Employer of last resort

Employers of last resort (ELR) are employers in an economy to whom workers go for jobs when no other jobs are available; the term is by analogy with "lender of last resort". The phrase is used in two senses:

  • undesirable jobs, often private sector, which are only taken as a last resort;
  • a formal government job guarantee program, where the government promises to act as employer of last resort, employing all comers.

The sense of a job guarantee program is used and advocated by some schools of Post-Keynesian economists, notably by authors of Modern Monetary Theory at the University of Missouri-Kansas City, the Levy Economics Institute (both United States) and in the Centre of Full Employment and Equity (Australia), who advocate it as a solution for unemployment.

Use

Colloquially, this may refer to work which is undesirable to most people or pays poorly – for instance, in the United States economy, many fast-food and retail industry jobs represent last-resort employment for many workers.[1]

In economics, the phrase often refers to employers which can hire workers when no other employers are hiring. Their presence may soften the negative impact on employment of downturns in the business cycle. One example of such a program would be the Civilian Conservation Corps, a government agency intended to provide work to young, unemployed men. Military Keynesianism argues that the military can act as an employer of last resort.

Government as employer of last resort

Proposals

A scheme was proposed by the Urban Coalition in the mid-1960s and received some support in the US Senate but was opposed by Lyndon Johnson.[2]

More recently L. Randall Wray suggested a proposal for the US where workers would be subject to federal work rules, jobs would be tailored to individuals' existing skills, and the US Labor Department would assess proposals for employment and keep a central register; he estimated a total cost of 1–2% of the US's GDP.[3] Marshall Auerback suggested the government hire all unemployed workers, paying close to the minimum wage.[4]

Criticisms

Marshall Auerback mentioned a number of flaws which his proposal attempted to get around. Such a scheme might have an effect on wages for existing jobs. It would also potentially require a large and expensive state bureaucracy to administer.[4]

Examples

On April 3, 2002 Argentina signed into law the social program Jefes y Jefas de Hogar Desempleados. It acts as an employer of last resort for heads of household who are unemployed and unable to find work.[5]

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See also

References
  1. Scott Sernau (2014). Social Inequality in a Global Age. SAGE Publications. p. 96.
  2. "Nation: Employer of Last Resort". Time. Dec 29, 1967.
  3. Wray, L. Randall (June 8, 2011). "The Job Guarantee: A Government Plan for Full Employment". The Nation. Retrieved 13 January 2014.
  4. Auerback, Marshall. "Time to Try Government as Employer of Last Resort". Huffington Post. November 17, 2009. Retrieved 13 January 2014.
  5. Kostzer, Daniel. "Argentina: A Case Study on the Plan Jefes y Jefas de Hogar Desocupados, or the Employment Road to Economic Recovery" (PDF). The Levy Economics Institute.
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