Need 5 million jobs??

"Foreman says these jobs are going boys and they ain’t coming back..."

The USA has lost 5 million good manufacturing jobs since 2000.  Services now account for about 85% of the jobs in the USA.  This includes great jobs that are the essence of America's new economy, like those stemming from Research and Development (academic, engineering, high tech), and management/administration services (lawyers, business and investment professionals). It also includes very low-paying restaurant and retail jobs that are the only ones many people can get absent an advanced education.

There are 14 million people working in restaurants in the USA today. Another 4.5 million work in retail sales. The average minimum wage in the USA is $7.25 an hour. That means there are almost 20 million working poor  in the services industries. In decades past, many of these people would have been working in great jobs such as those in auto plants that closed years ago. Add 45 million people living on food stamps, and this is a n American national tragedy.

Given that the good manufacturing jobs aren't coming back, the challenge is simple - i) recognize that service jobs will be the only jobs that millions of people will ever get in their lives - this is their career; ii) make sure that these people can live off the wages they earn at these jobs; and iii) spread these jobs around to dramatically lower the number of people living on food stamps.

California is going to raise the minimum wage to $15 an hour. This will represent a living wage for a family of 2. This should be a national policy. Unlike manufacturing jobs, service jobs cannot be exported. If the wages of almost 20 million people were to be doubled overnight, the positive effect on the demand side of the economy would dwarf anything the US Government or US Fed have done since 2009, simply because millions of poor people would now have twice as much money to spend.  The effect on businesses???...see below.

Spreading these jobs around would require a delicate policy balance. The policy could aim at limiting the length of the work weeks of those in these positions, thereby making room for more people to enter the workforce. This could be done through a combination of incentives to business to hire people in these industries, disincentives to staying on food stamps, and taxing people who work above a certain number of hours a week in these industries. The goal should be to open up 5 million new positions as soon as possible, which could reduce the number of people living on food stamps by perhaps 15 million, given that many people living on food stamps are dependents of people who are out of work.

But wouldn't the economy collapse as a result of doubling the minimum wage for the service industry? Wouldn't unemployment increase?  Wouldn't all service industry companies disappear?

The service industry will raise prices. This will cause the very inflation the US Fed has been praying for in order to have a relevant policy suite again. And the service industries will have millions more customers who can actually afford to buy - money will start moving again.

But isn't this socialism!!??

This is really about a managed economy. Every single banker in America has been managed for generations now. Every business benefits from some form of government largess, whether in the form of subsidies tax credits. Every single person has their hand in the public cookie jar, whether in the form of tax deductions for mortgage interest payments or Social Security or Medicaide, you name it...everyone in America is benefiting from an economy that is managed in almost every respect.

So why not manage the economy for the benefit of poor people? The state saved the banks and bankers took millions in bonuses during and after 2009. Mortgage interest deductions means the state is helping people to buy their homes! Why not structure a system that already exists - minimum wages and taxes - to maximize employment in an economy, and to make a massive dent in the number of people living on food stamps?

The alternative is what, exactly? More tax breaks for billionaires? 5 million new good paying jobs are just a few realizations away.