By Pavlina R. Tcherneva, Assistant Professor of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability. Originally published at New Economic Perspectives
Discussions of the ‘politically possible’ always remind me of a favorite quote: “Argue for your limitations, and sure enough they’re yours.”
Bernie Sanders’ issues page reads like a list of everything we’ve been told is not politically possible. And yet he’s getting record breaking support, precisely because people are tired of being told that something cannot be done–that it is impossible to get money out of politics, or that tackling inequality and racial injustice is unrealistic, or that securing a living wage is a political nonstarter.
Bernie has unapologetically rejected sclerotic visions of what is ‘politically possible’. And now he should add the Job Guarantee (JG) to his list of issues. Indeed, he already has the key ingredients—a bold proposal to eliminate unemployment by creating 13 million decent-paying jobs, a living wage, and a federally-funded youth job guarantee, which Sandy Darity correctly called a stepping stone (a pilot program) to a blanket job guarantee for all.
The Job Guarantee’s time has come.
- It secures a basic human right
- It tackles at least three key sources of “economic violence and injustice”—unemployment, precarious work, and poverty wages
- It is good for families, the economy, the environment, and our communities
Here’s what you need to know about the JG.
The Job Guarantee Is Not Big Government
A common misconception of the JG is that it is a large and unpredictable program, echoed by Matt Bruenig in a recent post:
“The size of the workforce on the JG will greatly differ across the business cycle … Because the JG workforce should theoretically turn over a lot and shrink a lot, work valuable over the long run is ruled out.”
The concern is that the JG (aka the ELR) will be a very large and volatile, difficult to administer, not only because it has to handle many millions of unemployed people at any given time, but also because it needs to go through very large swings (trying to create millions of new jobs in recessions for the jobless, but being unable to complete its projects as these millions of people go back to private sector in expansions). This is largely incorrect.
- JG stabilizes employment
Yes, the JG will fluctuate—it will grow in recessions and shrink in expansions. But a permanent JG will be relatively small and will oscillate comparatively little, because it stabilizes economic conditions, private spending, profit expectations and, importantly, employment. The amplitudes of the economic volatility we observe today will be much smaller, precisely because the JG tackles all the vile consequences of mass unemployment (on private sector spending and expectations, and on people and communities). The JG is also good for the private sector and ensures more stable and plentiful private sector employment, because it guarantees that domestic demand never collapses as much as it does today with mass unemployment.
- JG is a preventative program, not just a cure
Unemployment is like a virus, it spreads through the economy if nothing is done to check it. And the best ‘cure’ for someone who wants a job—is a job, not a handout. But the JG is not just a cure. It’s also prevention.
Every unemployed person today puts another one out of work, but the Job Guarantee reverses the process: employing one person creates work for another.
Today, 20 million people want decent work at decent pay. If we launched a JG now it would surely balloon quickly, which is why Sanders’ proposal for creating 13 million jobs is the only program that guarantees a rapid return to true full employment. But a permanent JG would not need to employ tens of millions of people (+/-), because mass unemployment becomes a thing of the past.
The JG will always be there to provide voluntary employment for a pool of people (small relative to today’s unemployment numbers)—who have difficulty finding private sector jobs or have been rendered ‘unnecessary’ by private firms. It’s one thing to support a family on an unemployment insurance check, and a whole different thing to replace lost private sector income with a living wage income from the JG in a job that does something useful (more below). In this sense, the livelihood of those participants is not disrupted as much as with unemployment, and does not cause the large ripple effect of layoffs through the economy we see today due to collapsing demand.
In other words, it is easier to prevent the development of mass unemployment, than to eliminate it once it has developed.
- JG breaks the vicious cycle at the bottom of the income distribution
As I have written before, people from different social stations experience different employment situations—the highly-skilled and highly-educated face virtually no unemployment, or relatively short stretches of joblessness. They are hired first and fired last. But even when they are unemployed, their safety net is much stronger because of more generous employment benefits, severance packages, savings and other sources of wealth.
But for those at the bottom of the income distribution, life is very different—precarious income and employment, longer periods of unemployment, shorter job tenure, and fewer prospects for accumulating wealth or building a nest egg. The vicious employment cycle is fired first-hired last. The JG by design captures those who are most vulnerable.
- The JG changes the economic odds for poor and middle class families
Imagine two candidates applying for a job: one has 9 months of experience in a JG soil renewal of reforestation project and the other – 9 months of unemployment. Which applicant would the prospective employer hire? Chances are – the one with the job. And indeed, research shows that, employers consider 9 month of unemployment to be the same as 4 years of lost work experience.
JG changes these odds. It gives people a chance for better life by providing a choice to work in a meaningful public service project—something welfare checks are not able to do.
- JG addresses income inequality and drives a stake through current power interests
Guaranteeing access to a living-wage job lifts incomes for the most vulnerable families in the economy – a key step to reversing income inequality in the US. And the threat of unemployment at the bottom of the income distribution is considerably weakened.
The JG redefines what kind of work is “useful”—public stewardship, environmental renewal and sustainability, community development and, importantly, investment in people, are recognized as important and valuable tasks, worthy of public support.
The JG establishes a standard for a decent pay package. It’s like the minimum wage, only better—everyone gets it and more (what good is the minimum wage to an unemployed person?). Private firms must match that minimum standard and pay extra when they need to hire those workers.
