Friday, September 12, 2014

Guaranteed Government Jobs: A Fourth Possible Jobs Crisis Solution?

An article came out in Salon last week advocating a new, rather large social program.  Its author Bryan Williams showed some advantages of the United States federal government providing jobs, with pay about $30,000 per year, for everyone officially unemployed. 

Such an effort would be expensive.  Williams multiplied $30,000 by 9.8 million unemployed to get $294 billion annually, but when the cost of benefits, and expenses putting these people into work settings of some sort, are added, it would be more like $500 billion.  Some of that, immediately, would be saved from other programs – the author estimated $28 billion less in unemployment benefits, $49 billion less in Medicaid, and “billions” from food stamps.  As well, $25 billion per year would be collected from the workers in payroll taxes.  By comparison, the remaining amount, about $390 billion, is well under 2013’s $585 billion Medicare cost. 

Clearly, with the jobs crisis permanent, such a program is worthy of consideration.  What are its other good and bad points?

Another advantage would be the stimulus effect of putting more money in the hands of people who may not have much.  It’s almost impossible to quantify how much that would be, but, clearly, when formerly unemployed people buy things they wouldn’t have bought before, those who sell them gain income as well, meaning even more spending and even more taxes collected.  In poorer areas in particular, not only current businesses would be helped but new ones would appear to deal with the increased demand.  We do not need to debate exact or even approximate amounts, only to realize they would be real and substantial.

A second good thing about an automatic employment program is that it would get necessary tasks  done, in particular infrastructure work.  A recent estimate claimed the country now needs $3.6 trillion of that by 2020 alone, and no other program to greatly step up its activity has even been seriously proposed.  The effort could potentially cover almost all of the infrastructure labor needed, with room left over to do many other constructive things. 

How about the downside?  Three problems come to mind.

First, assured government jobs would damage incentive for people to work at other positions much more than either a guaranteed income or the current safety net.  Giving people, say, $10,000 per year just for being American citizens would take some off the working rolls, but the bulk would still want to have cars, meals out, good private houses, and other things such a stipend would not cover.  If people knew they would always be employed, though, they would often care less about keeping their existing jobs, and quality and quantity of work would suffer across the country.  The same problem would happen with the government positions themselves.  As well, if everyone unemployed were assured of working for $30,000 per year, many would find ways of losing their lower-paying positions.  Both practices would be seriously destructive.     

Second, such a program would overemphasize official unemployment.  The latest American Job Shortage Number (AJSN) shows a national deficit of 19.6 million jobs, of which only an estimated 8.8 million would be filled by the country’s technically jobless.  The proposed effort would provide nothing for people in other categories who would work if the opportunities were truly there:  700,000 of the 775,000 discouraged; 2.9 million of the 3.6 million who did not look in the previous year; 1.1 million or one-tenth of those institutionalized, in the military, and off the grid; and even 4.2 million representing only 5% of those claiming no interest whatever in jobs.  Those people, more willing to work than many think, arguably need such a program more than many whose skills are fresher and contacts more current.

Third, a guaranteed jobs effort would be very hard to manage.  Dealing with the highly variable numbers of people needing it, assigning them to workplaces, anticipating how many could be used where, and handling those suddenly leaving would mean a lot of inefficiency, and a lot of $600 weeks for no work at all.  Especially given that it would take years to develop and implement the logistics of assigning people, there would be chaos for quite a while.  

So how much promise does assured federal jobs have?  It could be an improvement over long-term falling employment, but would need changes to be truly good, which could make it even more gigantic and unwieldy.  The stimulus effect, as well, could be offset by what could become an effective $15 per hour minimum wage, as most jobs paying less would be quickly vacated in favor of government opportunities.  There would also be temptations to go further with the program, as those on the left would not only lose little time in labeling jobs there as holding a stigma, but would push to make them pay closer to what they considered a living wage. 

Therefore, while the idea of guaranteed government jobs has some appeal, it would not be the right way to go.  Full marks to Bryan Williams, though, for presenting it – with a crisis this profound, we need more people doing just what he did.  His idea, as flawed as it is, gets a place with three other possibilities:  guaranteed income, shorter work hours, and payments for online contributions.  We need more. 

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