The proposed JG wage is $15 per hour with benefits equal to 20 percent of wage costs, which include health insurance, childcare, paid leave, and retirement. In other words, a full-time JG worker will earn $31,200 per year. Total labor costs including benefits would be $37,440 per year. Administration and material costs will be set at 25 percent of labor costs. Any additional overhead or material costs for the operation and execution of JG projects will be absorbed by the project-executing organizations—the nonprofits, localities, and municipalities that employ JG workers. The JG will also offer part-time work options and flexible working arrangements to accommodate students of legal working age, parents, and other caregivers who may wish to work. Note that the JG wage of $31,200 is above the poverty threshold for a US family of five, whereas the typical family size in the United States is 3.14 people, and 96.5 percent of all families are comprised of five people or fewer. Source: Tcherneva, Pavlina R. 2018. “Job Guarantee: Design, Jobs, and Implementation,” Working Paper 902, Levy Economics Institute, Annandale-on-Hudson, NY
How much will the JG program cost?

The JG program is a separate program that pays a living wage. It is not tied to other anti-poverty programs and does not require people to work for their benefits. When a person opts to take the JG job, they will no longer receive unemployment insurance (UI) or other anti-poverty assistance, thereby reducing spending on these programs.

As above, a generous JG program that employs between 11–16 million people at $15 per hour plus benefits will result in a net expenditure of 0.8 percent to 2 percent of GDP (Fullwiler forthcoming). These estimates include expected reductions in spending on other programs such as UI, Medicaid, and earned income tax credits (EITC).

However, these estimates are based on very conservative assumptions regarding potential savings on a wide range of other federal, state, and local programs that are targeted to low-income households. In 2015, for example, the federal government spent $104 billion on food and nutritional service programs, including $74 billion for the Supplemental Nutrition Assistance Program (SNAP), $21 billion for Child Nutrition, $6 billion for the Women, Infants, and Children program (WIC), $17.3 billion on Temporary Assistance to Needy Families (TANF), $50 billion in housing assistance, and $64 billion on EITC, to name some of the main anti-poverty expenditures. Additionally, total direct spending by states for social services and income maintenance for those on public welfare was $505 billion (this does not include spending on health, policing, or corrections).

Research indicates that most social problems—from homelessness and child malnourishment, to mental and physical health problems, to certain types of crime—are connected in one way or another to unemployment (Tcherneva 2017). For example, the average cost of incarceration in the United States is $35,000 per year per inmate, which is slightly below the $37,440 in wages and benefits that the JG provides. In New York State, the cost is $75,000 per inmate—the equivalent of two JG jobs. And in New York City, it is $169,000 per inmate per year, or equal to four-and-a-half living-wage JG jobs.

Many of those who are behind bars for economic reasons (i.e., related to the absence of stable well-paid jobs and the associated pathologies unemployment creates) would be better served by taking up a JG job instead. Thus the federal JG program will also be a boon to state finances, causing large-scale savings on incarceration and other anti-poverty measures.

All of these savings are not estimated in the cost calculations above. A more elaborate model will be needed to estimate the reduction in medical expenditures, incarceration costs, and other anti-poverty measures, as well as the positive social multipliers and growth that would result from implementing a JG.

It is conceivable that if we included all social and economic benefits—including reductions in poverty, indebtedness, crime and incarceration, and improvements to physical and mental health—the impact on the federal government budget would be far less (and the positive impact on state budgets would be larger) than what Fullwiler (forthcoming) has estimated.

Finally, it is important to note that the real costs of unemployment (in terms of wasted human and physical resources, forgone output, poverty, and other social ills) are the real burden on our communities and future generations—a burden that we already carry. We are already “paying” for unemployment. In financial and real terms, the costs of unemployment today outweigh the financial and real costs of running a JG.

Sources: Fullwiler, Scott. forthcoming. “Simulating a Large Job Guarantee Program Paying Above-Poverty Level Wages Plus Benefits.” Levy Institute Working Paper. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College.

Tcherneva, Pavlina R. 2018. “Job Guarantee: Design, Jobs, and Implementation,” Working Paper 902, Levy Economics Institute, Annandale-on-Hudson, NY  http://www.levyinstitute.org/pubs/wp_902.pdf

Tcherneva, Pavlina R. 2017. “Unemployment: the Silent Epidemic“, Working Paper 895, Levy Economics Institute, Annandale-on-Hudson, NY  http://www.levyinstitute.org/pubs/wp_895.pdf

The JG program is a separate program that pays a living wage. It is not tied to other anti-poverty programs and does not require people to work for their benefits. When a person opts to take the JG job, they will no longer receive unemployment insurance (UI) or other anti-poverty assistance, thereby reducing spending on these programs.

