A Federal Job Guarantee or a Universal Basic Income

by John M Repp

Where there is no vision, the people perish. (Proverbs 29:18) We need to reimagine a better America to get beyond the overlapping crisis we face in this summer of 2020, a pandemic, massive unemployment, uprisings protesting police violence and an approaching election. I want to discuss two ideas for reform: A Federal Job Guarantee and the Universal Basic Income.

After the financial crash and recession of 2008-2009, it took 10 years before the American economy got back to what conventional economists said was “full employment”. But even then, there were millions of people who were not working full time as well as millions who were discouraged about finding work at all.

A Federal Job Guarantee is a policy to provide a job with a good wage and benefits for anyone who wants to work. It would be voluntary, part-time or full-time and pay $15. It seems like a simple reform of the labor market, but it turns out to have a myriad of positive effects touching many areas of modern life. Such a policy would provide an absolute floor for wages, a real minimum wage. If an employer payed less and gave less benefits it would be difficult for that employer to keep a workforce. The larger economy would become more stable and the usual ups and downs of the business cycle would be moderated by more jobs not a spike in unemployment.

The money to pay the wages would come from the Federal government, but as much as possible the work would be managed locally. The local agencies administering the program will take input from local people. Another part of the proposal is the idea of fitting the job to the person rather than the other way around, although the program would need to have a training component. Both these things would be part of the legislation to establish the Federal Job Guarantee.

How much would a job guarantee cost? There are several estimates, hovering around one-half a trillion dollars. On the other side of the ledger, the program would get rid of unemployment compensation as well as much of Medicaid, food stamps, and other programs designed to help people in poverty. The program would cost more as it starts up but could eventually add about one-half a trillion dollars to the nation’s gross domestic product. It would be money well spent.

What will all these people do? We have many unmet needs such as converting our electrical power system to solar and wind, electrifying our public transportation system, weatherizing our buildings, converting our industrial farming to regenerative farming, planting billions of trees and millions of acres of hemp, creating kelp gardens all along our coasts (the last two things to drawdown carbon dioxide), cleaning up the environmental messes and taking care of children and elders. There is plenty of work to do.

House Resolution 109 which recognizes “the duty of the Federal Government to create a Green New Deal” includes in its list of “goals and projects”, item (H): ”guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations and retirement security to all people of the United States.” The Second Bill of Rights, an economic bill of rights, advocated by Franklin Roosevelt’s administration includes the right to a job. The International Bill of Rights includes the right to a good job. In modern society if a person does not have a job that pays good wages and benefits, they cannot have real freedom, dignity or security.

The job guarantee would start to lessen the wage and wealth gap that has become so destructive to so many Americans over the last 40 years of austerity. The austerity was the result of the false belief that the Federal government was running out of money. A sovereign government that has the right to issue currency simply cannot run out of money. The current method of government accounting treats the government like a private corporation, keeping track of its income (taxes and bond sales) and its spending. It ignores the government’s right to create money, a right the Constitution gives to the government in Article 1, Section 8.

The policy would help blacks, Latinx, and native Americans as groups to a greater extent than whites, since the blacks, Latinx and native Americans now have higher rates of unemployment. So, it can be part of a reparations package for the long train of injustices these people and their ancestors have suffered. We often forget that the 1963 March on Washington led by Martin Luther King, Jr was named “The March for Jobs and Freedom”. Corey Booker has drafted a bill for a pilot project for a job guarantee in certain blighted areas in our country.

The idea is popular with many people. Vast majorities of both Democratic and Republican voters support the job guarantee policy.

What is wrong with our political leaders? Who opposes such the idea? Maybe economists or people who cannot move beyond the old economic paradigms. Maybe the financial elite because they want to continue to make 40% of the profits of our whole economy when 40 years ago, they got only 2%. That financial elite has starved our country of real capital to build new wealth i.e. factories, buildings, farms, schools, infrastructure in exchange for mere money gained by speculation. The political right has called the idea of a job guarantee a “disaster”, just repeating the myth that it would cost too much. Maybe the employer class would oppose the idea because it would lessen the sting and power over workers they have because they can fire workers. Of course, they can still fire workers who are not performing, but those workers can be assured they will have another job.

What about the Universal Basic Income (UBI)? It too would be funded by the Federal government. Compared to a Federal Job Guarantee, it would be easy to accomplish. We already see the Congress during this pandemic handing out checks to most people. The problem I see with the UBI is that while it would help many people who are poor, it would just reinforce the status quo. The cash would be spent on what private corporations and small businesses already produce and sell. Unlike a Federal Job Guarantee, new sectors like solar and wind, refitting our buildings, regenerative agriculture, expanding and improving educational opportunities and providing care for people and our environment would not be developed and expanded.

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