Government Jobs Guarantee.

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Rather than a basic income scheme which has inherent drawbacks both economic (inflationary bias) and social (paying people the dole already creates friction even when unemployment is endemic) a universal jobs guarantee would in my view be a far preferable option.

 

Business cannot and will not sustain full employment over the business cycle, if ever. It is antithetical to their interests. Contrary to capitalist dogma, business' narrow interests involve shedding jobs and lowering wages. Business does not have any macro view or responsibility.

 

From Wikipedia:

 

job guarantee (JG) is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability, by having the state promise to hire unemployed workers as an employer of last resort (ELR).[1]

 

The economic policy stance currently dominant around the world uses unemployment as a policy tool to control inflation; when cost pressures rise, the standard monetary policy carried out by the monetary authority (central bank) tightens interest rates, creating a buffer stock of unemployed people, which reduces wage demands, and ultimately inflation. When inflationary expectations subside, these people will get their jobs back. In Marxian terms, the unemployed serve as a reserve army of labor. By contrast, in a job guarantee program, a buffer stock of employed people (employed in the job guarantee program) provides the same protection against inflation without the social costs of unemployment, hence potentially fulfilling the dual mandate of full employment and price stability.[1]

 

The JG is based on a buffer stock principle whereby the public sector offers a fixed wage job to anyone willing and able to work thereby establishing and maintaining a buffer stock of employed workers. This buffer stock expands when private sector activity declines, and declines when private sector activity expands, much like today's unemployed buffer stocks.

 

The JG thus fulfils an absorption function to minimise the real costs associated with the flux of the private sector. When private sector employment declines, public sector employment will automatically react and increase its payrolls. So in a recession, the increase in public employment will increase net government spending, and stimulate aggregate demand and the economy. Conversely, in a boom, the decline of public sector employment and spending caused by workers leaving their JG jobs for higher paid private sector employment will lessen stimulation, so the JG functions as an automatic stabilizer controlling inflation. The nation always remains fully employed, with a changing mix between private and public sector employment. Since the JG wage is open to everyone, it will functionally become the national minimum wage.

 

Under the JG, people of working age who are not in full-time education and have less than 35 hours per week of paid employment would be entitled to the balance of 35 hours paid employment, undertaking work of public benefit at the minimum wage. The aim is to replace unemployment and underemployment with paid employment (up to the hours desired by workers), so that those who are at any point in time surplus to the requirements of the private sector (and mainstream public sector) can earn a reasonable living rather than suffer the indignity and insecurity of underemployment, poverty, and social exclusion.

Job guarantee

Comments

EXPAT Added Aug 9, 2017 - 5:32am
Surprise! I agree with you. But it is going to take a combination of Capitalism and Socialism that we in USA have never experienced.
But we have to do something. If people can't live by legitimate means, they will find illegitimate means. Did I hear Mafia and Black Market?
I would rather pay a salary for a service, than give a handout for drugs/alcohol!
Minister Peaceful Poet Added Aug 9, 2017 - 5:49am
"a universal jobs guarantee" could very well equal a forced work program where only a select few can choose there own jobs.  Not like its not like that now.  I don't get to be a surgeon or an astronaut, but I do have some choices. 
 
 
John G Added Aug 9, 2017 - 6:26am
"a universal jobs guarantee" could very well equal a forced work program
Not at all. It would be entirely voluntary.
Dino Manalis Added Aug 9, 2017 - 9:55am
Government jobs may be considered, but only in limited and special circumstances.  We need to maintain strong pro-business pro-growth policies.
Dave Volek Added Aug 9, 2017 - 10:45am
This kind of sounds like a version of Keynesian economics to me.
 
The trouble with this ecomics is that governments tend to forget the part of withdrawing from the economy when times are good--because it hurts governing parties at the ballot box.
EXPAT Added Aug 9, 2017 - 2:24pm
I agreed with John because JG is a step in the right direction.
What is truly needed is 100% employment according to ability. We no longer have a labor driven economy, but we still have labor in USA. When people do not feel they are a productive part of society, they act out their alienation in negative ways.
It would take a series of articles to discuss this, but work is participation in society, while welfare is slavery.
George N Romey Added Aug 9, 2017 - 2:48pm
Guaranteed employment is doable but means a complete mindset change. You would think those that believe so strongly in the value of work would agree.
John Minehan Added Aug 9, 2017 - 3:05pm
Not unlike something proposed by Sen. Robert F. Kennedy in the1960s to re-invent the AFDC system.
 
Now, ultimate experience with the aftermath of "Welfare Reform" in the 1990s demonstrated that is not necessarily either an easy nor a straightforward process, but that is more a caveat than a counter-argument.
 
