Rep. Ro Khanna to Introduce Compromise “Jobs for All” Bill

The federal job guarantee bill would provide public, private, and nonprofit employers a subsidy to hire temporary employees for up to 18 months at a time.

FILE- In this Jan. 30, 2018, file photo, job applicants talk with employees of Hialeah Park, at a JobNewsUSA job fair in Miami Lakes, Fla. On Friday, May 4, the U.S. government issues the April jobs report. (AP Photo/Lynne Sladky, File)
Job applicants at a JobNewsUSA job fair in Miami Lakes, Fla. on Jan. 30, 2018. Photo: Lynne Sladky/AP

Ro Khanna, the Silicon Valley member of Congress who has been pushing the boundaries of progressive policy in the House, is wading into the debate over a federal job guarantee with a new draft bill.

The bill would provide public, private, and nonprofit employers a subsidy to hire temporary employees for up to 18 months at a time, with opportunities to extend the placement for another year, according to a copy of the bill, titled Promising Jobs for All, which Khanna, D-Calif., shared with The Intercept. Khanna’s use of the private sector is a departure from other plans that have been advanced of late. “Maybe it’s working for government or working for a union that’s doing drywalling or painting for a company,” Khanna told me of the possible guaranteed occupations. “It could be working for a local retailer or child care company.”

Both in the proposal itself and in an interview with The Intercept, Khanna referenced Franklin D. Roosevelt’s Economic Bill of Rights, the first point of which outlines the “right to a useful and remunerative job in the industries or shops or farms or mines of the Nation.” But despite Khanna’s reference to the iconography of the New Deal, his bill is decidedly more moderate than a high-profile effort by a handful of progressive economists that has been gaining steam lately. Khanna’s plan, by contrast, includes a range of new caveats, time limits, restrictions, and income thresholds — in some ways mirroring the kind of public-private compromise that appears in the dizzying complexity of the Affordable Care Act.

Khanna’s plan, much like the ACA, is an attempt to grapple with political and feasibility concerns that have dogged the more ambitious job guarantee proposals. Some in beltway policymaking circles have raised concerns about how difficult it could prove to implement such a program. The right argues that a job guarantee would fuel government excess and cronyism, helping the country creep ever-closer toward socialism. Some on the left see lionizing the value of work as a moral hazard, while tech-utopians see it as a threat to their preferred vision: a universal basic income, which would provide a salary for everybody regardless of whether they worked.  

Khanna is clear-eyed about the fact that his plan is not the most progressive one on the market, explaining that his more modest approach is driven in part by a concern that a more radical intervention might backfire in certain parts of the country. Citing “Strangers in Their Own Land,” Arlie Hochschild’s sociological account of Trump country during the five years leading up to his win, Khanna warned that in “communities where there’s great suspicion toward government jobs … we need to give people a path and a choice to succeed in the market economy or to succeed in government work.”

In a recent op-ed in the Washington Post, economists Jared Bernstein and Dean Baker praised the aim of a job guarantee, but expressed concerns that existing proposals could pull tens of millions of workers out of low-wage work in the private sector. Such a plan could “increase the size of the federal workforce by a factor of 10,” coaxing as many as 20 to 30 million workers out of the private sector, which they suggest would be both bad policy and terrible politics. Moreover, Baker predicts that some red states might refuse federal funds altogether, as they did in response to programs ranging from the Works Progress Administration through Obamacare.

For those reasons and more, Bernstein and Baker — who wrote a 2013 book, titled “Getting Back to Full Employment” — advocate for exploring a “less interventionist approach to job creation.”

But the argument from the left is that incrementalism is insufficient — both politically and as policy. In a paper for Bard College’s Levy Institute for Economics, economists Stephanie Kelton, L. Randall Wray, Pavlina Tcherneva, Scott Fullwiler, and Flavia Dantas, called for a $15 per hour federal job for anybody who wants one. Another plan, by Mark Paul, William Darity, and Darrick Hamilton, commissioned by the Center for Budget and Policy Priorities, similarly suggests a robust public role in guaranteeing work indefinitely. The authors of the latter two plans have been in talks with Sen. Bernie Sanders’s policy team as he crafts his job guarantee proposal, and Paul, Darity, and Hamilton’s work was a major influence on a bill introduced by Sen. Cory Booker, D-N.J., to set up pilot programs in a handful of rural communities.