As above, a generous JG program that employs between 11–16 million people at $15 per hour plus benefits will result in a net expenditure of 0.8 percent to 2 percent of GDP (Fullwiler forthcoming). These estimates include expected reductions in spending on other programs such as UI, Medicaid, and earned income tax credits (EITC).

However, these estimates are based on very conservative assumptions regarding potential savings on a wide range of other federal, state, and local programs that are targeted to low-income households. In 2015, for example, the federal government spent $104 billion on food and nutritional service programs, including $74 billion for the Supplemental Nutrition Assistance Program (SNAP), $21 billion for Child Nutrition, $6 billion for the Women, Infants, and Children program (WIC), $17.3 billion on Temporary Assistance to Needy Families (TANF), $50 billion in housing assistance, and $64 billion on EITC, to name some of the main anti-poverty expenditures. Additionally, total direct spending by states for social services and income maintenance for those on public welfare was $505 billion (this does not include spending on health, policing, or corrections).

Research indicates that most social problems—from homelessness and child malnourishment, to mental and physical health problems, to certain types of crime—are connected in one way or another to unemployment (Tcherneva 2017). For example, the average cost of incarceration in the United States is $35,000 per year per inmate, which is slightly below the $37,440 in wages and benefits that the JG provides. In New York State, the cost is $75,000 per inmate—the equivalent of two JG jobs. And in New York City, it is $169,000 per inmate per year, or equal to four-and-a-half living-wage JG jobs.

Many of those who are behind bars for economic reasons (i.e., related to the absence of stable well-paid jobs and the associated pathologies unemployment creates) would be better served by taking up a JG job instead. Thus the federal JG program will also be a boon to state finances, causing large-scale savings on incarceration and other anti-poverty measures.

All of these savings are not estimated in the cost calculations above. A more elaborate model will be needed to estimate the reduction in medical expenditures, incarceration costs, and other anti-poverty measures, as well as the positive social multipliers and growth that would result from implementing a JG.

It is conceivable that if we included all social and economic benefits—including reductions in poverty, indebtedness, crime and incarceration, and improvements to physical and mental health—the impact on the federal government budget would be far less (and the positive impact on state budgets would be larger) than what Fullwiler (forthcoming) has estimated.

Finally, it is important to note that the real costs of unemployment (in terms of wasted human and physical resources, forgone output, poverty, and other social ills) are the real burden on our communities and future generations—a burden that we already carry. We are already “paying” for unemployment. In financial and real terms, the costs of unemployment today outweigh the financial and real costs of running a JG.

Sources: Fullwiler, Scott. forthcoming. “Simulating a Large Job Guarantee Program Paying Above-Poverty Level Wages Plus Benefits.” Levy Institute Working Paper. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College.

Tcherneva, Pavlina R. 2018. “Job Guarantee: Design, Jobs, and Implementation,” Working Paper 902, Levy Economics Institute, Annandale-on-Hudson, NY http://www.levyinstitute.org/pubs/wp_902.pdf

The program will be federally funded but locally administered. Only the federal government has the capacity to design a countercyclical budget that floats with changes in unemployment, which is essential for the program’s success. See the discussion in section VI.5 (“Program Budget and Funding Mechanism”) in the full proposal (Tcherneva 2018).

——

Section VI. 5 “Program Budget and Funding Mechanism” (Tcherneva 2018)

The primary challenge is to design a budget that not only ensure the program’s long-run sustainability, but also one that accommodates normal countercyclical fluctuations and large swings in enrollment, should those unexpectedly arise.

Unemployment behaves like an epidemic, developing rapidly and unexpectedly and spreading with the distinct pattern of a contagion effect. Simultaneously, it inflicts large social and human costs (Tcherneva 2017). Therefore, the proposed funding mechanism here is, in part, modeled after disaster and emergency relief in the United States.

For example, each year Congress would pass base appropriations for the management of the JG program. Because the actual level of joblessness over a given year is unknown—much as it is with large-scale disasters or smaller, localized events—the funding would have to fluctuate with need. This can be accomplished in two ways: 1) the base appropriations can be adjusted as needed using the Budget Control Act, which permits some increases in discretionary spending; and 2) unexpected annual increases in JG funding can be provided through supplemental appropriations bills that offer funding not subject to spending caps or budgetary controls.

This is the model currently used for disaster and emergency relief. Since natural disasters have intensified, the base budget has proven inadequate, necessitating very large supplemental appropriations that can be vulnerable to abuse. By contrast, the JG tames unemployment fluctuations and stabilizes employment patterns, which suggests that it will not be as reliant on supplemental appropriations as disaster and emergency relief.