Milton Friedman's  “Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels. [Reply to the government bureaucrat of one Asian country who told him that, reason why there were workers with shovels instead of modern tractors and earth movers at a worksite of a new canal, was that: "You don't understand. This is a jobs program."]” is more on point. 
 
But, what you are talking about is intended to be "make work" (not intending to be pejorative, just descriptive) and so long as everyone understands that and it is policed to avoid corruption, it might work.    
John G Added Aug 9, 2017 - 4:30pm
Dave Volek. No it isn't Keynesian and you've not read the piece it seems. 
John G Added Aug 9, 2017 - 4:32pm
Minehan. Friedman was wrong about everything and Clinton's welfare reforms have no relevance to a jobs guarantee.
Donna Added Aug 9, 2017 - 4:43pm
John G.
Interesting article..I have never heard of a jobs guarantee. Has this ever been done? If so what was the rate of success? Do you have a model of another Country that has accomplished this,with good results? now you have me thinking..must research. )0(
George N Romey Added Aug 9, 2017 - 4:51pm
Donna no country has ever guaranteed jobs per se. However, the Scandinavia countries have far more superior safety nets and companies are required to provide for generous severance payments and paid time off.  Yet their companies are competitive on a global stage.  Even those countries are going to have issues keeping all of their people employed as technology destroys jobs.
John G Added Aug 9, 2017 - 4:52pm
Hi Donna. The USA had full employment during the war and most western economies had close to full employment throughout the post WW2 to neoliberal period.
 
FDR's administration had various work schemes that made a huge difference through the Great Depression.
To paraphrase Keyes , If the government can pay men to kill Germans, it can pay them to do more useful things.
I'll put up a few links to some other resources.
John Minehan Added Aug 9, 2017 - 4:53pm
"Clinton's welfare reforms have no relevance to a jobs guarantee."
 
No, but what happened after that reform has everything to do with your idea.  Many people who had never been in the work-force or had been out of it for a long time, took a while (and several jobs) to adjust.  Same would likely be an issue here.
 
Friedman makes a valid critique of the efficiency of such a plan.  On the other hand, if it is purely a jobs program, does it have to be efficient?
 
Politically, to continue, it would probably have to be, otherwise people paying lots of taxes would object, absent fear of a "Jacquerie" without it.
 
What you propose is not a bad idea, but may not be politically feasible.  Never forget the Golden Rule: "Them what has the gold make the rules."     
Donna Added Aug 9, 2017 - 5:02pm
John G, Thank you, i will follow any link you find..)0(
George,thank you, will look at the Scandinavian Country..)0(
 
George N Romey Added Aug 9, 2017 - 5:06pm
During WW2 business had no choice to hire what they considered undesirable-older workers, blacks, women. Technology, outsourcing, do more with less, greed and falling demand are killing our ability to keep people now employed. 
John G Added Aug 9, 2017 - 5:08pm
John Minehan, please read the Wiki page that is linked in the article.
Friedman's 'critique' was not valid. This is not Keynes' demand management.
"A lot of taxes" is nonsense talk. There is no cause to believe that taxation rates would need to be increased. Unlike under a basic income.
John G Added Aug 9, 2017 - 5:09pm
Programs enacted but not implemented[edit]
In the United States, the Humphrey-Hawkins Full Employment Act of 1978 allows the government to create a "reservoir of public employment" in case private enterprise does not provide sufficient jobs. These jobs are required to be in the lower ranges of skill and pay so as to not draw the workforce away from the private sector. However, the act did not establish such a reservoir (it only authorized it), and no such program has been implemented in the United States, even though the unemployment rate has generally been above the rate (3%) targeted by the act.
John G Added Aug 9, 2017 - 5:24pm
George, did you even read the piece? This is a GOVERNMENT scheme. 
There are plenty of things need doing. That the capitalist class can't or won't do them (because they can't extract rentier income) isn't a deal breaker.
John G Added Aug 9, 2017 - 5:34pm
John Minehan Added Aug 9, 2017 - 5:34pm
"During WW2 business had no choice to hire what they considered undesirable-older workers, blacks, women. Technology, outsourcing, do more with less, greed and falling demand are killing our ability to keep people now employed."
 
This is (to use pejorative terms) "government make work," and "featherbedding."  It is not intended to be "efficient."
 
On the other hand, since it is not efficient (and may or may not be effective) it is potentially not politically sustainable absent fear of some kind of "Jacquerie."
 
While there are many things the government could be doing, it is less than clear who effectively they could do them with a "pick up team" work force.
 
