Two policy proposals receiving increasing attention are the job guarantee (JG) and basic income guarantee (BIG). The first would provide everyone of working age with the option of a guaranteed job. The second would introduce an unconditional income payment. To be clear, I would support either of these as standalone programs, whichever happened to be on the policy agenda. Nevertheless, I think there are a few reasons to prefer a combined policy that integrates elements (perhaps all positive elements) of both programs. In its leanest form, a 'job or income guarantee' (JIG) could provide everyone with the option of accepting a job-guarantee position or, by opting out of the labor force, a means-tested but otherwise unconditional income payment. In expansive form, a JIG could provide a universal and unconditional basic income as well as the option of a guaranteed job for anyone who wanted one. Other intermediate variations on the theme would, of course, also be possible. The expansive form would be ideal, but even the lean version seems to offer some advantages over a standalone JG or BIG.heteconomist
Some Reasons for Guaranteeing Both an Income and Job
Peter Cooper
25 comments:
Finally, someone talking some sense as far I can see.
We don't have to settle for one or the other because we have the money for both. In fact, as far I can tell if we use the increased productivity from the JG correctly it would cancel out the potential inflationary effects of a BIG.
I posted the following on Peter's site:
Quote:
Most JG advocates discuss a JG at minimum wage. At the same time, they talk about the JG as a reserve of employed (as a means of keeping intact their skill set) The two items are at odds with each other. On the one hand, they do not want the JG to compete with private employers, which they achieve by advocating the JG at minimum wage. They then engage in an act of hand waving - saying that this JG will keep a person's resume alive, at the same time keep their skill sets. Just how?
The New Deal job programs avoided this dilemma by offering a job at the going (median) wage rate for each different skill set, with the provisio that the job was only for 40% of the work week. The remaining time could be spent in looking for private sector jobs, or doing "something else" with their time. Thus the New Deal was able to accomplish much with these workers. Skill sets were in fact kept alive and enhanced. Writer, musicians, artists and even actors got a job. And in their chosen profession.
As you, I am a strong advocate for a BIG - that should be the basic safety net for every individual in society, and a way to make sure that everyone can survive. The purpose for a JG and a BIG in my mind are different, but are complimentary in nature.
Of course the wealthy are going to raise the canards of "moral hazard" and "encourages laziness"
This doesn't exactly use "BIG" the way it is used by its proponents like Philippe Van Parijs - as meaning the big BIG - completely unconditionally giving everyone enough money to live on for nothing. Which would very obviously be very, very inflationary, and so is just a lie.
This JIG is a JG + a small BIG. Small BIG basically = welfare, the dole, the safety net etc and already exists, better in some places than others of course. AFAIK all the MMT academics etc want a JIG. Wray puts it as "the JG is an add-on".
Clonal: It is a point of logic that the JG must be a fixed, minimum wage. Otherwise it is not a guarantee, and it is the minimum because people always go for more money rather than less.
The MMT JG would as Minsky said, and as the New Deal programs tried, "take people as they are." Match each job to skills as much as possible. Give writers, musicians, artists and even actors a job in their chosen profession. I cannot see what is or was so hard with that.
I agree that the MMTers sometimes make noises about not competing with the "private" sector - for no reason I can see - except political. But they just as often make noises in the opposite direction - saying the JG would and should drive out such marginal businesses and jobs.
Clonal, do you have a link for the "40% of the work week" claim?
There were many New Deal jobs programs and they had different rules.
The WPA offered 3 wages -- unskilled, semi-skilled, and skilled/management. The WPA also offered a cost-of-living adjustment for different parts of the country.
The WPA averaged 110 hours per month, with a 140 hour/month cap. Perhaps your 40% rule was some other New Deal program?
http://www.gjenvick.com/WPA-WorksProgressAdministration/Booklets/Questions-Answers-WPA/1939-04-17/02-WPA-Employment-WagesAndHours.html
I agree and don't see why this cannot be easily arranged through government and the non-profit sector.
The argument for the basic JG, i.e., unskilled labor, is based on the premise that layoffs ripple downward with the bottom being the one's taking the brunt.
That may be true, but I know of a number of middle-aged (40+) mid-level managers that were laid off in the downsizing of the Eighties and never found employment at their skill and pay level (100K range) again. They were collateral damage of capitalism.
Agree with Clonal and Septeus7 and PeterC about the JIG.
Calgacus, there is no safety net in the US other than SNAP and many poor people do not qualify for SNAP due to its asset rule.
No, all the MMT academics do not want a JIG, to the contrary they are opposed to a BIG, some of them strenuously so. This dates back to Minsky who was a reactionary conservative (and probably a racist). Minsky firmly opposed transfers, for moral and racial reasons, not for economic reasons.
Contrary to claims, the JG would NOT match jobs to skills. The JG would only be for unskilled workers or for liberal arts majors -- Pavlina has admitted as much. You can't pull REAL jobs out of thin air because they require tools and materials that are forbidden by the JG's funding limitation (80% wages). I.e., how would you create a JG for a butcher, a logger, or a process engineer?