The base appropriation budget will initially be estimated to fund a sizable program. To employ 11–16 million people at $15 per hour plus benefits equal to 20 percent of wages (allowing for material costs set at 25 percent of labor costs), the direct program expenditures would be about 1.3 percent to 2.4 percent of GDP (and the net cost of the JG program would vary from 0.8 percent to 2 percent of GPD, see Fullwiler [forthcoming]). This is less than what the US government spends annually on elementary and secondary education. In subsequent years, the budget will be calculated as a rolling average of actual funding from previous years. If the JG induces higher level of private sector employment and settles down to a smaller size over the course of several years, then the budget would reflect those changes and the reduced need to fund such a large program.

Adjustment in the base appropriations and supplemental appropriations are nevertheless necessary because mass layoffs can occur for any number of reasons. The main reason is that private sector profits as a share of GDP fluctuate over the business cycle, which in turn produce fluctuations in private sector employment rates. To serve as a genuine buffer stock, the budget for the JG must fluctuate in a similar fashion.

Adjustments in base and supplemental appropriations are also needed for extreme circumstances. For example, the global financial crisis—to the dismay of many economists—resulted in almost a million unemployed individuals per month in early 2009. A standby jobs program would have provided alternative employment opportunities to the unemployed, thus remedying labor market condition much faster than what we experienced. One estimate suggest that if the American Recovery and Reinvestment Act budget funded a JG program instead, it could have created 20 million living-wage jobs, wiping out unemployment altogether and launching a strong jobs-led recovery (Tcherneva 2009). Since financial crises, geopolitical shocks, and other events may unexpectedly generate sudden mass layoffs, the JG budget would need to increase accordingly to provide needed funding quickly.

Furthermore, disaster events such as hurricanes Harvey and Irma significantly impact local employment rates and demand a discretionary increase in jobs assistance, similar to other discretionary increases in disaster relief funding.  

Indeed, current law already provides funding for those who have lost their jobs due to natural disasters. However, it does not provide the employment opportunities, which the JG will supply.

Congress can appropriate an employment relief fund (ERF) as a supplement to the DOL’s budget. The US DOL works with state labor department agencies and their local offices to disburse the payments for wages and materials associated with program management, similar to the way it currently disburses UI payments.

Just as it is with disaster relief, DOL offices, as well as the Presidency, can issue disaster unemployment declarations that would make additional funds available if there are sudden and acute mass layoffs in a particular area. As discussed above, such a program already exists on the books and can be incorporated into the JG budget. This is the Disaster Unemployment Assistance  program, which provides unemployment benefits to those who have become unemployed as a direct result of a presidentially declared major disaster.

If funding for the entire JG program cannot be provided through the Stafford Act of 1988 (Robert T. Stafford Disaster Relief and Emergency Assistance Act), a modern unemployment emergency relief act can be passed for the purpose.

Source: Tcherneva, Pavlina R. 2018. “Job Guarantee: Design, Jobs, and Implementation,” Working Paper 902, Levy Economics Institute, Annandale-on-Hudson, NY

The program is funded by the Department of Labor (DOL) but is locally administered and managed by states, municipalities, One-Stop Job Centers, nonprofits, and social entrepreneurial ventures (see section VI.6, “Administrative Agencies and Project-Executing Organizations”) in the proposal (Tcherneva 2018).

The goal is to match individual community needs with unemployed resources. A bottom-up approach of management and administration combined with participatory decision-making and budgeting will enhance program effectiveness.

Since the JG is under a new agency with new program objectives, some additional administrative apparatus will need to be created—a challenge that’s not unique to the JG program, as all essential government programs require administration and management.

I propose to design the JG as a “National Care Act” that addresses the urgent environmental and care needs of communities across the United States. The jobs will be useful and targetted to neglected areas. The program can act as a preparedness response, providing jobs to the unemployed on-demand in monitoring, rehabilitation, and investment projects that serve the public good. I have discusssed the important role localities and non-profits can play in the job design (Tcherneva 2012, 2014), as they are already working to address pressing environmental and care gaps, but are normally understaffed and underfunded.

The city mobilizes able-bodied men and women with varied skill levels for a massive cleanup of vacant lots, focusing on rehabilitation and reclamation of materials. Disabled individuals, who may have difficulty with physical work but have basic computer skills and wish to work, create a database documenting the cleanup efforts, cataloguing the reclaimed materials, and offering office-based logistical support. At-risk youth help with park cleanup and apprentice with local construction companies in building, painting, and landscaping skate parks and basketball courts. The city undertakes greening projects and rehabilitation of abandoned public spaces.

