists clung stubbornly to their ideal of laissez faire (let do; non-interference) as the proper governmental approach to economic affairs. General Theory was the paradigm-shifting book that persuaded Western governments to take active fiscal and monetary measures for ensuring adequate demand for goods and full employment of the labor force.

In crafting the Employment Act, the 78th Congress was especially concerned about the social and cultural ravages of unemployment. It was less concerned with any explicit notion of economic growth. For one thing, national income accounting was in its infancy. Also, Congress was still reluctant to get the federal government very involved in economic affairs, especially with heightened concerns over the sway of communist ideology. That said, the Employment Act did establish the Council of Economic Advisors, which turned out to be a highly influential pro-growth institution for decades to come.

The American economy ran fairly smoothly and grew very rapidly for the next couple of decades, but by the 1970s, American political leadership was beside itself with the problem of stagflation, that is, recession (“stagnation”) concurrent with inflation. Economists thought you could have only one or the other for any significant period of time and that they were, in fact, countervailing forces. Unlike World War II, though, the Vietnam War wasn’t sufficient to kick the real economy into high gear. Efforts to stimulate investment and consumer spending by loosening the money supply only led to inflation. Thus, stagflation.

The bedeviling bouts of stagflation finally led Richard M. Nixon to announce, “We are all Keynesians now,” recognizing that conservative diehards were some of the last to accept any government involvement in macroeconomic policy. Nixon had established the Bureau of Economic Analysis in 1972 for state-of-the-art accounting and GDP calculation. The 95th Congress, led by Hubert Humphrey and Augustus Hawkins, worked to update the Employment Act, which was finally amended as the Full Employment and Balanced Growth Act (FEBGA) and signed by President Carter in 1978. As of then, the US government was fully and formally committed to GDP growth as central economic policy.

It was easy for supporters of FEBGA to argue mathematically that, all else equal, more jobs could be had with greater GDP. It was also easy for Big Money to hide behind pro-growth policy for purposes of accumulating more capital and increasing CEO salaries, without any concern for creating more jobs. Not surprisingly, FEBGA ended up a thick mix of fiscal and monetary policy that serves the capitalist as well as the labor force.

FEBGA is often referred to with the shorthand “Employment Act,” saving a number of syllables and reminding us of its original (1946) focus. I favor the full 1978 title, even if only via acronym, as a reminder that GDP growth is not just some wistful political notion or rhetorical tool but rather a formal, central policy of the USA pursued with fiscal, monetary, and deregulatory means, as well as diplomacy and terms of trade in international affairs.

Now, more than a half century later and in the midst of an economy-crushing pandemic, it’s time to rewrite FEBGA. We need a Full and Sustainable Employment Act, with the very name change communicating that growth is no longer sustainable.[1] The Full and Sustainable Employment Act will mark the transition from economic growth to a steady state economy, politically and every bit as formally as FEGBA called for growth.

Pro-growth politicians (or perhaps Big Money) came up with the brilliant metaphor, “A rising tide lifts all boats.” While at least one source attributes the phrase to President John F. Kennedy, it seems like the stuff of Madison Avenue. And, when limits to growth aren’t acknowledged, the logic illustrated by the metaphor is unassailable. All else equal (“ceteris paribus” in econ-speak), a growing GDP means more jobs. Of course the devil is in the phrase “all else equal,” because little is equal on the tilted chess board of a capitalist economy. Instead of more jobs, a growing GDP too often means more expensive technology and billionaire CEOs, who are just as effective at blasting ships out of the water as making way for more boats.

Either way, the metaphor of the rising tide sinks like a presidential approval rating when limits to growth are recognized, as they increasingly are and should especially be in the context of COVID-19. There is only so much water; the tide can’t rise forever. There is a limit to the number of boats at sea, too, and even a limit to boat-building material on shore. It’s high time for the “rising tide” metaphor to ebb all the way back into the rustic recesses of faded political minds.