Kelton was an economic adviser to Sanders’s 2016 presidential campaign and his chief economist on the Senate Budget Committee. She argues that Khanna’s bill flows from a flawed understanding of the nature of unemployment. While Khanna characterizes high unemployment as a market failure, Kelton calls it “a feature, not a bug, of capitalism.” High unemployment, after all, keeps wages down and profits up. The goal of a job guarantee, she said, shouldn’t be “to mitigate unemployment or improve things at the margin. We’re actually trying to do something that’s fundamentally transformative” — eliminating involuntary employment altogether. 

If the plan seems moderate, it’s not because Khanna lacks progressive bona fides: He was an early backer of “Medicare for All” and is a champion in Congress for Justice Democrats, a left-leaning group working to elect progressive candidates in general elections and primaries alike. Khanna has also co-sponsored a measure declaring that the U.S. involvement in the Saudi-led assault of Yemen isn’t authorized under the legislation that green-lit the Iraq War.

While there doesn’t seem to be bad blood between Khanna and the supporters of the different approaches  — Khanna’s team sent versions of the proposal to Kelton, Hamilton, and Baker to solicit feedback — Kelton and Hamilton each said that they were wary of framing Khanna’s proposal as a “job guarantee,” and had reservations about the program’s design. Kelton sees in Khanna’s proposal a basic contradiction: If Americans have a right to a job, she argues, that right should be absolute, and work should not be apportioned out in fits and starts. Under Khanna’s plan, a full-fledged job guarantee featuring $15 minimum wage jobs would be limited to a set of to-be-determined cities around the country, while elsewhere, jobs are limited to 18 months. “You can’t pilot a right, and it shouldn’t depend on your ZIP code,” she told me.

In light of recent momentum around full-fledged federal job guarantee proposals, Hamilton, when asked about Khanna’s proposal, warned against that enthusiasm “being co-opted, watered down, and deviated from its intended goal.” He asked: “Why be self-defeating, why introduce a compromised position before the transformative position has actually had a chance?”

Hamilton, whose research focuses on stratification economics, was particularly concerned that Khanna’s proposal would not actually keep applicants out of unemployment, instead requiring them to apply after having been unemployed for some time. Nor would Khanna’s plan address hiring discrimination.

Leaving hiring up to the private sector would preserve that sector’s rampant hiring bias, which inordinately impacts applicants of color and formerly incarcerated people. Making government employment unconditional — giving a job to anyone who wants one — provides another option. As Hamilton explained, “The universal guarantee that the FJG provides moves away from the ‘disciplining the poor’ frame to an economic ‘rights’ frame, which serves to alleviate racial, gender, and social stigma and discrimination in general.”

Despite those benefits, Baker argues that progressive policymaking should be moderated by a healthy dose of political pragmatism. “[Khanna’s proposal is] obviously much more modest than a full-scale job guarantee, because I don’t think we’re in place for a full-scale job guarantee,” Baker told me by phone. “The right can make mistakes all the time. On the left, it’s not the same story. We have to make sure our things work.”  

Rep. Ro Khanna, D-Calif., speaks on Capitol Hill in Washington, Monday, Dec. 18, 2017, during a news conference on sexual harassment. (AP Photo/Susan Walsh)

Rep. Ro Khanna, D-Calif., speaks on Capitol Hill on Dec. 18, 2017.

Photo: Susan Walsh/AP

Eligibility under Khanna’s proposal is tightly restricted to workers over the age of 18 who can prove that they have either been out of work for 90 days or their earnings fell below the poverty line for at least six months. Job placements would last for 18 months, though applicants have to work in the program for at least three months and can be fired. Employees in “high growth” or “stable” sectors would also be eligible to receive up to one additional year of technical training through their employer or an outside educational institution. Workers with less than a high school diploma or who were “facing other major barriers (e.g. age, criminal record, disabilities, domestic violence victims, recovering addicts)” could also apply for a 12-month extension waiver.

Over the course of 10 years, workers could accept up to three jobs program placements “though [they] could not stay with the same employer with a federal subsidy to prevent employers using taxpayer money indefinitely without hiring [the] employee.” In order to take another placement, workers must have been unemployed for four weeks after their last position. Other plans don’t outline limits on placements.

