Friday, November 9, 2018

Guaranteed Income and a Guaranteed Job: What’s the Difference?

Four years ago September I posted about the subject of a recent article, a vast social program designed to kill off unemployment forever.  That was not a guaranteed basic income, on which I had written and would write more, but was similar in many ways.  The suggestion was for our federal government to provide work for anyone officially jobless, at a consistent $15 per hour. 

It is easy to compare or even conflate these two ideas.  Both are grand plans defensible despite their monumental costs.  Both are, in a sense, nuclear bombs against the jobs crisis.  Each would massively increase the amount of money in circulation, increasing tax revenue to partially offset their outlays.  Each would be susceptible to claims that the amounts involved were insufficient, especially as they would not be enough to support middle-class lifestyles.  However, their differences are less obvious and more profound.  What are they?

First, while guaranteed income would cut overall demand for employment opportunities, guaranteed jobs would increase it, especially at rates of pay above or equal to the government wage rate.

Second, while universal basic income would have little effect on the incentive workers have to perform well, assured government employment would savage it.  I don’t know just how that would play out, but it seems clear that when people are assured of being paid, many would not care about how effective they would be.

Third, guaranteed income would be relatively cheap to establish and maintain, while a program with tens of millions of jobs would be rife with labor needs, money needs, and complications.  Our government would need to implement solutions to a wide range of situations, such as workers who cannot or will not do their assigned jobs, workers who want to change positions, people physically relocating, advancement and training not pertaining to current assignments, employee management and supervision (how could the millions of people needed there be paid the same as their reports?), and so on. 

Fourth, assured stipends would precipitate a profusion of personal decisions, ranging from increased motivation to work from depression relief to doing nothing but collecting checks and everywhere in between.  Assured employment would create three tiers of employment – positions paying more than, about the same as, and less than the established government wage.  That would make it difficult for companies to obtain low-skilled labor at less than, in this example, $15 per hour, whereas if they made it $16 they could be flooded with applicants, with the likely result, with more time-saving word-of-mouth hiring, a drop in the importance of job-seekers’ merit.

Fifth, while assured government employment would not be cheap, its possible net $400 billion cost would be dwarfed by the $1-2 trillion for a $10,000 annual American citizen’s grant.

Sixth, while guaranteed income would be straightforward, the jobs program could quickly devolve into make-work, illegitimate favoritism, and tasks with far less than $15 per hour value.  We could easily end up with the likes of, as the Soviets had, people working in barbershops only to sweep up hair, crippling incentive for productivity increases and with what might be deleterious personal effects such as that country’s one-in-seven alcoholism rate.  We would like to think that inconsistent with our national character, but millions working dead-end jobs with no real incentive for high performance could attract the dark clouds that many observers have said have long hung over the Soviet and Russian spirit. 

In the late summer of 2014, while I acknowledged that guaranteed employment was one of only four comprehensive jobs-crisis solutions, with paid Internet contributions and reduced working hours along with universal basic income, I did not think it would work.  That is still my view, but if we decide it is the best way out of an indefinite job shortage, we could get the most of it by making its structure more like the postwar job market.  Government work could be assured, but would need different skill levels, diverse rates of pay, promotions, demotions, and be available to those not officially jobless.  The latest American Job Shortage Number or AJSN shows that those with other employment statuses make up more than two-thirds of latent demand – we cannot deny them these opportunities. 

Given its flaws, it is no surprise that assured government employment has got little press attention since Senator Bernie Sanders proposed it last spring.  However, we still need possible solutions for what will, within years, be clear to all as a permanent jobs crisis.  As you may have noticed above, my count of them is still where it was five summers ago, at four.  We cannot afford to stop there.

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