It so happens that the acronym of Full and Sustainable Employment Act—FSEA—is useful for nailing the coffin shut on the “rising tide” metaphor. Combining “F” (for Full) and “SEA” invokes the image of a full sea. Why not take advantage of such a linguistic coincidence and make the message a little clearer yet? It is not unprecedented for Congress to wax metaphorical with the short title of a paradigm-shifting statute; they might as well call this one the “Full Seas Act.”

ships and the Full Sustainable Employment Act

“A rising tide lifts all boats” was a fine metaphor for the 20th century, but in the 21st century the seas are full. (Image: CC0, Credit: Good Free Photos)

What might the Full Seas Act actually look like? How will it conduce a steady state economy? What happens to the pro-growth arrangements established by FEBGA? The best way to envision these developments is to consider a proposed Section 2.[2]

Full Seas Act—Findings and Declaration

In a typical act of Congress, Section 1 provides a short title (“Full Seas Act” in this case). Section 2 is in many ways the most important section of a path-breaking statute because it establishes the key findings and declarations of Congress. It comprises a sort of preamble and emanates the spirit of the law. It justifies the details laid out in subsequent sections, and future policy development at the agency level will be informed by its content as well.

On the other hand, readers should keep in mind that Section 2 is never designed to address all the details of the challenge at hand, much less all the problems of the world. The crux of the Full Seas Act is a formal transition from economic growth to the steady state economy (most likely via degrowth). Therefore, Section 2 will not include references to specific policy tools such as minimum wages, energy caps, banking reforms, etc. Sections 3 and beyond just as surely will, however.

Without further ado, then, the initial public offering of the Full Seas Act, Section 2, more or less consistent with the canons of statutory construction:

 

SEC. 2.

(a) FINDINGS. The Congress finds that—

(1) Economic growth, as measured with gross domestic product (GDP), requires a growing human population, increasing per capita consumption, or both.

(2) Consistent with the natural sciences, including basic principles of physics and biology, there are limits to economic growth within and among nations.

(3) There is a fundamental conflict between economic growth and environmental protection, including the maintenance of: clean air and water; productive soils; biological diversity; stocks of natural resources including water, timber, fisheries, minerals, and fossil fuels, and; funds of ecosystem services including nutrient cycling, pollination, waste absorption, and carbon sequestration.

(4) A well-maintained, non-degraded environment is the foundation of a productive economy. Therefore, and because of the fundamental conflict between economic growth and environmental protection, there is also a fundamental conflict between economic growth and the long-term maintenance of the economy including jobs, income, and wellbeing.

(5) A well-maintained economy is vital to national defense. Therefore, and because of the fundamental conflict between economic growth and the long-term maintenance of the economy, there is a fundamental conflict between economic growth and national security.

(6) There is abundant environmental and economic evidence that long-term limits to growth have been and are being reached and exceeded in the Nation, other nations, and globally.

(7) There is abundant evidence that perennial fiscal and monetary efforts to stimulate GDP growth are increasingly causing environmental, economic, and social harm while resulting in fewer benefits, with the harm gradually exceeding the benefits.

(b) DECLARATION. The Congress declares that—

(1) It is heretofore the policy of the Nation to undertake a gradual but certain transition from the goal and pursuit of economic growth to the goal and pursuit of a sustainable steady state economy, with stabilized or mildly fluctuating population and per capita consumption as generally indicated, all else being equal, by a mildly fluctuating GDP.

(2) The transition to a steady state economy must be undertaken with every intent and effort to achieve and maintain the full employment of the labor force consistent with environmental protection and other aspects of economic sustainability including a balanced federal budget and the effective control of inflation.

(3) The President, President’s Cabinet, Council of Economic Advisors, Federal Reserve, and federal agency directors will immediately cease and desist from developing strategies and initiatives to grow or stimulate the economy. Existing policies, programs, and projects designed explicitly to grow or stimulate the economy shall not be extended beyond fiscal year 2021 or beyond the designated sunset date, whichever comes later.

(4) The Congressional Research Service, collaborating with the Office of Management and Budget and Council of Economic Advisers, will review and summarize the federal agency mission statements, goals, objectives, policies, programs, and practices designed for GDP growth, producing a Report on Federal Growth Incentives no later than 30 April 2022.

(5) A Commission on Economic Sustainability (“the Commission”) is hereby established to include the Administrator of the Environmental Protection Agency and the Secretaries of Agriculture, Energy, and Commerce, chaired by the Secretary of the Interior, to estimate and monitor environmentally sustainable levels of population and socially optimal levels of GDP. The Commission will produce a Report on Sustainable Population and Optimal GDP no later than 31 August 2022.

(6) The Commission Chair, with counsel of the Chairman of the Council of Economic Advisors, Secretary of Commerce, Federal Reserve Chair, and Secretary of the Treasury, drawing on the Report on Federal Growth Incentives and the Report on Sustainable Population and Optimal GDP, and pursuant to the framework provided in subsequent sections herein, will develop and deliver to the President, no later than 31 August 2023, a 25-year Steady-State Transition Plan detailing and scheduling the adjustments, modifications, additions, and deletions necessary to establish a system of government operations most conducive to a steady state economy at an estimated optimal level of GDP.