It's not an unworkable concept, but it could become politically untenable if it is not well run or not sold as what it is.  (RFK's point that some kind of work is valuable for people.)
 
Let's see . . . .   
George N Romey Added Aug 9, 2017 - 5:41pm
Of course I see it as a government scheme.  There is no shortage of work to be performed.  My way would be a five year $5 trillion infrastructure program financed by a national credit bank.  This would hire not just workers doing construction work but older professionals that can re-enter in the world of finance, HR, engineering (given private industry doesn't want to touch people over 50).  You get the velocity of money from real production. Finally the country (and business) will have 21st century infrastructure.  For example a train between NYC and Washington that travels at 250-300 mph not 75-100 mph (and even slower in certain parts). 
John G Added Aug 9, 2017 - 5:47pm
Infrastructure can be part of it. But clearly not the whole.
Funding isn't an issue. We certainly don't need more banks.
George N Romey Added Aug 9, 2017 - 6:00pm
John write good articles and respond with full and respectful responses and you will be admired on WB. There are many of us that realize the economy sucks and has not recovered. We don't all have to agree on all the details.
John G Added Aug 9, 2017 - 6:06pm
I've been around politics all my life George. It's a rough game and it requires a bit of passion I believe.
If a few swear words and a bit of robust disagreement offend you, don't argue with Australians and don't condescend to people who might know a thing or two.
John G Added Aug 9, 2017 - 7:30pm
Marrying the Basic Income with the Job Guarantee
14 minute video Pavlina Tcherneva
Patrick Writes Added Aug 9, 2017 - 9:09pm
I'm not against the idea. But in the best of circumstances, this would result in China-like building of ghost cities and such, would it not? In the worst of circumstances, could be far worse. 
 
The government is terrible at allocating resources (unless it's for market-driven stuff like dams and bridges and highways). But with armies of "workers" at their command, what are they going to set them toward doing?
John G Added Aug 9, 2017 - 9:20pm
The government is terrible at allocating resources
Terrible compared to who/what? 
Dams, bridges and highways are 'market driven'?
Check your ideological dogma at the door please.
Tamara Wilhite Added Aug 9, 2017 - 11:13pm
Instead of a new program, requiring those on SSDI with the physical ability (and many do) to perform public service like picking up the trash in the parks would be easier to implement and encourage many to find work.
 
Tamara Wilhite Added Aug 9, 2017 - 11:15pm
The problem with saying "you have to work unless in school" is that you get more people hiding in school earning useless degrees like ones from social justice programs, draining resources from society and then being ill-prepared to contribute.
We already have millions with a skills mismatch, trained for management jobs we don't have instead of skilled labor positions going begging.
John G Added Aug 9, 2017 - 11:32pm
Wilhite if you don't read the piece, please don't comment.
You're just peddling neoliberal mantra.
John G Added Aug 9, 2017 - 11:34pm
The extremist right love strawmen.
Saint George Added Aug 10, 2017 - 3:31am
Yay! Everyone would work for the government! Fantastic!
 
The dream of every little girl and boy is not to be an astronaut or a ballerina . . . it's to be a civil servant!
 
Glorious!
John G Added Aug 10, 2017 - 3:33am
The extremist right love strawmen.
John G Added Aug 10, 2017 - 3:40am
Gratuitous abuse will be deleted Corey. 
Saint George Added Aug 10, 2017 - 4:24am
Yay! Everyone would work for the government! Fantastic!
 
The dream of every little girl and boy is not to be an astronaut or a ballerina . . . it's to be a civil servant!
 
Glorious!
John G Added Aug 10, 2017 - 4:31am
You'd rather they dreamt or were resigned to unemployment and below subsistence wages at the mercy of your capitalist heroes, one presumes.
Hmmmmm unemployment, poverty and social exclusion or a living wage doing something useful?
Yeah, tough choice, Einstein.
 
Saint George Added Aug 10, 2017 - 4:35am
You'd rather they dreamt or were resigned to unemployment and below subsistence wages 
 
You mean like what's happening now in the worker's paradise of socialist Venezuela? 
 
You have a shit-view of life (typically European, by the way). "Yay! Let's all work for the government as civil servants!"
John G Added Aug 10, 2017 - 4:39am
Clearly you haven't read the piece and aren't really interested. in anything other than pushing personal animosity.
Why am I not surprised?
Australia isn't in Europe, Einstein.
 
