The Legal Duty to Create Jobs

Lost in the Debt Ceiling Debate: The Legal Duty to Create
Jobs

by Jeanne Mirer and Marjorie Cohn
Submitted to Portside by the authors

August 11, 2011

http://www.commondreams.org/view/2011/08/11-0

The debate about the debt ceiling should have been a
conversation about how to create jobs. It is time for
progressives to remind the government that it has a legal
duty to create jobs, and must act immediately - if not
through Congress, then through the Federal Reserve.

With official unemployment reaching over 9%, the unofficial
rate in double digits, and the unemployment rate for people
of color more than double that of whites, it is nerve
wracking to hear right wing political pundits say the
government cannot create jobs. Do people really believe this
canard? On "Real Time with Bill Maher" a few weeks ago,
Chris Hayes of The Nation stated that the government should
create and has in the past created jobs, but he was put down
by that intellectual giant Ann Coulter who said, "but they
(WPA jobs) were only temporary jobs." No one challenged her.

Most of the jobs created under the Works Progress
Administration (WPA) - and there were millions of them -
lasted for many years, or until those employed found other
gainful employment. They provided a high enough income to
allow the worker's family to meet basic needs, and they
created demand for goods in an economy that was suffering,
like today's economy, from lack of demand. The WPA program
succeeded in sustaining and creating many more jobs in the
private sector due to the demand for goods that more people
with incomes generated.

The most galling thing about pundits stating with such
certainty that the government cannot create jobs is the
implication that the government has no business employing
people. In actuality, however, the law requires the
government, in particular the President and the Federal
Reserve, to create jobs. This legal duty comes from three
sources: (1) full employment legislation including the
Humphrey Hawkins Full Employment Act of 1978, (2) the 1977
Federal Reserve Act, and (3) the global consensus based on
customary international law that all people have a right to
a job with favorable remuneration to provide an adequate
standard of living.   .

1.      Full Employment Legislation

The first full employment law in the United States was
passed in 1946. It required the country to make its goal one
of full employment. It was motivated in part by the fear
that after World War II, returning veterans would not find
work, and this would provoke further economic dislocation.
With the Keynesian consensus that government spending was
necessary to stimulate the economy and the depression still
fresh in the nation's mind, this legislation contained a
firm statement that full employment was the policy of the
country. As originally written, the bill required the
federal government do everything in its authority to achieve
full employment, which was established as a right guaranteed
to the American people.  Pushback by conservative business
interests, however, watered down the bill. While it created
the Council of Economic Advisors to the President and the
Joint Economic Committee as a Congressional standing
committee to advise the government on economic policy, the
guarantee of full employment was removed from the bill.

In the aftermath of the rise in unemployment which followed
the "oil crisis" of 1975, Congress addressed the weaknesses
of the 1946 act through the passage of the Humphrey-Hawkins
Full Employment Act of 1978. The purpose of this bill as
described in its title is:

"An Act to translate into practical reality the right of all
Americans who are able, willing, and seeking to work to full
opportunity for useful paid employment at fair rates of
compensation; to assert the responsibility of the Federal
Government to use all practicable programs and policies to
promote full employment, production, and real income,
balanced growth, adequate productivity growth, proper
attention to national priorities."

The Act sets goals for the President. By 1983, unemployment
rates should be not more than 3% for persons age 20 or over
and not more than 4% for persons age 16 or over, and
inflation rates should not be over 4%. By 1988, inflation
rates should be 0%. The Act allows Congress to revise these
goals over time.

If private enterprise appears not to be meeting these goals,
the Act expressly calls for the government to create a
"reservoir of public employment." These jobs are required to
be in the lower ranges of skill and pay to minimize
competition with the private sector.

The Act directly prohibits discrimination on account of
gender, religion, race, age or national origin in any
program created under the Act. Humphey-Hawkins has not been
repealed.  Both the language and the spirit of this law
require the government to bring unemployment down to 3% from
over 9%. The time for action is now.

2.      Federal Reserve

The Federal Reserve has among its mandates to "promote
maximum employment."  The origin of this mandate is the Full
Employment Act of 1946, which committed the federal
government to pursue the goals of "maximum employment,
production and purchasing power."  This mandate was
reinforced in the 1977 reforms which called on the Fed to
conduct monetary policy so as to "promote effectively the
goals of maximum employment, stable prices and moderate long
term interest rates." These goals are substantially
equivalent to the long-standing goals contained in the 1946
Full Employment Act. The goals of the 1977 act were further
affirmed in the Humphrey-Hawkins Act the following year.