(7) The President, Cabinet secretaries, and federal agency directors shall not overlook the existence, neglect the enforcement, or underfund the performance of the Clean Air Act, Clean Water Act, Endangered Species Act, National Environmental Policy Act, or any other of the Nation’s environmental laws or regulations on grounds that said laws or regulations may interfere with the workings of the economy or slow the rate of GDP growth.

 

Stay Tuned for the Rest of the Full Seas Act

For policy wonks and steady-state advocates, exciting times lie ahead as Sections 3 and beyond of the Full Seas Act will feature long-awaited steady-state policy instruments. The starting point should be the top ten policies favored by Herman Daly. Chapter 11 of Supply Shock is largely for purposes of informing the Full Seas Act. And, at the risk of unintentionally omitting dozens of helpful individuals, now is the time to revisit specific proposals of scholars such as Peter Victor, Tim Jackson, Dan O’Neill, and Phil Lawn as well as the rich mix of overlapping ideas emanating from the European degrowth movement.


“Steady statesmanship” an essential aspect of the Full Seas Act. (Image: CC0, Credit: U.S. Department of State)

Speaking of the latter, the Full Seas Act could hardly be effective in a world pursuing GDP growth with only rare exceptions such as Bhutan and New Zealand. Ramped up levels of international trade will be difficult to reconcile with the steady state economy of a huge nation-state. Therefore, the Full Seas Act must address the need for steady statesmanship in international diplomacy.

We should take a page from the playbook of the 93rd Congress, which passed the Endangered Species Act of 1973. Congress used Section 8 largely to implement American obligations pursuant to the Convention on International Trade in Endangered Species of Wild Fauna and Flora, or “CITES,” one of the most sweeping international conservation agreements to date.

Our approach in the Full Seas Act needs to be more proactive, because in this case there is no convention ready and waiting to be implemented. We should devote one section, then, to fleshing out and pursuing the development of a Convention on Economic Sustainability, most likely with a United Nations secretariat. This convention will be assembled for purposes of addressing global limits to growth and the need for “contraction and convergence,” or the acceptance of degrowth in wealthy countries while nations with ubiquitous poverty are assisted to the extent that they have diplomatically established their own sustainable steady-state goals.

Steady statesmanship may be even more difficult than the domestic policy reforms required for an American steady state economy. Yet the harsh realities of COVID make such statesmanship feasible as well. In any event, does it matter how difficult it is, in deciding whether to pursue it? After all, what is the alternative? As we like to say at CASSE, peace is a steady state economy.

And so is health.

[1] See Chapter 11, “A Call for Steady Statesmen,” in Czech, B., Supply Shock: Economic Growth at the Crossroads and the Steady State Solution (2013, New Society Publishers) for the initial proposal of the Full and Sustainable Employment Act along with numerous policy tools and institutions to be considered in drafting the legislation.
[2]The Section 2 proposed herein does not include amending specifications. The bill presented to Congress will specify which clauses of FEBGA are to be amended, and how. Basically, however, the intent is to replace Section 2 of FEBGA with the proposed Section 2 herein.

Brian Czech

Brian Czech is the Executive Director of the Center for the Advancement of the Steady State Economy.

The post A Post-COVID Vision: The Full and Sustainable Employment Act appeared first on Center for the Advancement of the Steady State Economy.


Unemployment rises to 6.2%. But less than expected.

Published by Anonymous (not verified) on Fri, 15/05/2020 - 8:30am in

The ABS releases Labour Force data every month, from its largest ongoing survey, of around 25,000 households each month. The April 2020 release, on May 14th, 2020 was the most closely watched for some time, as it was expected to show the impacts of the COVID-19 economic shutdown which took effect in the second half of March, after the March survey was run. The March data only showed a 0.1% increase in unemployment, and this was one was widely tipped to be in the 7-8% range, on its way to around 10% in the coming months.

In fact, the unemployment rate for Australia was 6.2%,  up by a full 1.0%, a big increase, but not as large as was expected.

Why would this be? Everyone knows about the huge job losses that have been experienced recently, due to the virus shutdown.

The answer is in the other figure, less quoted, but equally important, from every Labour Force survey – the participation rate. This fell substantially, from 65.9% to 63.5%.

