Issue 3 - Fall 1995
The Alternative to Welfare: Creating Jobs in the Third Sector
Adapted from The End of Work:
The Decline of the Global Labor Force and the Dawn of the Post Market Era
(page 1 of 2)
By Jeremy Rifkin

After years of wishful forecasts and false starts, the new computer and communications technologies are finally making their long anticipated impact on the workplace and the economy, throwing the world community into the grip of a third great Industrial Revolution. Already millions of workers have been permanently eliminated from the economic process, and whole job categories have shrunk, been restructured, or disappeared.

The Information Age has arrived. In the years ahead, new, more sophisticated software technologies are going to bring civilization ever closer to a near workerless world. In the agricultural, manufacturing, and service sectors, machines are quickly replacing human labor and promise an economy of near automated production by the mid decades of the twenty first century. The wholesale substitution of machines for workers is going to force every nation to rethink the role of human beings in the social process. Redefining opportunities and responsibilities for millions of people in a society of declining mass employment is likely to be the single most pressing social issue of the coming century.

Social Wages

Up to now, the marketplace and government have been looked to, almost exclusively, for solutions to the growing economic crisis facing the country. In the current debate over corporate downsizing, mass layoffs, and the emerging two tier society, few pundits have considered the potential role of the Third Sector in restoring the work life of the country. In recent years, we have become so preoccupied with the market and public sectors that we tend to forget that the nonprofit or volunteer sector has played an equally important role in the making of the nation.

Today, with the formal economy less able to provide permanent jobs for the millions of Americans in search of employment and with the government retreating from its traditional role of employer of last resort, the Third Sector becomes our last best hope for absorbing the millions of displaced workers cast off by corporate and government re engineering.

The Third Sector cuts a wide swath through society. Nonprofit activities run the gamut from social services to health care, education and research, the arts, religion, and advocacy. There are currently more than 1,400,000 nonprofit organizations in the United States with total combined assets of more than $500 billion.

The assets of the Third Sector now equal nearly half the assets of the federal government. A study conducted by Yale economist Gabriel Rudney in the 1980s estimated that the expenditures of America's voluntary organizations exceeded the gross national product of all but seven nations in the world. Although the Third Sector is half the size of government in total employment and half its size in total earnings, it has been growing twice as fast as both the government and private sector in recent years. The independent sector already contributes more than 6 percent of the GNP and is responsible for 10.5 percent of the total national employment.

More people are employed in Third Sector organizations than work in the construction, electronics, transportation, or textile and apparel industries. The American people ought to consider making a direct investment in expanded job creation in the Third Sector or social economy as a means of providing meaningful employment for the increasing number of jo themselves locked out of the new high tech global marketplace. The state and federal governments could provide a "social wage" as an alternative to welfare payments and benefits for those permanently unemployed Americans willing to be retrained and placed in community jobs in the Third Sector. The government could also award grants to nonprofit organizations to help them recruit and train the poor for jobs in their organizations.

An adequate social wage would allow millions of unemployed Americans, working through thousands of neighborhood organizations, the opportunity to help themselves. Providing a social wage in return for community service work would also benefit both business and government. Reduced unemployment means more people could afford to buy goods and services, which would spur more businesses to open up in poor neighborhoods, creating additional jobs. Greater employment would also generate more taxes for the local, state and federal governments. What's more, a rise in employment would cut the crime rate and lower the cost of maintaining law and order.

It is often argued that simply providing income or job training is of little help if not accompanied by concrete programs to help educate the young, restore family life, and build a sense of shared confidence in the future. Extending a social wage to millions of needy Americans and providing funds for neighborhood based organizations to recruit, train, and place people in critical community building tasks that advance these broader social goals, would help create the framework for real change. Public works projects and menial work in the formal economy, even if they were available, would do little in the way of restoring local communities.

In addition to providing a social wage for the nation's poorest citizens, serious consideration should be given to an expanded concept of social income that would include social wages for skilled workers and even management and professional workers whose labor is no longer valued or needed in the marketplace. A viable Third Sector requires a full range of skills, from minimum entry level competence to sophisticated managerial experience. By providing a job classification scheme, grading system, and salary scale similar to the ones used in the public sector, Third Sector organizations could recruit from the broad ranks of the unemployed, staffing their organizations with the proper mix of unskilled, skilled, and professional labor that would insure success in the communities they serve.

Financing a Social Income

Paying for a social income and for re education and training programs to prepare men and women for a career of community service would require significant government funds. Some of the money could come from savings brought about by gradually replacing many of the current welfare programs with direct payments to persons performing community service work. Government funds could also be freed up by discontinuing costly subsidies to corporations that have outgrown their domestic commitments and now operate in countries around the world. The federal government provided transnational corporations with more than $104 billion in subsidies in 1993 in the form of direct payments and tax breaks.

Additional moneys could be raised by cutting unnecessary defense programs. Even though the Cold War is over, the federal government continues to maintain a bloated defense budget. While Congress has scaled down defense appropriations in recent years, military expenditures are expected to run at about 89 percent of Cold War spending between 1994 and 1998. In a 1992 report, the Congressional Budget Office concluded that defense spending could be cut by a rate of 7 percent a year over a five year period without compromising the nation's military preparedness or undermining national security.

Perhaps the most equitable and far reaching approach to raising the needed funds would be to enact a value added tax (VAT) on all nonessential goods and services. While the VAT is a new and untried idea in the United States, it has been adopted by more than fifty nine countries, including virtually every major European nation. More >>


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