But let’s have no illusions: ‘captains of industry’ will fight the program tooth and nail, as Kalecki warned and Roosevelt experienced. Yet FDR’s success (and that of Harry Hopkins, Eleanor Roosevelt, and Frances Perkins, among others) in improving labor market conditions through New Deal programs remains unmatched in our history.
The Job Guarantee is the next step in completing the Roosevelt revolution.
- JG is the missing piece from the social safety-net
In advanced economies, basic needs are generally solved by direct means:
- When the problem is retirement income insecurity – we provide retirement income (e.g., social security).
- When the problem is food insecurity – we provide food.
- When the problem is homelessness – we provide housing.
- But when the problem is joblessness, we do not provide employment. We provide a handout, a training program, a college loan – everything but an actual job. The Job Guarantee institutes an important component of the overall safety-net: a job safety-net.
Much Needed Public Works are Clumsy Countercyclical Tools and Do Not Provide Jobs for All
The task before us is to provide a decent job at decent pay for everyone who wants one. Many progressives seem to think that conventional public works are better suited as countercyclical stabilizers or job creation policies. Bruenig echoes this sentiment by recommending that a “targeted Public Works approach…can be ramped up and down cyclically as needed.” I find this proposal paradoxical since earlier in his blog, he argues that capital-intensive projects do not fluctuate easily with the business cycle. And that’s exactly right.
We either need to replace the Tappan Zee bridge or not. A high-speed rail system is either a good idea or not. Rain or shine, recession or expansion, the work has to be done. These projects cannot fluctuate because they are essential, strategic, and capital-intensive. They are much needed programs, but they are not cycle-stabilizing policies. And they cannot guarantee an employment opportunity to the last person who hasn’t found a decent paying job, but wants one. Only the Job Guarantee can.
But low capital intensity projects are in great shortage, can vary with the mood swings of the economy, and are not make-work.
We Need to Get More Things Done Than We Have Pople to Do Them
The private sector is simply not in the business of satisfying unmet basic needs or providing employment for everyone. But once most basic needs are met, will there be enough work for the JG participants to do? I’m convinced, yes. As Warren Mosler says, “There is no limit to the ways we can serve one another”.
My worry is that even if we mobilized everyone who wanted to work in a private and public initiative, there would still not be enough manpower to do all the things that we sorely need—especially concerning the environment.
Take the Hudson Valley for example where I live and work. The Hudson River and local parks and preserves are struggling with several invasive species (water chestnut and zebra mussel), fundamentally altering the ecology of the estuary and the natural habitat of the Valley. And while my community and friends, volunteers and non-profits, have been hard at work preserving and restoring the the Valley, one crucial thing is missing: large-scale funding and many, many more helping hands.
Learning to identify the invasive plants and removing them is mostly done by community members and school groups on volunteer basis. Other area projects include eel and herring monitoring, building hiking trails, cleaning parks, removing trash—all low-cost, tow-tech, and high-labor-intensity tasks that bring many environmental and social benefits. And they literally only require gloves, fishing nets, and rakes. The work is flexible and year-round.
And this is just one example that that can provide jobs to thousands of unemployed people from the entire Hudson Valley on ongoing basis for decades to come. (Elsewhere, I discuss how the JG can solve the “food desert” problem).
The neighboring city of Newburgh–once the jewel of modern technological achievement was the first electrified city in the United States, showcasing the glory that electrification would bring the nation and the world. (Electrification–the offspring of private ingenuity brought to our doorsteps courtesy of large scale government investment). Today Newburgh’s housing stock – a rare collection of historical architecture – is crumbling and needs to be restored and preserved. After years of neglect and severe austerity, the city is slowly turning a corner mostly because of impressive community revitalization efforts. But unemployment remains a pressing problem. What is needed? Large-scale funding and many, many more helping hands.
Most communities throughout the US can benefit from countless ongoing public service, environmental, after-school and care projects. And the unemployed need the restoration of their human worth.
As Bernie Sanders himself put it in his 2011 8-hour Senate floor speech:
“Human beings want to be productive… They want to be a part of something. They want to go to work, earn a paycheck, bring it home. You feel good about that.
Do you know what it does to somebody’s sense of human worth when suddenly you find yourself at home …[and] you can’t go out and earn a living. It destroys people… That’s what unemployment is about.” (112-113)
Good intensions rarely stand in the way of good economic policies—but lack of conviction and political will do. When it comes to the Job Guarantee, we can also use a bit of imagination.
Sanders is already changing the conversation about what is politically possible. Adding the Job Guarantee to his issues will solidify his unapologetically bold and sorely needed progressive agenda.
Some Additional Links
- For various explanations of the JG, see here, here, here and here
- Here and here, I argue that we need to scale up what is already done successfully by nonprofits and social enterprises as one way of implementing the Job Guarantee
- Here and here I explain why the JG can be especially beneficial to poor women
- On the JG as a means to addressing racial injustice and inequality see here and here
- For more on the Job Guarantee’s Green Jobs approach, see here
- On child poverty and the Job Guarantee, see here
- Why the JG delivers the benefits that a Basic Income Grant only promises and why a JG-BIG combination is the way to go, here and here. Also see Tony Atkinson’s endorsement of the JG-participation income policy here
- I make the case for a Youth Job Guarantee (I call it YES – Youth Employment Security)
- Why the conventional methods of securing full employment have failed, here and here
- How the JG enhances the private sector, here