Example 2

A former coal mining community experiences city blight, mass unemployment, and a high incidence of health problems. The JG organizes a comprehensive program for restoring the natural environment using the abandoned coal mine, based on existing best practices (e.g., in some Appalachian areas in the United States). Abandoned mines are filled with water to create man-made lakes. The work involves construction of infrastructure that directs rivers into the empty craters—work that is suitable for the skill level of the unemployed miners. Others are employed in a mass reforestation effort to plant appropriate tree species that restore the ecosystem, stem soil erosion, and reintroduce important lost wildlife to the region. The municipalities organize food insecurity, water quality, and malnutrition surveys. They launch a comprehensive community garden program.

Example 3

Local CSAs propose to organize and build community gardens throughout the city. They employ local unemployed residents to setup and run the gardens. Produce is distributed to members, sold in local farmers markets, or delivered free of charge to low-income families. In addition to building community gardens, the CSA employs people to build greenhouses and aquaponics operations, and run classes for adults and youth related to sustainable agriculture. Local CSAs can offer full- and part-time work opportunities and flexible working arrangements.

Example 4

A local green nonprofit institute has extensive experience in creating, protecting, and expanding the network of public trails. On short notice it absorbs anyone available to work on trail maintenance and repair. In addition, the nonprofit works on removing invasive species from local areas. The species removal necessitates soil erosion prevention efforts, all of which need to be staffed on an ongoing basis. The institute also runs an eel and herring monitoring program.

People with different skill levels are employed to perform the different tasks—most of the above do not require much, if any, training or experience. Workers with higher skills can assist in creating maps, documenting the species, and performing research as needed. The nonprofit also offers courses, seminars, and hands-on experience for youth and adults in environmental conservation. It also provides flexible working arrangements for those with child or elder care responsibilities.

The JG is authorized as a new program, under a new agency. Its primary objective is to provide work to the unemployed at a living wage in projects that enhance the public purpose.

As a new program, the JG aims not to replace existing public sector work. In other words, the Food and Drug Administration cannot lay off its food and drug inspectors and transfer them onto the JG payrolls. A library or a school cannot lay off its librarians and teachers and rehire them through the JG.

The JG serves the function as a “public option for work” because it is open to all, irrespective of income or labor market status. Whatever work and pay conditions it offers will become the standard for the economy as a whole. Under special circumstances someone may prefer lower-paid private sector work, but as a rule the proposed JG wage ($15 per hour, plus benefits) will become the effective minimum wage. There is some empirical evidence that illustrates this effect (Tcherneva 2012).

The JG strengthens a family’s working options. Why juggle two part-time jobs under duress to make ends meet if there is a well-paid, full-time JG work opportunity. Furthermore, because some of the benefits the JG provides are very popular (e.g., guaranteed health insurance), many people may flock to the program to get them. If firms wish to retain these workers, they will need to match not just the pay, but also the benefits and working conditions that the JG establishes.

This is a ‘disruptive’ aspect of the JG that aims to encourage firms to raise the pay for their workers, improve working conditions, and offer more stable employmemt. To ensure that this ‘disruption’ is not destabilizing, the JG can be phased in more slowly to allow firms adequate time to adjust.

With the JG in place, as companies lay off workers in recessions, these same workers can transition directly to the JG. Without the JG, they face uncertain prospects of finding another job, and the meager unemployment assistance they receive ensures that they will curb their spending—they skip shopping trips, restaurant outings, or going to the movies. That ripple effect results in additional laid off workers—servers, cash register operators, movie ticket attendants, and many more. In a sense, one unemployed person throws another one out of work.

The JG stops and prevents this vicious cycle. When private employment shrinks and workers are laid off, they transition into the JG. The increase in government expenditure on hiring those workers is the very stimulus the economy and the private sector need to recover from the depths of a recession.

There are the only two buffer stock options with respect to inflation control. Either we allow the pool of the unemployed to expand and shrink with changes in economic activity (the status quo), or we devise a long-run program to directly employ the unemployed that does the same.

Currently the Federal Reserve uses unemployment to control inflation. The non-accelerating inflation rate of unemployment (NAIRU) is the benchmark policy guide for deciding when to step on the brakes and slow down economic growth. If the Fed deems that the pool of the unemployed has shrunk to “undesirable” levels (put simply, that too many people have jobs), it increases interest rates with the intent to slow down purchasing power, increase unemployment, and thus remove any inflationary pressures that may result from too many people having jobs and income. This, as the late Nobel Prize–winning economist William Vickrey argued, is the equivalent of economic vandalism.

