Full Employment is the Law

Unemployment and inflation levels began to rise in the early 1970s, reviving fears of an economic recession. In the past, the country's economic policy had been defined by the Employment Act of 1946, which encouraged the federal government to pursue "maximum employment, production, and purchasing power" through cooperation with private enterprise. Some Congressmen, dissatisfied with the vague wording of this act, sought to create an amendment that would strengthen and clarify the country's economic policy.

The Act's sponsors embraced conventional Keynesian economic theory, which advocates aggressive government spending to increase economic demand. In particular, Keynesian theory asserts that the government can minimize the shock of business fluctuations by compensatory spending, intended to maintain or inflate investment levels by government spending.

Consistent with Keynesian theory, the Act provides for measures to create temporary government jobs to reduce unemployment, as was attempted during the Great Depression.

Somewhat contradictorily, the Act also encouraged the government to develop a sound monetary policy, to minimize inflation, and to push toward full employment by managing the amount and liquidity of currency in circulation.

Overall, the Act sought to formalize (and to expand Congress's role in) the economic policy process, as governed by the Federal Reserve and the President.

Overview

In response to rising unemployment levels in the 1970s, Representative Augustus Hawkins and Senator Hubert Humphrey created the Full Employment and Balanced Growth Act. It was signed into law by President Jimmy Carter on October 27, 1978, and codified as 15 USC § 3101. The Act explicitly instructs the nation to strive toward four ultimate goals: full employment, growth in production, price stability, and balance of trade and budget. By explicitly setting requirements and goals for the federal government to attain, the Act is markedly stronger than its predecessor. (An alternate view is that the 1946 Act concentrated on employment, and Humphrey-Hawkins, by specifying four competing and possibly inconsistent goals, de-emphasized full employment as the sole primary national economic goal.) In brief, the Act:

The Act set specific numerical goals for the President to attain. By 1983, unemployment rates should be not more than 3% for persons aged 20 or over and not more than 4% for persons aged 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 allows 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, and national origin in any program created under the Act.

Amendments

The language of the Full Employment and Balanced Growth Act was amended twice by riders attached to unrelated or distantly related legislation.

The People Before Banks Coalition unites organized labor, faith communities and local organizations in a campaign calling on JP Morgan Chase Bank to do the right thing. Coalition leaders are asking individuals and organizations to sign a pledge to withdraw their Chase accounts and/or cancel their Chase credit cards if the bank continues to reject two actions that are morally and economically just:

1. Declare a two-year moratorium on foreclosures
As a beneficiary of billions of taxpayer dollars spent to bail out the banks, Chase should take the lead in stemming the flood tide of foreclosures sweeping the country. In communities devastated by unemployment, people need a temporary bailout scaling back their housing costs to affordable levels.

2. Sever its business ties with the RJ Reynolds Corporation if

the tobacco giant refuses to join negotiations with the Farm Labor Organizing Committee over the slave-labor working conditions at the company’s contract growers in North Carolina. Chase is RJ Reynolds’ principal creditor.

To encourage Chase Bank to take these urgent steps, we are enlisting supporters to sign a pledge to withdraw their Chase accounts and/or cancel their Chase credit cards. The UAW has already made the pledge and we are asking individuals and organizations to join this campaign.

CHASE BANK AND HOME FORECLOSURES

JP Morgan Chase is now racking up growing profits at the same time it admits to massive irregularities in the foreclosure of homes without proper documentation. Chase and other mega banks would rather rush to foreclosure when the mortgage is federally insured, collecting the full value at taxpayer expense.

Chase proclaims that it has “offered more than 900,000 mortgage modifications to troubled homeowners,” but government reports for the Home Affordable Modification Program (HAMP Servicer Report, August 2010) indicate that Chase has a poor record for making these modifications permanent. Chase finds it cheaper to postpone permanent modification or deny it altogether if it can collect on federal insurance for the full value of the foreclosed mortgage.

Chase has joined only a portion of Michigan’s “Helping the Hardest Hit” for the unemployed, at the same time that the bank is the prime contractor to the state of Michigan for issuing debit cards to those collecting unemployment insurance. Chase Bank, while collecting the fees from those cards, should be in the forefront of guaranteeing that the unemployed do not lose their homes. (For more information, go to http://www.moratorium-mi.org/).

REYNOLDS AMERICAN AND MIGRANT FARMWORKERS

Every year, thousands of migrant farm workers travel to North Carolina to work for tobacco growers under contract to RJ Reynolds. Many suffer from subminimum wages, corrupt crew leaders, extreme poverty, unregulated labor camps, and serious daily health risks, including nicotine poisoning and heat stroke. JP Morgan Chase is one of the lead banks in a consortium of lenders that has invested $500 million in Reynolds.

UAW President Bob King recently visited the tobacco fields with Baldemar Velasquez of the Farm Labor Organizing Committee. “Chase needs to help unemployed homeowners in Michigan and underpaid farm workers in the Carolinas,” King said on his return. “The bank could make a huge difference by suspending foreclosures and by pressuring RJ Reynolds to join negotiations with farmworkers and contract growers.” (For more information go to http://supportfloc.org/)