Thanks for posting PeterC's blog, Tom. I think PeterC's heart is in the right place and can't think of any reason we couldn't make the economics work, too.
Calgacus,
The point of the New Deal programs was that the wages were different for different skill sets,and set at the going hourly wage for that skill set. Thus a skilled machinist would get the median hourly wage for a skilled machinist, and not that of a day laborer. The minimum wage does not reflect the skills, but is a blanket minimum wage. Further, the work was limited to 40% of the work week. This allowed a worker to look for work in the private sector, or to use the remaining time for creative purposes. I believe that some of the famous depression era novels were written this way.
This is something that a JG at minimum wage cannot achieve. And there is no way to preserve either your resume or your skill sets at a minimum wage JG.
I am fairly sure that the economists who are proposing the JG at minimum wage will never be able to salvage their resume if they ever had to take a JG at minimum wage. I am afraid the advocates of the JG never put themselves in the shoes of those who they are advocating for.
Dan,
I am talking about the WPA. The 140 hours you are talking about comes from the workers handbook that says:
Q. Do all workers have to put in the some number of hours on WPA projects?
A. No, but no worker may be required to work more than 8 hours per day, 40 hours per week, or 140 hours in two semimonthly pay periods, except to make up lost time or in extreme emergencies. This rule is only for WPA and not for other governmental agencies.
That was setting the maximum you could ever be required to work.
My information came from other sources. There were two limits in the WPA program - one was no more than one person per family, and the second was that workers could not be paid for more than 30 hours a week.( http://en.wikipedia.org/wiki/Works_Progress_Administration ) However in practice it came down to about 16 hour per week in response to objections by employers and unions. I had come across a credible reference on that - I would have to dig around for it.
I think we need to be careful about thinking of a JG in terms of the US or even the developed world. It's just as applicable to the emerging world and maybe more so. What a JG/BIG would look like in different locales is contextual even within single large variegated economies like the US. What might be appropriate for rural America would almost certainly not be suited to urban America, and the context of smaller cities is different from metropolises like NYC.
I think we are looking at several different things that have to be distinguished, e.g., under policy, strategy and tactics.
Are there some basic policy principles that apply universally? Do further distinctions need to be made wrt to policy?
Strategy is clearly context-dependent and tactics even more so. What might be effective in one locale might not in another. What might be politically practical one context might not in another.
So I think we need to think globally and measure nationally, regionally or provincially, and locally in dealing with how to deal with human dignity, human rights, opportunity, and full employment. Looking at it narrowly is probably a distraction.
Here is how I got my 40%. The maximum a worker could be paid for was 30 hours/week. The work week in the 1930's was 50 hrs/week. In practice, the average payment to workers on the WPA was for roughly 20 hr/week (not 16). So that is how I came to the 40% number.
Also, there is a good 56 page article written in 1998 by Amenta et al "Bring Back the WPA: Work, Relief, and the Origins of American Social Policy in Welfare Reform"
"No, all the MMT academics do not want a JIG, to the contrary they are opposed to a BIG, some of them strenuously so. This dates back to Minsky who was a reactionary conservative (and probably a racist). Minsky firmly opposed transfers, for moral and racial reasons, not for economic reasons."
You nailed it, Dan. Reactionary conservative. This deep seated sentiment applies to far too many so called liberals.
Calg,
"Which would very obviously be very, very inflationary,"
I dont see how that follows it is about price not quantity.... consider this assumption is perhaps monetatist....
rsp,
Matt,
I think Calg may be taking refuge in the favorite catch all phrase of economists - "all other things being equal" Which of course never happens to be the case.
The BIG would definitely not be inflationary in a society where robots are doing in increasing amount of the work, and therefore labor productivity is rising. Under such circumstances, the issues become primarily of ownership, and secondarily of distribution.
,
Dan Lynch: Calgacus, there is no safety net in the US other than SNAP and many poor people do not qualify for SNAP due to its asset rule.
I am not defending the horrible US "safety net". But there is more than that - Medicaid, TANF, SS disability, SSI, unemployment insurance etc.
No, all the MMT academics do not want a JIG, to the contrary they are opposed to a BIG, some of them strenuously so. This dates back to Minsky who was a reactionary conservative (and probably a racist). Minsky firmly opposed transfers, for moral and racial reasons, not for economic reasons.
Contrary to claims, the JG would NOT match jobs to skills. The JG would only be for unskilled workers or for liberal arts majors -- Pavlina has admitted as much. You can't pull REAL jobs out of thin air because they require tools and materials that are forbidden by the JG's funding limitation (80% wages). I.e., how would you create a JG for a butcher, a logger, or a process engineer?
I believe a look at the relevant MMT academic literature would support my claims and not the ones above. In Wray's latest economonitor (comments) Let’s Compare the Job Guarantee to the Alternatives, NOT Against Some Distant Utopian Vision "Jobs vs Welfare? We need both, of course. I think the BIG is a particularly bad way to do welfare" ... " I support small big, not BIG BIG."
