Transformational Growth and Full Employment
Edited by Edward J. Nell and Mathew Forstater
Chapter 18: Transformational Growth Project Members and Conference Participants in Open Conversation
EDWARD NELL: Most proposals for public sector employment have treated it as a fiscal stabilizer, or as an anti-poverty measure. If it is to act as a fiscal stabilizer, the public sector should expand in a slump and contract in the boom. This is just what is needed to set up a Ôbuffer stockÕ approach to labor Ð to offer a labor supply in a boom and to hire in the slump, in both cases at a fixed wage. This will provide a stabilizing effect on the wage structure. We start by setting a fair, but low, wage at which labor will be absorbed in the slump and be released when private sector employment expands. Keeping the wage reasonable but low makes it easy for people to be bid away from public employment by the private sector. (This wage will become the market-imposed minimum wage.) In other words, the public sector wage will be chosen to make adjustment easy, and to help stabilize the wage bill. Of course, this has a direct impact only on the low end of the wage bill, but because the wage structure doesnÕt change easily, a very large part of the wage/price complex is stabilized. It can be expected that many of the jobs most likely to be created will be training jobs. At the same time we provide for full employment. Warren Mosler likes to call this Ôfull employment with loose labor markets,Õ as it prevents upward pressure on the wage bill while at...
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