Although Khanna’s plan does not provide for a living wage or any income floor beyond that created by each state’s minimum wage laws, he contemplates that the “quality of all jobs under this proposal would be raised” with the passage of legislation for other workplace protections and benefits, like paid family leave and a higher federal minimum wage.

In a phone call with The Intercept, Khanna acknowledged that “the federal jobs guarantee is bolder” than his proposal, referencing Hamilton and Darity’s work by name. Both their proposal and the Levy measure exclusively lay out a plan for a public option for employment — perhaps the biggest difference from Khanna’s draft measure — staffing socially necessary work. “Our proposal,” Khanna contrasts, “is allowing people to get a job in the private sector as well.” He self-consciously sees it as a kind of stepping stone to a more wide-ranging guarantee, at this stage emphasizing training and credentialing jobs program workers to seek employment elsewhere.

Khanna’s program is designed specifically to avoid poaching work from the private sector by producing work in both the public and private domains that would be equally attractive to workers. It also disincentivizes using jobs program workers — paid for via the subsidy — to replace those whose wages are paid out a company’s pre-existing budget. For example, it bars companies from using subsidies to hire workers to replace existing ones or those that were recently fired, meaning firms can’t lay off a department (for instance) and replace it with subsidized workers. Khanna’s plan also aims to put workers on a pathway to higher-paying, skilled work — eventually receiving accreditation in a new field. That’s just one of a number of wraparound services the measure envisions, along with child care, transportation, and screening and matching applicants for jobs.

To further guard against the criticism that his plan would syphon too many workers away from the private sector, Khanna designed his program to be administered on two fronts; that’s where things start to get more complex. He imagines that the Department of Labor would provide regular grants to each state, the level of which would be based on each state’s Medicare match rate. In addition, states and municipalities, or “private, nonprofit organizations linked to local governments,” could apply to the Department of Labor for federal funds through a competitive grant process. States would be eligible for reimbursement between 75 and 100 percent of job guarantee spending, and could count welfare benefits and other federal funds spent on subsidized workers toward their contributions to the program.

The grant-making process would give special priority to applicants who would provide jobs in places with persistent racial disparities in unemployment or high rates of mortality and drug addiction.  If granted, eligible employers would receive a subsidy worth 120 percent of projected wage costs — 150 percent for unionized jobs. So that federal money wouldn’t overly subsidize the growth of private firms, if a company were to hire more than 15 people using subsidies, it would have to hire the equivalent of 25 percent of its unsubsidized workforce to continue receiving jobs program funding. In the event of a recession, that requirement would be dropped.

Five pilot communities would also be eligible for fuller-fledged job guarantee programs in the mold of the CBPP and Levy proposal, complete with living wages and benefits like paid vacation and health care. The ultimate goal would be to expand these programs if successful.

Unlike Baker and Khanna, Hamilton sees the program’s lack of competition with private sector employers as more of a liability than an asset. “Various job creation programs are often designed to complement, rather than compete, with the private sector,” Hamilton added. “As a result, these programs will end up subsidizing low wage, for-profit work, while, in contrast, a ‘public option’ to work … would raise the floor on wages, benefits, and working conditions by providing workers with a viable competitive alternative to precarious work.”

For example, in rural communities where large corporations like Walmart and McDonald’s are the largest employers, under Khanna’s plan, those companies could theoretically accept grants to bring on jobs program work, effectively subsidizing private work that continues to be poorly paid in industries dependent on toxic supply chains. It would also give the private sector more say over investment decisions on subsidized and newly staffed jobs programs relative to other proposals, meaning many projects would have to fit within either a company’s profit motive, a nonprofit’s missions, or existing local and state government agencies. Khanna agreed with these concerns and readily acknowledged that these issues are valid and still need to be worked out.

Khanna doesn’t see his measure as a be-all-end-all and is open about kinks that still need to be worked out — both before a final version of the bill is introduced and as part of any potential implementation. “I’m hopeful that others will propose their own plan. I hope we have a few,” he told me. “That’s what happened in health care, and that ultimately led to the Affordable Care Act. I think the more plans that are there, the better.”

Top photo: Job applicants at a JobNewsUSA job fair in Miami Lakes, Fla. on Jan. 30, 2018.

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