By contrast the JG expands in recessions (deflationary periods) and contracts in expansions (inflationary periods), serving the exact same function of responding anti-cyclically to changes in aggregate demand that the NAIRU is supposed to serve, except it does it by establishing an above-poverty wage floor, providing jobs for all who need them, producing socially useful output, and reducing the outsized costs of unemployment.

No. See questions 13, 14, 15 and 15-a. Fiscal or monetary policies are required for other policy objectives, but the JG is a powerful macroeconomic policy in its own right. It obviates the need to maintain an unemployment buffer stock via fiscal or monetary fine-tuning and replaced it with an employment buffer stock policy. To achieve other goals—such as strategic investments, better income distribution, comprehensive inflation management, financial stability, etc.—different monetary and fiscal policies would be needed.

Source: Tcherneva, Pavlina R. 2018. “Job Guarantee: Design, Jobs, and Implementation,” Working Paper 902, Levy Economics Institute, Annandale-on-Hudson, NY

As discussed above, unemployment is a persistent problem. There are more people who want jobs than there are jobs available, even in the best of times. Requiring people to work for their benefits is a cruel game of musical chairs. And since the government has already placed work requirements on some social benefits, it is also incumbent on the government to guarantee those job opportunities. In the current policy context the JG is mandatory.

The JG is “fair work” in the sense that it provides a fair opportunity to any person to secure decent, well-paid employment. It not only provides the needed employment safety net, but also changes the very macroeconomic conditions that people face as they search for a better life.

While some public projects may fail, as is also the case in the private sector, in general public job creation programs tend to be successful and popular. Not only do these programs fill important needs gaps and make a material impact on communities and peoples’ lives, but they also empower.

The JG removes the existing threat of unemployment, which private firms use in their hiring practices. The JG puts upward pressure on wages at the bottom of the income distribution. It also provides opportunities for cooperative work arrangements. It can socialize some forms of production that are done for profit and demonstrates that people are capable of running and organizing their communities on their own.

The JG works as a hybrid program that uses the best practices established by states and localities, NGOs, SEVs, and other public institutions. The DOL and Community Jobs Banks can solicit projects from NGOs, SEVs, and municipal governments, but the final responsibility that enough projects have been solicited and/or designed rests with the new DOL agency created to manage the program.

The DOL will provide guidelines and directives to localities to create enough work for all. The unemployed would register with the One-Stop Job Centers and indicate whether they would like to get UI or to enroll in the JG. If they prefer the work opportunity, they will not qualify for UI.

The One-Stop Job Centers are responsible for providing all types of work to the unemployed. If there are private job openings, they can try to place the unemployed there, or in other traditional nonprofit or public sector work. But if those opportunities are in short supply, the One-Stop Job Centers will also serve as public job banks that will present the unemployed with several public work options provided though the JG program.

The public job banks will already have an arrangement with local schools, libraries, nursing homes, environmental groups, and other community organizations to accept newly unemployed people as trainees, where they can shadow teachers, coaches, nurses, and librarians and assist them with ongoing work until such time when a more appropriate work opportunity may be found for them.

If local project-executing organizations are unaware that there are many more locally unemployed people who need work than the projects they have proposed and designed, it will be the responsibility of the local One-Stop Job Centers to reach out to various local providers and, in cooperation with the municipality, initiate new projects.

This is one blueprint for the program’s implementation. Some trial and error, experimentation, and ongoing improvements will be necessary for the program’s long-run success.

From the point of view of the unemployed, it makes little difference if one is structurally or cyclically unemployed. For the architects of the JG program, this distinction may make some sense, though there is considerable overlap between the two categories—many who are laid off during recessions increasingly find it difficult to secure work in recoveries and eventually become structurally and long-term unemployed. The JG is designed with the person and their needs in mind, thus with respect to the actual operation of the JG, there are several different considerations.

For example, especially soon after program launch, some of the unemployed may fail to enroll in the JG because they are unfamiliar with the program. It is the responsibility of the One-Stop Job Centers (aka, the unemployment offices) to provide the needed information and a menu of job options.

Second, once people enter the program, they may have trouble transitioning out of it, either because they were previously unemployed for a long period of time or because they face other barriers to private sector employment. The JG will be tasked with assisting them with this transition, so that people do not end up staying in the program longer than they hoped for.

Yet others may prefer the JG job option to any other alternatives. The JG welcomes them (see question 25). Finally, if the cyclically unemployed want to enter or exit the JG quickly, they can be placed in jobs that do not cause significant disruption to the work being done. For example, such nondisruptive work could include shadowing teachers, nurses, or librarians or joining ongoing small infrastructure, rehabilitation, or green projects that can easily accommodate extra workers, but will not be shut down if some of them leave. Again, the ability to absorb or shed employees is not a unique challenge for the JG. Indeed every labor market segment within the private, nonprofit, or public sectors deals with new entrants and job leavers on an ongoing basis.