3.      The global consensus based on customary
international law that all people have a right to a job with
favorable remuneration and an adequate standard of living

In the aftermath of World War II, and for the short time
between the end of the war and the beginning of the Cold
War, there was an international consensus that one of the
causes of the Second World War was the failure of
governments to address the major unemployment crisis in the
late 20's and early 30's, and that massive worldwide
unemployment led to the rise of Nazism/fascism. The United
Nations Charter was created specifically to "save succeeding
generations from the scourge of war." To do so the drafters
stated that promoting social progress and better standards
of life were the necessary conditions "under which justice
and respect for obligations arising under treaties and
respect for international law can be maintained."

It is no accident that one of the first actions of the UN
was to draft the Universal Declaration of Human Rights.
(UDHR or the Declaration). The Declaration was ratified by
all then members of the United Nations on December 10, 1948.
It is an extremely important document because it not only
recognized the connection between the respect for human
dignity and rights, and conditions necessary to maintain
peace and security. The Declaration is the first
international document to recognize the indivisibility
between civil and political rights (like those enshrined in
the Bill of Rights) on the one hand, and economic, social
and cultural rights on the other.   The UDHR is the first
document to acknowledge that both civil and political rights
are necessary to create conditions under which human dignity
is respected and through which a person's full potential may
be realized. Stated another way, without political and civil
rights, there is no real ability for people to demand full
realization of their economic rights. And without economic
rights, peoples' ability to exercise their civil rights and
express their political will is replaced by the daily
struggle for survival.

The Declaration, although not a treaty, first articulated
the norms to which all countries should aspire. It stated
that everyone has the right to an adequate standard of
living. This includes the rights to: work for favorable
remuneration, (including the right to form unions), health,
food, clothing, housing, medical care, necessary social
services, and social insurances in the event of
unemployment, sickness, disability or old age. There has
been a conspiracy of silence surrounding these rights. In
fact, most people have never heard of the Universal
Declaration of Human Rights.

Similarly, most Americans do not know that the UN drafted
treaties which put flesh on the broad principles contained
in the Declaration. One of the treaties enshrines Civil and
Political Rights; the other guarantees Economic, Social and
Cultural Rights. These treaties were released for
ratification in 1966. The United States ratified the treaty
on civil and political rights and has signed but not
ratified the economic, social and cultural rights treaty.

The latter treaty requires the countries which have ratified
it to take positive steps to "progressively realize" basic
economic rights including the right to a job. Almost all
countries of the world have either signed or ratified this
treaty. When most countries become party a treaty, they do
so not because they think they are morally bound to follow
it but because they know they are legally bound. Once an
overwhelming number of countries agree to be legally bound,
outliers cannot hide behind lack of ratification. The global
consensus gives that particular norm the status of binding
customary law, which requires even countries that have not
ratified a treaty to comply with its mandate.

       The conspiracy of silence

With the duty to create jobs required by U.S. legislation,
monetary policy and customary law, why has the government
allowed pundits to reframe the debate and state with
certainty the government cannot do what it has a legal
obligation to do?

We allow it because of the conspiracy of silence which has
prevented most people from knowing that the full employment
laws exist, that the Federal Reserve has a job-creating
mandate, and that economic human rights law has become
binding on the United States as customary international law.

Congressman John Conyers of Michigan knows about the
Humphrey-Hawkins Full Employment Act, and he has introduced
legislation that would fund the job creation aspects of that
Act in the "The Humphrey-Hawkins 21st Century Full
Employment and Training Act," HR 870. It would create
specific funds for job training and creation paid for almost
exclusively by taxes on financial transactions, with the
more speculative transactions paying a higher tax.

If Congress refuses to enact this legislation, the President
must demand that the Federal Reserve use all the tools
relating to controlling the money supply at its disposal to
create the funds called for by HR 870, and to start putting
people back to work through direct funding of a reservoir of
public jobs as Humphrey-Hawkins mandates.

There is nothing that would prevent the Federal Reserve from
creating a fund for job training and a federal jobs program
as HR 870 would require, and selling billions of treasury
bonds for infrastructure improvement and jobs associated
with it. The growth in jobs would stimulate the economy to
the point that the interest on these bonds would be raised
through increased revenue. There is no reason the Fed on its
own could not add a surcharge on inter-bank loans to fund
these jobs. These actions could be done without
Congressional approval and would represent a major boost to
employment and grow the economy. If the Federal Reserve is
going to abide by its mandate to promote maximum employment,
and comply with the Humphrey Hawkins Act, and the global
consensus it must take these steps.

Failure of the Fed and the President to take these
affirmative steps is not only illegal, it is also
economically unwise.  The stock market losses after the debt
ceiling deal is in part based on taking almost 2 million
more jobs out of the economy and will only further depress
demand creating further contraction in the economy.   This
is not an outcome any of us can afford.

[Jeanne Mirer, who practices labor and employment law in New
York, is president of the International Association of
Democratic Lawyers.

Marjorie Cohn is a professor at Thomas Jefferson School of
Law and past president of the National Lawyers Guild.]

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