Some definitions

Measure
Definition
Comments

Unemployment rate
(Number of people without a job and actively looking for work) / (Number of people in the labour force)
To be unemployed, you have to not only not have a job, but you must be looking for work actively and available to start work within the next week.

Labour force
Employed + Unemployed
Everyone aged 15+ who is either employed or looking for work is in the labour force

Not in the labour force
All other population over 15
The largest group within “Not in the Labour Force” is retirees, but it can include stay at home parents, full-time students, and discouraged jobseekers, or really anyone who is not employed but not looking for work.

Participation rate
(Labour force) / (Population over 15)

Source: ABS 6102.0.55.001 – Labour Statistics: Concepts, Sources and Methods

Remember that unemployment does not necessarily include everyone who is receiving a JobSeeker payment, and it may also include people who are not on JobSeeker at all. It’s an interview based survey (now 100% phone interviews), so it depends on how the respondent answers the questions. Households are normally in the Labour Force Survey for 8 months, with 1/8th of the sample rotated in and out each month. A lot of people think the unemployment data comes from Centrelink, but it’s not directly associated with any government payments.

So, while the survey found a decline of 594,000 jobs (4.6%) in a month, the number of unemployed “only” increased by 104,500, because many of those who lost jobs weren’t actively seeking more work. This resulted in a large drop in the participation rate.

This doesn’t include JobKeeper – those employed by a business receiving this payment are still classified as employed because they are being paid via their employer, and the government pays the employer.

The survey also records “underemployment” which is a measure of those who were working less hours than they would like to, and this showed a large increase, to 13.7% of the labour force, up by over 600,000 people, and the highest ever recorded. This will include many of those on JobKeeper, who may be working less hours, but whose wages are supplemented by this program.

This is a really important distinction – JobKeeper recipients aren’t part of the unemployment rate, but they may be included in underemployment, if they’re working less hours. This difference is shown clearly in .id and NIEIR’s new COVID-19 pages on economy.id, which outline the expected effects over the June 2020 quarter of the current economic shutdowns and stimulus, in your local and regional economy. In the chart, we clearly differentiate between expected job losses and jobs supported by JobKeeper, modelled via hours worked impacts. These are now available for every subscriber to economy.id.

So the unemployment rate, though it’s the most quoted headline figure, omits a lot of detail.

At .id, we know that employment data is a really important indicator of what’s going on in your community. As well as the new updated COVID-19 forecasts on economy.id, we have the quarterly updated unemployment rate for your local area on the site (under economic indicators at the top of the page). This is current to December 2019 at the moment, so it won’t show Covid-19 impacts just yet, but updates will be rolled out as soon as they’re available.

And in profile.id, you can see Census-derived estimates of unemployment and participation rates. While these are updated only every 5 years, and should not be seen as indicative of current conditions, they are fantastic for comparing across areas, so you can see the relative rates of unemployment as indicators of advantaged and disadvantaged areas, and these can also be mapped in the atlas (alongside youth and seniors unemployment).

Note that the participation rate shown in profile (derived from Census) will generally be a bit lower than the one shown in the Labour Force survey – that’s because about 7% of the population don’t answer the question on the Census form, so they appear in “Not Stated”. But it’s quite comparable across areas.

Also on profile and atlas, we include “Disengagement” – this is a measure of the proportion of each age group who are not employed or in education. This will be one to watch in future as the economic effects filter through the population, as it’s strongly correlated with social disadvantage.

There is more information on the Labour Force Survey and how it’s being conducted during the Covid-19 crisis at the ABS website. Eg. They have moved to entirely phone-based surveying, and as previously reported, have dropped the “trend” series as current events are altering the trend dramatically.

If you need further analysis of these results, we’re always there to help. Contact .id via our website, or email info@id.com.au.

 

 

‘Do What You Love’ Mantra Makes People Feel Like Failures

Published by Anonymous (not verified) on Mon, 19/10/2015 - 10:25am in

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Jobs

New Tools for Retrenched Workers

Published by Anonymous (not verified) on Mon, 07/09/2015 - 11:31am in

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employment, Jobs

Partnership Creates Indigenous Jobs

Published by Anonymous (not verified) on Mon, 17/08/2015 - 11:02am in

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Jobs

Unemployment Not Due to Lack of Motivation

Published by Anonymous (not verified) on Fri, 06/03/2015 - 3:23pm in

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Jobs, Unemployment

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