Yes. People are paid to work. If they do not show up to work, they will not collect a check. If they threaten the safety of others, they will be let go.

However, when considering this question, it is important to note that the JG is not run for profit. It produces public goods and services. The program’s success and individual performance in the program will not be judged by private sector “efficiency criteria.” Its reason for existence is fundamentally different—it is to serve the needs of the environment, community, and people; and to enhance the public good. Its purpose is not to maximize profit.

Therefore what constitutes nonperformance in the JG will differ from that of a private firm. A person cannot be fired for doing work that is considered “not profitable.” They can be let go for nonperformance, as defined above (e.g., not showing up, safety concerns, not doing the task they’ve been assigned to), but only after they have been mentored and provided ample assistance to be successful on the job. Because the JG fits jobs to the person, it may be that “the match” is not a good one. Then, every effort will be made to move that person to another work opportunity where they can be successful. If external factors impede one’s ability to hold onto their JG job—drug or alcohol abuse for example—they can be referred to the necessary rehabilitation programs, which can be provided through the JG itself. The JG is a step toward a more holistic approach to addressing the multiple deprivations many families face.

The existing threat of unemployment is eliminated. The JG fundamentally changes the way the labor market works. Tight full employment is secured, a base wage is firmly established, and the existence of a public employment option changes the bargaining power of workers in the most precarious forms of employment—those at the bottom of the income distribution.

Not only is mass joblessness a thing of the past, but conditions in the private sector change, as firms must (at a minimum) match conditions offered by the public option in terms of wages and benefits.

Of course it is. We guarantee access to a public library to everyone. There may be some circumstances when a person is asked to leave the premises, but unless they threaten the public’s safety, they are not denied access to the public library the next time they show up.

Another example is public education, which is guaranteed to all children. Sometimes students get into trouble and are suspended or expelled. As a matter of principle (though it can surely be improved upon in practice), we seek ways to help these students—we make referrals and find rehabilitation programs, or connect them with community liaisons and at-risk youth programs to help them stay in school and be successful. Again, while some kids fall through the cracks and much more is needed to help them, this is the principle that underpins public education—that it is guaranteed to all, and that everyone has the right to education.

The same commitment governs most programs that guarantee other rights—not only the right to education and public libraries, but also to postal services, fire prevention, public safety, and security. The JG offers the same “guarantee.” It is an assurance that no one will be denied access to a job if they need it, just like no one can be denied a visit by the fire department in case of fire. As above, if someone wishes to work but is unable to do so because of mental health issues, for example, the program will look to connect them to other programs that are more appropriate to address that person’s needs. Separately, if individuals want to work but caregiving responsibilities or lack of suitable transportation prevent them from doing so, the JG will aim to alleviate these obstacles by making the appropriate investments.

Not necessarily. Depending on the program’s impact on the social costs of unemployment, it could arguably even shrink government.

Most people fear the financial costs of these programs. As discussed in question 1, they are still relatively modest given our bold assumptions about the size of the program: 0.8 percent to 2 percent of GDP. However, that number is rather meaningless unless it is compared to the social benefits derived from these programs.

The JG does aim to increase the supply of public goods, while reducing the outsized social, economic, and political costs of unemployment. Second, our model indicates that it permanently increases GDP and private employment. Finally, the JG moves countercyclically—the stronger the economy, the smaller the program. It will swell in recessions, providing the countercyclical stabilizing force that restores private sector payrolls. As a consequence, the program shrinks with recoveries.

As was discussed above (e.g., question 3), the real costs of unemployment are enormous and already paid for. The physical and financial resources US states dedicate to dealing with incarceration, poverty, poor health, and other social ills are already very large. If the JG has the preventative effects discussed above, it may in fact shrink the size of government and redirect the resources currently used for battling the social ills of unemployment towards the operation of the JG program.

No. (See questions 32, 33, and 35). The vast majority of employment is in the private sector. The JG does not change that. According to the Bureau of Labor Statistics, in January 2018, 85 percent of all working people were employed in the private sector (profit and nonprofit). The federal government employed only 2 percent of the total labor force; states and municipalities employed the remaining 13 percent. At the same time, the cost of unemployment burdens all, but is predominantly borne by the public sector.

Under the boldest assumptions about the size of the program (see question 1), and depending on how the program is phased in, it is possible that the JG program employs, at its peak, about 10 percent of the labor force (that’s essentially equivalent to the existing amount of unemployment and underemployment). The workers would be distributed across states, localities, and nonprofits. In strong expansions, that number would be much smaller, as people transition to other forms of traditional private or public sector employment.

