What is a job guarantee — & why?



Myles Ma

Myles Ma

Senior Reporter

Myles Ma is a senior reporter at Policygenius, where he covers personal finance and insurance and writes the Easy Money newsletter. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

Published May 11, 2018 | 6 min read

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A federal job guarantee looks likely to be a talking point in the 2020 presidential election. Potential Democratic candidates like Sens. Cory Booker, Kirsten Gillibrand and Bernie Sanders have expressed support for such a program, as have about 46% of likely U.S. voters according to a recent poll from Rasmussen Reports.

Workers hired through a job guarantee program could fill gaps left by the private sector, doing work with no profit motive like cleaning up the environment, said Pavlina R. Tcherneva, associate professor and director of the economics program at Bard College. In addition to providing work to the unemployed, it would give people in low-paying or dangerous private sector jobs a way out.

It may sound like big government excess, Tcherneva said, but the current system of helping the poor already leads to plenty of government spending, not only in welfare programs but also in programs to decrease crime, provide better nutrition, and other problems related to poverty. A job guarantee would reduce spending on many anti-poverty programs. Unemployment and poverty also have other costs, Tcherneva said, including blighted communities, poorer health and reduced potential.

Unlike the existing entitlement system, which supports people once they become poor, a job guarantee can keep them from becoming poor in the first place, said William Darity, professor of public policy at Duke University.

What kind of jobs would people do?

Darity, who co-wrote a proposal for a federal job guarantee policy for the Center on Budget and Policy Priorities, a nonpartisan research institute, hopes a variety of jobs will be available, from work on physical infrastructure like road and bridge repair to human services like child and elder care, along with opportunities for writers, artists and musicians. A job guarantee program could also create entirely new jobs depending on public need.

One of the earliest jobs guarantee was part of the President Franklin D. Roosevelt's New Deal. In response to the Great Depression, Roosevelt created a public jobs program to provide work for anyone seeking employment as part of his "Economic Bill of Rights." This included programs like the Public Works Administration and the Civilian Conservation Corps, which provided the kind of job guarantee envisioned by Darity.

Professional child and elder care could free up women who bear the burden of providing this care for free, which could help increase productivity and reduce the gender pay gap, Darity said.

Tcherneva, who has also come up with a job guarantee program design, said jobs could also focus on the environment, like tending community gardens or restoring wildlife habitats.

Who decides what jobs they do?

Tcherneva advocates for a bottom-up approach. While the federal Department of Labor might provide guidelines for the program, proposals for jobs would come from individual communities and non-profits.

The proposal from Darity and his co-authors would create a National Investment Employment Corps made up of any American who wants a job. The Department of Labor would manage the corps, but would also lean heavily on local government to inform decisions about what jobs the corps would do.

How much would these jobs pay?

The jobs should at least keep full-time workers above the poverty level, Darity said. That would be around $25,000 a year, plus a benefits package including health insurance comparable to coverage offered to federal civil servants as well as paid sick, vacation and family leave.

Tcherneva's proposal would be slightly more generous, offering workers $15 an hour, or $31,200 a year for full-time workers, plus Medicare coverage.

How can America afford this?

America already spends billions of dollars each year to support low-income citizens, including $28.8 billion on food and nutrition assistance, $14.9 billion on housing assistance, and $7.4 billion on unemployment insurance. A job guarantee should reduce this spending, Tcherneva said.

Someone who loses their job would have an alternative to filing for unemployment under a job guarantee program, she said. State and local governments would also spend less on policing and incarceration if fewer people turn to crime to make money.

The cost of the program would depend on the number of people who take part. In the depths of the Great Recession, more than 15 million people were out of work.

Add in another 10 million who might be unhappy with their jobs and you're on the hook for 25 million salaries, or about $625 billion a year if you use Darity's $25,000 minimum. But that would be a worst-case scenario, Darity said.

The number of guaranteed jobs would rise and fall depending on the business cycle, with more people seeking jobs when the economy is doing badly, Darity said. Because of that, a job guarantee program could help mitigate future recessions.

"It's a way of creating some insulation from severe downturns," Darity said. "If this option is available to people during periods where the economy is moving to recession it will help preserve their income and consumption levels and it can help prevent us from having as severe a downturn as we had during the Great Recession."

Still, with benefits, the program might cost around $1 trillion a year. Darity said if the government could give trillions to big banks after the Great Recession — some estimates peg the size of the Federal Reserve bailout at $29 trillion — it could afford $1 trillion a year to help the poor.

What do critics say?

One worry critics have is that, if everyone is making at least $25,000 a year, prices will rise accordingly, leading to inflation. There may be a one-time bump in prices, Tcherneva said, but there's no reason to expect a constant rise, since the program shrinks as the economy improves.

The job guarantee is often compared to universal basic income, a welfare program in which every citizen receives a regular sum of money to live on regardless of employment status. This is well-intentioned, Tcherneva said, but she believes people want to work for their living.

"I think what we will find is there is a lot more desire for work than sometimes people say," she said.

Matt Bruenig, president of the People's Policy Project, a left-leaning think tank, writes that organizing potentially millions of workers through a job guarantee program would be an immense bureaucratic undertaking.

Noting that many of the best jobs could require highly specific skills and years of training, Bruenig said, "the idea that thousands of administrations across the country will be able to usefully employ random flows of labor with random sets of skills in random durations is fairly implausible. This is not a knock on the bureaucracy. The top business geniuses in the country would struggle to run an enterprise like that."

Where did this idea come from anyway?

The idea of the federal government guaranteeing jobs has been around since at least the 1930s, when economists like John Maynard Keynes suggested using government tax revenue to stimulate hiring.

Coretta Scott King was also an advocate, pushing for the Humphrey-Hawkins Full Employment Act of 1978, as David Stein writes in the Boston Review. While falling short of requiring the government to create jobs, it called for the Federal Reserve to more forcefully pursue lower unemployment in addition to controlling inflation.

Will this actually happen?

"This is an old idea," Darity said. "It's been present in American political thought for a long time."

Darity advocated for it during the Great Recession. The idea wasn't taken up then.

He's not sure if it will be implemented any time soon even now that progressive Democrats like Sanders have taken up the idea. But, he said, "This is the first time, to the best of my knowledge, that it's being considered as a credible social policy option."

Tcherneva is encouraged by the discussion around a job guarantee. Support is growing, as evidenced by the Rasmussen poll.

"I think it's reasonable to expect some bolder jobs programs in the future," she said.

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