Bill H. Added Aug 10, 2017 - 11:35am
 
As we have recently seen, efforts to allow corporations to hire cheap labor from overseas will continue to increase. By both not funding educational efforts to train US citizens with the proper skills and providing loopholes in the immigration system to allow "those with the proper skills" to enter the US, corporations and CEO's will be laughing all of the way to the bank while many citizens are still out of work.
Even A Broken Clock Added Aug 10, 2017 - 11:46am
John, an interesting proposal that will need to be further exposition in order to be considered. If I am reading correctly, you are advocating a non-coercive employment system that would supplant existing social benefits such as SNAP or section 8 housing allowances. Is that correct?
 
Also, what sorts of socially beneficial work would you consider to be included in the employment guaranteed jobs, and how would this fulfill societal needs without displacing private sector jobs which would be preferred?
Mike Haluska Added Aug 10, 2017 - 12:48pm
John -
 
I like the idea of insisting that able-bodied people work in return for a handout.  However, in reality this turns into another bureaucracy to keep track of the government workers.  Just imagine trying to keep payroll and attendance on this group - it's easier to heard cats.
John Minehan Added Aug 10, 2017 - 4:22pm
This has the makings of a good idea.  You are correct in citing the inflationary impact of guaranteed income.
 
There are some political things to consider.  Tax payers dislike the idea of paying people to do make work.  Consider this from Walter Russell Mead:
 
"First, voters simply will not be taxed to cover the costs of blue government.  Voters with insecure job tenure and, at best, defined-contribution rather than defined-benefit pensions will simply not pay higher taxes so that bureaucrats can enjoy lifetime tenure and secure pensions.
 
Second, voters will not accept the shoddy services that blue government provides.  Government is going to have to respond to growing ‘consumer’ demand for more user-friendly, customer-oriented approaches.  The arrogant lifetime bureaucrat at the Department of Motor Vehicles is going to have to turn into the Starbucks barista offering service with a smile."
 
Your counter argument is that your program does not entail either fat pay checks or big pensions, but it still is state and local money (they who can't print and must tax) to do "make work."
 
And if what you plan to do is more substantive, aren't you taking an opportunity away from an entrepreneur who may be trying to meet the need? 
 
It is worth remembering that Wendell L. Willkie challenged FDR in part because the TVA took away an opportunity he had worked hard to develop for rural electrification with a private utility. 
 
One viable counter argument is what Robert F. Kennedy talked about in about 1968, when he suggests something similar, that work itself is valuable to people, families and societies. 
 
Another thing you might consider is to do this in concert with entrepreneurs who are already looking at better ways to do these things.  Possibly, the government might function better as a labor exchange/hiring hall for private employers.
 
This is not an attempt to troll you, this is a good idea.  It does need work.     
John G Added Aug 10, 2017 - 5:18pm
The Mead piece isn't worth a response. Libertarian ideologues won't support any social initiatives.
His objections are strawmen.
All your suggestions completely miss the point of a jobs scheme.
So yes, you are trolling.
John Minehan Added Aug 10, 2017 - 6:31pm
Mead isn't a "Libertarian," he's a Leftist who understands the limits he works with.
 
But this idea is at least rational, I give you great credit for that.
John G Added Aug 10, 2017 - 6:39pm
JM Mead isn't a "Libertarian," he's a Leftist
Now you're just lying through your teeth. He's an extreme right wing 'libertarian'.
Your condescension is noted. Next time read the piece.
 
Phil Greenough Added Aug 11, 2017 - 10:05am
There really is no difference between a government jobs guarantee and a basic income guarantee, they are both schemes. The former simply requires people to work to receive money they can’t earn on their own and the latter doesn’t.  The problem with a jobs guarantee is that some people are uninterested or unable to work.  Is your suggestion to let all these people starve to death?  Of course not, that is why you will end up paying people who don’t work.   Then, when those that work realize they don’t have to work to receive free money, they’ll choose not to.  So you might as well just call your idea a Basic Income scheme as well.  The key is to pay people so little that getting off their ass and working is the far better option.  Currently, the less one works the more free stuff they get.  So I’m all for Basic Income if it means getting rid of all the other free stuff and limiting Basic Income so that people are incentivized to get a job. 
George N Romey Added Aug 11, 2017 - 1:34pm
Despite the government employment stats that very, very few people believe, we have a huge unemployment problem in this country.  Its near 1930s proportion.  When you throw off tens of millions and use an outdated birth/death model from the 1990s of course it looks like we have full employment.  Worker participation rates are still at all time lows.
 
If the private sector can't employ people that want to and will work there is plenty of good things to be done.  The Hoover Dam was built during the Depression and still stands today.  It doesn't have to be a government waste, if managed properly.  Believe it or not government does do some things right.
John G Added Aug 11, 2017 - 4:27pm
PG.  Maybe read the articles before commenting in future?

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