No, the JG is nothing of the sort. First, the JG operates in market conditions and serves as a complement to private sector employment (see buffer stock features in questions 14 and 34). The stronger the private sector labor market, the smaller the JG program. In the former Soviet bloc, under command economy conditions, the government served as the employer of first and (in many places) only resort. The JG by contrast is the employer of last resort and the federal government doesn’t normally do the actual hiring.

Yes. There have been many direct employment programs around the world—small and large—that we can use as examples. Often these have been targeted or time-limited programs. For example, Argentina’s jobs program was implemented during the serious economic crisis in the early 2000s; it was phased out as the economy recovered. Similarly, the United States created the New Deal jobs programs during the Great Depression to deal with its employment crisis and, like Argentina, shut down those programs when economic conditions improved. On the other hand, over the past decade, India has been running a permanent JG program.

Smaller programs, such as youth employment guarantees and programs for the homeless and ex-convicts, also point to overwhelmingly positive results. The following is a brief discussion:

1. Plan Jefes y Jefas, Argentina

2. National Rural Employment Guarantee Act (NREGA), India

3. New Deal, the United States

1. Youth Incentive Entitlement Pilot Projects (YIEPP), the United States

2. Future Jobs Fund, the United Kingdom

Localized programs in distressed communities that serve the homeless and ex-convicts

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I. LARGE EMPLOYMENT PROGRAMS IN THE US and ABROAD

Around the world there have been large-scale direct job creation initiatives that offer useful insights.

1. Plan Jefes y Jefas in Argentina

Argentina created the Plan Jefes y Jefas in the depths of the 2001 economic crisis. It guaranteed four hours of daily work paid at the minimum wage to an unemployed (male or female) head of household. While it was not a universal public service employment program, its significance lies in the fact that it was explicitly modeled after the public service employment proposal developed in the United States (aka, the employer of last resort).

The program grew quickly to two million workers (5 percent of the population and 13 percent of the labor force participated) but it also shrunk as the economy recovered. Though the program was discontinued as the economy recovered, it exhibited key features of the JG proposal that were discussed above—it showed countercyclical features, the Jefes wage served as a base wage, it produced valuable public goods and services, and it had significant positive impact on the workers and their families, especially on marginalized communities and on women. Administration and institutional capacity were not obstacles to the program’s speedy launch and operation. The program was up and running within six months after it was signed into law.

2. National Rural Employment Guarantee Act (NREGA) in India

As discussed above, the JG is a permanent, universal program that provides jobs to all, in good times or bad. The program in India comes close to such a program. The NREGA guarantees at least 100 days of wage work to each household per year. The program enshrines the right to paid work into law—a right that has been written into the constitutions of many countries, inspired by the United Nations Declaration of Human Rights, though signatory countries have yet to meet that mandate. India’s program guarantees work by household only, not per individual—as in this JG proposal.

Though the social and economic conditions of India are profoundly different from those in the United States, the significance of NREGA lies in the fact that it has created a rights-based framework for wage employment programs and has charged the government with the legal responsibility for providing employment to those who ask for it.

NREGA, just like the JG, not only guarantees employment on demand, but also aims to create specific productive public assets in communities—wells, ponds, roads, parks, etc.—and provide needed public services, like water conservation, horticulture, flood prevention, drought proofing, and other environmental projects. Apart from NREGA’s documented environmental benefits, the program has reduced the pay gap between men and women amongst the poor and has helped raise wages at the bottom for private sector workers.

3. The New Deal in the United States

In many ways, the New Deal invented the model of large-scale direct employment programs during the Great Depression. An estimated 13 million workers participated in the Works Progress Administration (WPA)—the largest of the jobs programs. As Taylor (2009) argues, the WPA can be credited not only with providing income to its workers, but also with creating the infrastructure that supported the war effort as well as the postwar boom. Indeed, Taylor (2009) argues that the WPA brought the United States into the twentieth century.

In the United States, the New Deal was up and running in four months and, as noted, Plan Jefes y Jefas was up and running in six months. These programs were similar in size (relative to the national populations) to the JG program proposed here. And while the JG deviates significantly from these large-scale employment programs, research into each of them has informed this proposal.

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II. YOUTH EMPLOYMENT GUARANTEES

Experience with direct youth employment programs suggests that they bring important benefits to young people

1. Youth Incentive Entitlement Pilot Projects (YIEPP) in the United States

Universal programs that are open to all tend to enjoy greater popularity than programs that target specific groups. While not a panacea to social antagonism and stigma, the JG is a significant improvement over the status quo. Not everyone can or should be expected to work (see question 30). However, many people who currently face punitive eligibility criteria for existing benefits prefer to work. The JG offers them an “out” by providing an opportunity to earn a living income while training, learning, and transitioning to other forms of employment.

