A Job Guarantee

People want to work. Let them.

Photo by jesse orrico on Unsplash

In the past few weeks, I’ve talked about bullshit jobs, the four-day workweek, and universal basic income. A gold star to those who spotted this theme developing. Today, I’m going to finish talking about work, and how “work” fits into the degrowth story. Next week I’ll finish this “chapter” by jumping into Modern Monetary Theory (MMT), which you’ll often see in degrowth circles as a way to pay for all these changes in the way “work” fits into an economy.

Without further ado, let’s jump into today’s topic, job guarantees.

What is a job guarantee?

A job guarantee program is an economic policy that aims to create full employment in an economy. This can be achieved by having the state (the government) become the employer of last resort. The mantra of a job guarantee is that “everyone who wants to work can work.” A jobs guarantee isn’t a Soviet-style system where you might just have people standing around and getting paid just because everyone is supposed to have a job. The point of a jobs guarantee program is to connect people who want and/or need to work with gaps in the employment landscape that are wanting for labor.

How does it work?

A job guarantee can be structured in a number of different ways, but it is right there in the name. The government guarantees a job to anyone who wants to work. These jobs likely aren’t going to be high-paying jobs in an economy. They are meant to match those willing to work, with work that needs to be done.

Generally, a job guarantee offers a fixed wage to anyone willing to work. Such a program may be funded at the state or local level but is administered at the local level. A jobs guarantee is an excellent tool to combat low-wage bullshit jobs (although high-wage jobs can be bullshit too) because a jobs guarantee sets a lower income floor for the economy. Employers can’t pay starvation wages in an economy with a job guarantee, because workers can always get a living wage from the employer of last resort – the government.

The aim of a jobs guarantee is to alleviate poverty, by providing jobs to those that want them. Job guarantees are also seen as a positive social policy that keeps people busy and active in their communities. Jobs also provide people with purpose and provide them with dignity. Most people want to work, and the government stepping in as the employer of last resort can provide those in a population that has a hard time finding a job with some money to pay their bills, yes, but also purpose, and a connection to their communities.

Giving people purpose is nice and all, but what about inflation?

The normal economic model in markets today uses unemployment as a tool to help contain inflation. High inflation, and especially runaway inflation has devastated economies throughout history and led to social unrest and a whole lot of other negative consequences. So high inflation is to be avoided at all costs – as far as most economists think.

The price for this fight against inflation is often that some level of unemployment is accepted and considered “natural” for an economy to function properly. Some level of unemployment is thought to be needed to keep the economy in balance. Most every country in the world will speak openly about its target unemployment rate.

Think about that.

For the good of the economy, central bankers around the world generally agree that a small portion of their citizens need to be denied work even if they are willing and able to work. An unemployment rate that is too low is seen as a symptom of an unhealthy economy.

The argument is that if unemployment goes too low, that pushes up the demand for workers who are becoming increasingly scarce in such a situation. When workers are a scarce resource, the prices they are paid will go up to lure them away to other work. This drives up wages as demand for workers increases, which drives up the price of goods and services as companies have to adjust their prices to pay workers. The feared result is inflation.

Not the result of job guarantees.

I understand this argument, and it is a sound one. The cause and effect of unemployment rates makes intuitive sense, and I can draw really nice sloping curves from a spreadsheet to demonstrate it with the best of them.

But it also sounds like we (I’m talking about you economists) have gotten a bit lazy. We’ve found an economic model that kinda works most of the time and things have gone pretty well.

It’s unfortunate that the poor have to suffer through unemployment, but hey that’s the price of this great system we have, and they don’t have any lobbying power, so what are you gonna do?

You are going to invent a job guarantee that’s what. A job guarantee aims to employ all the people we can, while not risking nasty inflation. The intent is to do away with some of the negative social costs of unemployment without the nasty side effect of runaway inflation. And much like the Universal Basic Income, it helps remove fear and despair from the workforce.

I don’t believe you. Won’t it cause inflation?

A job guarantee program can contribute to inflation, so the devils are in the details. Such a program needs to be designed to not drive inflation, and in the end, be effective.

First, the administration of such a program is key. Administration has to be local. People at the local level know what is needed, what will work, and what won’t. If no one administering a jobs guarantee program has boots on the ground where the program is – it will fail.

I live outside a small college town in America. If there were a job guarantee program here run from Washington D.C., it would be a disaster. Before you even get into the design of such a program, you need actual people with knowledge of local markets to run such a program. They aren’t going to be perfect, but they will be light years more perfect than a bureaucrat in the capital matching random names to random jobs on a computer.

Now let's tackle the inflation issue.

Any jobs guarantee program looking to avoid inflation will focus on filling jobs that are currently going wanting. If there are not enough landscapers, or crop pickers, or health workers in an area and those searching for work can do those jobs, then you make that match. These workers are filling roles where demand is not met. By definition that isn’t inflationary.

Also, the wage of this labor is going to be fixed, or relatively low and isn’t going to push up prices. Prices of this labor aren’t going to rise quickly because of a sudden spike in demand.

Finally, the job market will fluctuate like all job markets do. When there is an economic downturn more job guarantees are needed, when there is a recovery, fewer jobs will be needed. The employer of last resort here – the government - isn’t looking to make next quarter's sales numbers. They are looking to provide jobs for those who need them to alleviate poverty, provide workers with purpose and dignity, and help the social fabric of communities.

Is this already working somewhere?

An article in The New Yorker about a year ago profiled a jobs guarantee program in a small Austrian town. The author found that the program was working as intended – but is to be wound down in 2024. By providing a small wage to people who wanted to work, those people had more options and could actually say “no” to jobs they didn’t want to do; jobs that were beyond their capabilities or demeaning, or just not a good fit. Not surprisingly, many employers in Austria didn’t want to see the program expanded because it gave workers too much power, too many options.

Maximilian Kasy, one of the economists from Oxford studying the program commented in the article:

“If they’re shit jobs, try to pay them as well as possible. Try to change the working conditions as much as possible until you reach the point that somebody wants to do them, or automate them if you can. And then, if nobody wants to do them, maybe we shouldn’t do them.”

That is precisely the point, and why I’m weaving a jobs guarantee, universal basic income, a four-day workweek, and the eliminating bullshit jobs into the story of the degrowth path away from work as we know it, and towards work that fulfills us, not destroys us. It’s not some wild fantasy.

Work is at the heart of our capitalist system of overproduction and overconsumption. A system that is increasingly making the human experiment more precarious.

We can change that.

A hard day's work is its own reward.

A hard day’s work that leaves you exhausted and humanity a little bit closer to catastrophe is a tragedy.

Let’s step away from that paradigm maybe.