What funding limitation, what "forbidden"? "Real jobs", WPA/JG ones not being them? - the very phrase and concept is irrational, antisocial, kleptocratic. To take one example above - a JG for a logger would be very easy and existed in practice, the New Deal's CCC - forestry. Minsky & the modern MMTers say it'll try to match jobs to skills. Their positions were/are squarely based on economic reasons - at least they say so. And I understand and agree with their economic logic. So what reason is there to suspect dishonesty, reactionary conservatism or worse?
Clonal: This is something that a JG at minimum wage cannot achieve. And there is no way to preserve either your resume or your skill sets at a minimum wage JG.
This is a complete non sequitur. What does the wage have to do with the job? Nothing. People preserve their resumes, their skill set, for no pay, all the time.
I am fairly sure that the economists who are proposing the JG at minimum wage will never be able to salvage their resume if they ever had to take a JG at minimum wage.
Minsky managed, having worked for the WPA, and using his special skills to boot. Even a few decades ago, let alone the Great Depression, the idea that a record of honest work is a resume-killer would have sounded quite outlandish to anyone in the USA, to any employer.
Again, there is no other proposal possible than minimum wage. Guarantee means guarantee. The JG program could have refinements as you suggest, but only the lowest level would be guaranteed. As a KISS fan, I would prefer having a higher base JG wage and a larger program, to excessive, imho deleterious complexity.
I am afraid the advocates of the JG never put themselves in the shoes of those who they are advocating for.I am afraid the advocates of the JG never put themselves in the shoes of those who they are advocating for.
Yes, that is a reasonable standard - putting yourself in those shoes. But IMHO the JG advocates most certainly do - and it is the critics and misunderstanders of the JG who don't. Some time ago a poll was posted here which showed the support for the Rolling Stone economic program - #1 on the list & support was the JG. And the poll showed that the poorer you are, the more likely you are for the JG. Apparently, increasing wealth leads to slipshod thinking and bad economics. The poor can't afford that, and know very well where their true interest lies - above all with a JG. Small BIGs might be nice, but the really important thing is the JG - with a nice high wage.
I think Calg may be taking refuge in the favorite catch all phrase of economists ...
I think you may not be distinguishing between the smallBIG and the bigBIG. While the smallBIG is not seriously inflationary with a JG - the JIG, the bigBIG certainly is obviously very, very inflationary in any current circumstances, outside of the most exceptional, tiniest and wealthiest of states.
Matt Franko: "Which would very obviously be very, very inflationary," Well, "monetarism", the quantity theory is not so utterly untrue. It is just an approximation which is so bad that it hardly useful except to point out things which are obvious to the untutored, like: "a big BIG can't work". Have vast sums of money raining down from the skies as the bigBIGgers want, and money would very quickly not be worth much. Wray, Tcherneva etc have made more detailed arguments, but imho they are hardly necessary.
I agree with Clonal’s criticisms of the more woolly minded JG advocates. But even Clonal underestimates the problems with JG when he says “On the one hand, they do not want the JG to compete with private employers, which they achieve by advocating the JG at minimum wage.”
Strikes me that even minimum wage JG jobs compete with minimum wage regular jobs. I.e. if you’re looking for a min wage job, and dozens of JG minimum wage jobs appear from nowhere, you’ll be tempted to take one of them rather than a regular min wage job.
Strikes me that even minimum wage JG jobs compete with minimum wage regular jobs. I.e. if you’re looking for a min wage job, and dozens of JG minimum wage jobs appear from nowhere, you’ll be tempted to take one of them rather than a regular min wage job.
That's one of the features of the JG rather than a bug. IF the JG pays unskilled workers a living wage, then so must the private sector, which would have to bid workers away from the JG with a higher wage than the minimum living wage.
As it is, firms are paying below the living wage and government (federal, state and local in the US) are making up the difference, supplemented by charity. What this means is that firms are paying below the subsistence wage necessary for workers to reproduce, violating even the principles on which laissez-faire is founded. It's a scam.
We have to come back to the fundamental concept on which the MMT JG is founded. The choice is between a buffer stock of employed and a buffer stock of unemployed. There are good economics reasons to choose the former over the latter, not to mention the moral reasons.
So I think that in a capitalistic system, this is the bottom line. Hence, it needs to be the starting point as foundation to build different programs for different contexts in different locales.
The right to work is the concept that people have a human right to work, or engage in productive employment, and may not be prevented from doing so. The right to work is enshrined in the Universal Declaration of Human Rights and recognized in international human rights law through its inclusion in the International Covenant on Economic, Social and Cultural Rights, where the right to work emphasizes economic, social and cultural development.
Tom, you have to make clear the difference between the right to work and the right to work laws passed by some US states.
The Wikipedia article I linked to does that, Clonal.
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