For many, the program would level the playing field and provide the economic opportunities they currently lack. Evidence shows that employers are reluctant to hire the unemployed, especially the long-term unemployed. The JG fundamentally changes the worker’s odds of success as they seek employment, income, and other economic opportunities.

While current law does not permit it, the JG can serve as an effective “path to citizenship” program.

No. The JG is open to qualified nonprofits. Those will exclude religious entities and political organizations.

Even if UI were increased, other cash assistance programs were strengthened, and a form of basic income guarantee were implemented, people would still want jobs.

Research indicates that the nonpecuniary costs of unemployment (85–93 percent) far outweigh the pecuniary costs (15–7 percent) (Winkelmann and Winkelmann 1995). This suggests that interventions that are based on providing income alone will not be successful. People reap a great many benefits from working; income is but one of them (see figure A4 in appendix II, in this proposal [Tcherneva 2018]). Decent work at decent pay brings significant mental and physical health benefits, it increases and deepens one’s social capital, strengthens educational and labor market outcomes of other family members, and offers institutional support and economic opportunities not available to those outside the labor market, to name just a few.

Work here is understood very broadly as the human economic activities undertaken to secure the social and economic provisioning of individuals, families, and communities. In modern market economies, work has taken the form of a “job,” i.e., paid work that has also become increasingly punitive. This is largely due to the very existence of mass and ongoing unemployment and its impact on labor market dynamics and paid employment.

The modern paradox is that many people want paid work—not just because of sheer necessity, but also because of the many non-monetary benefits a job offers. Yet the marketplace has failed to provide what people want—decent work at decent pay.

The JG addresses this paradox by rethinking/reimagining paid work, and by supplying a public option for paid work that is based on social value, public purpose, and empowerment (see question 46).

Reducing the retirement age and the working week are desirable and consistent with the JG. Indeed, since the JG sets the labor standard, if it provides full-time pay and benefits for a 30- or 35-hour working week, then that becomes the standard for the economy as a whole.

Technology will continue to transform our lives and the way we provision ourselves. Many jobs will (and arguably should) be automated. Still, the majority of the jobs of the future have not been invented yet. As technology makes certain jobs obsolete, it creates the need for new ones. And yet, involuntary unemployment will continue to be a problem.

There is no iron law of technology that requires certain jobs to be performed by computers/ robots. Despite the innumerable online university courses, society still pays a premium for high-quality, in-person instruction. Apps, smart boards, and other programs have transformed school curricula, but not the focus on personal contact and interactive learning. Hospice care cannot be done through the television set and personal care is still the norm.

The JG here is conceived as a National Care Act program that focuses on provisioning for the environment, our communities, and people. Technology notwithstanding, we can still find many useful things for people to do.

It is also important to point out that government programs cannot be “prefunded” via tax collections. Program budgets are appropriated ahead of time, allowing the necessary spending to take place. Tax collections are a reflux, after the spending has occurred, and the amount of taxes collected varies with the health of the economy and in precisely the opposite direction to the needs of the program.

In recessions the JG requires increased funding, exactly at a time when tax revenues decline. So raising taxes to prefund the program is not only impossible, but trying to do so will be counterproductive—the income that the government provides to the unemployed needs to be a net injection in the economy, not offset by taking away income somewhere else in the economy.

The task is to allow the budget to float. Since the program always spends neither more nor less than what is needed to hire all people who are in need of a job, spending is, in a sense, at the “right” level because it responds to the needs of the economy.

We have the ways and means to hire the unemployed. This proposal aims to do so via a comprehensive public service employment program.

Whichever way we design or phase in the Job Guarantee, at the heart of the proposal is the aspiration that there will come a day when the right to work will be secured to all, including the least fortunate among us. The program does so by raising and establishing a floor to pay, below which no working person would ever fall.

The program is open to all, though it does not aim to provide medium- or high-wage work to highly skilled individuals (i.e., unemployed engineers, accountants, managers). They are, of course, welcome into the program should they wish to perform public service at the base pay. But since these groups tend to experience shorter spells of unemployment and generally have the assets that allow them to weather them, they would not normally enroll into the JG and/or would be the first ones to transition out of it.

The present concern is with providing a living wage for anyone who wishes to work. By raising the floor and providing a public job option, the JG will go a long way to breaking the vicious employment dynamics at the very bottom of the income distribution—last hired–first fired dynamics, labor market discrimination, and unfavorable prospects for parents and caregivers, to name a few.

Good question!

For more, see https://www.pavlina-tcherneva.net/the-case-for-a-job-guarantee