Employers of last resort (ELR) are

employers Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any ...

in an

economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...

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 A job guarantee is an economic policy proposal that aims to provide a sustainable solution to inflation and unemployment. Its aim is to create full employment and price stability by having the state promise to hire unemployed workers as an emp ...

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 Post-Keynesian economics is a school of economic thought with its origins in '' The General Theory'' of John Maynard Keynes, with subsequent development influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor, Sidney ...

, notably by authors of

Modern Monetary Theory Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox * * * * * * macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply ...

at the

University of Missouri-Kansas City A university () is an institution of higher (or tertiary) education and research which awards academic degrees in several academic disciplines. Universities typically offer both undergraduate and postgraduate programs. In the United States, ...

, the

Levy Economics Institute Founded in 1986 as the Jerome Levy Economics Institute, the Levy Economics Institute of Bard College is a nonprofit, nonpartisan public policy think tank. The purpose of its research and other activities is to enable scholars and leaders in busi ...

(both United States) and in the

Centre of Full Employment and Equity The Centre of Full Employment and Equity or CofFEE is an official research centre of the University of Newcastle, New South Wales, Australia, and has operated since 1998. CofFEE's membership is drawn from the disciplines of economics, politics, ...

(Australia), who advocate it as a solution for

unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refe ...

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. In

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

, 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 Business cycles are intervals of expansion followed by recession in economic activity. These changes have implications for the welfare of the broad population as well as for private institutions. Typically business cycles are measured by examin ...

. One example of such a program would be the

Civilian Conservation Corps The Civilian Conservation Corps (CCC) was a voluntary government unemployment, work relief program that ran from 1933 to 1942 in the United States for unemployed, unmarried men ages 18–25 and eventually expanded to ages 17–28. The CCC was a ...

, a government agency intended to provide work to young, unemployed men.

Military Keynesianism Military Keynesianism is an economic policy based on the position that government should raise military spending to boost economic growth. It is a fiscal stimulus policy as advocated by John Maynard Keynes. But where Keynes advocated increasing p ...

argues that the

military A military, also known collectively as armed forces, is a heavily armed, highly organized force primarily intended for warfare. It is typically authorized and maintained by a sovereign state, with its members identifiable by their distinct ...

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 Lyndon Baines Johnson (; August 27, 1908January 22, 1973), often referred to by his initials LBJ, was an American politician who served as the 36th president of the United States from 1963 to 1969. He had previously served as the 37th vice ...

. 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. Marshall Auerback suggested the government hire all unemployed workers, paying close to the minimum wage.

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.

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.

References

{{Reflist

External links

An Introduction to the Employer of Last Resort Proposal
(2008) from

Dollars & Sense ''Dollars & Sense'' is a magazine focusing on economics from a progressive perspective, published by Dollars & Sense, Inc, which also publishes textbooks in the same genre. ''Dollars & Sense'' describes itself as publishing "economic news and ana ...

magazine
The Employer of Last Resort Approach to Full Employment written L. Randall Wray
(July 2000) from the U
Centre of Full Employment and price stability

Employer of last resort
website dedicated to reviewing information related to the employer of last resort philosophy. Public employment Economic policy Full employment Modern monetary theory Employers