“Rather than jobs per se, the primary challenge is to build a new income distribution system, recognising that the old one has broken down irretrievably. The rentiers are running away with all the revenue thrown up by rentier capitalism, and real wages will continue to lag. Putting people into static low-wage jobs is no response.”
Guy Standing is Fellow of the UK Academy of Social Sciences, and Professorial Research Associate, School of Oriental and African Studies, University of London.
Cross-posted from Open Democracy
From time to time, there is a surge in advocacy of a job guarantee for everyone, or for everyone ‘able to work’. It is happening again, this time from a slew of politicians and social scientists positioning themselves on the centre left, as social democrats. In the USA, several prominent Democrat senators and possible candidates for the next presidential election have said they support the idea, including Bernie Sanders, Cory Booker, Elizabeth Warren, Kamala Harris and Kirsten Gillibrand. In Britain The Guardian has endorsed it unequivocally as ‘a welcome return to a politics of work’, joining the likes of Lord Layard, Blair’s ‘happiness czar’.
The Guardian claimed a job guarantee policy ‘would secure a basic human right to engage in productive employment’. Throughout history, the vast majority of people would have found that a very strange ‘human right’. Having a job is to be in a position of subordination, reporting to and obeying a boss in return for payment. Indeed, historically the words ‘job’, ‘jobbing’ and ‘jobholder’ were terms of regret and even pity, referring to someone with a bits-and-pieces existence. Subordination and alienation have also been at the heart of labour law, which is based on the master-servant model.
The newspaper added that the job guarantee ‘would only offer employment under-supplied by the private sector’, singling out ‘environmental clean-up’ and ‘social care’. These may sound appealing on paper but represent a narrow and unattractive range of jobs to be offered. They also bear more than a passing resemblance to the menial jobs convicted offenders are obliged to undertake under ‘community payback’ schemes.
The practical objections become evident as soon as the details are considered: what jobs, who would be responsible for providing them, who would qualify to be offered them, what would the jobs pay and for how many hours, who would pay, and what would be the effects on other workers and on the wider economy?
To start with, identifying jobs to be provided and administering the process would be a bureaucratic nightmare (witness the shambles of many ‘community payback’ schemes, even though they are on a small scale and the labour they offer is ‘free’). And, when asked what type of job would be guaranteed, proponents never suggest the guaranteed jobs would match people’s skills and qualifications, instead falling back on low-skill, low-wage jobs they would not dream of for themselves or their children.
Then other questions arise. If guaranteed jobs are providing desired services or goods, and are subsidised, there must be substitution effects – guaranteeing jobs now taken by others – and deadweight effects – putting people in jobs that would have been created anyhow. If somebody is given a guaranteed job at the minimum wage, what happens to others already doing such jobs? Would the job guarantee agency guarantee their jobs as well, with no decline in wages if they happened to be higher? If the unemployed were offered a job at a minimum wage subsidised by the state, this would increase the vulnerability of others, either displacing them or lowering their income.
Ro Khanna, a California Democrat congressman, has said firms would not be allowed to hire subsidised workers if they were substitutes for previous employees. Clever employers could find ways round that. However, it would also be unfair. Why should a firm coming into a market be subsidised relative to one that has been in it for a while, giving the newcomer an unfair advantage?
The Guardian further claimed, without citing evidence, that a job guarantee scheme would not be inflationary because ‘any restructuring of relative wages would be a one-off event’. This contradicts generations of research. If all were guaranteed a job, what would stop wage-push inflation? The only restraining factors would be fear of automation and more offshoring. But it would hardly be fear, as a job would be guaranteed anyhow!
The gross cost of a job guarantee might outweigh the net gain. If the government guaranteed the minimum wage in guaranteed jobs, those in jobs paying less (or working fewer than the guaranteed hours) might quit or find ways to be made redundant, so they could have a guaranteed job instead. Social democrats might like that, as it would mean better-paying jobs for more of the underemployed and precariat. But the fiscal cost would be daunting. For example, in the UK, over 60% of those regarded as poor are in jobs or have someone in their household who is. In the USA, the situation is just as bad. It is estimated that about half its 148 million workers earn less than $15 an hour. Would they all become eligible for a guaranteed good job?
At its unlikely best, a job guarantee would be paternalistic. It presumes the government knows what is best for individuals, who would be offered a necessarily limited range of jobs at its disposal. Suppose someone was pressed to take a guaranteed job on a construction site (‘infrastructure’, a favoured area for guaranteed jobs) and that person proved incompetent and was injured. Would the job guarantee agency be held responsible and pay compensation? It should, since it put the person in that position. How would that be factored into the costing of a job guarantee scheme? Similarly, if a person put into a ‘social care’ job was negligent and caused harm or distress to the care recipient, would the latter be able to sue the job guarantee agency for compensation?
In addition, a job-guarantee scheme would spring a familiar trap – the phoney distinction between those who ‘can work’ and would thus be eligible for a guaranteed job and those ‘who cannot work’. In Britain, this has led to demeaning and stigmatising ‘capacity-to-work’ and ‘availability-for-work’ tests, resulting in discriminatory action against disabled and vulnerable people, and those with care responsibilities.
Another failing of the job guarantee route is the mapping of a path to ‘workfare’. What would happen to somebody who declined to accept the guaranteed job? They would be labelled ‘lazy’ or ‘choosy’ and thus ‘ungrateful’ and ‘socially irresponsible’. Yet there are many reasons for refusing a job. Studies show that accepting a job below a person’s qualifications can lower their income and social status for the long term. As what is happening in the current UK benefit system attests, those not taking jobs allocated to them would face benefit sanctions, and be directed into jobs, whether they liked them or not. Jobs done in resentment or under duress are unlikely to be done well.
A job guarantee would be a recipe for perpetuating low productivity. What would happen if a person in a guaranteed job performed poorly, perhaps because of limited ability or simply because they knew it was ‘guaranteed’? This was a fatal flaw of the Soviet system. If you are guaranteed a job, why bother to work hard? If you are an employer and are given a subsidy to pay employees guaranteed a job, why bother to try to use labour efficiently?
If subsidised through tax credits or a wage subsidy, a worker would need to produce only a little more value than the cost to the employer to make it profitable to retain him or her. This would cheapen low-productivity jobs relative to others and inhibit the higher productivity arising from labour-displacing technological change. If a job of a certain type is guaranteed, what happens if an employer wishes to invest in technology that would remove the need for such jobs?
Those calling for a job guarantee also ignore the fact that any market economy requires some unemployment, as people need time to search for jobs they are prepared to accept, and firms must sift applicants for jobs they want to have done. To adopt a job guarantee policy would risk putting the economy in gridlock.
Job guarantee advocates, such as Larry Summers, President Clinton’s former Treasury Secretary, argue that people without jobs ‘are much more likely to be dissatisfied with their lives’ and are more likely to be drug addicts and abusive than those with even low-wage jobs. This is bogus. I suggest there would be no correlation between life satisfaction and having a job if the comparison was made between those in lousy jobs and those with no job but an adequate income on which to live. Somebody facing a choice between penury and a lousy job will prefer the job. But that does not mean they like or want it for itself.
The polling company Gallup conducts regular State of the Global Workplace surveys in over 150 countries. In 2017, it found that globally only 15% of workers were engaged by their job, and in no country did the figure exceed 40%. One recent UK survey found that 37% of jobholders did not think their job made any significant contribution.
Summers ends his article by equivocating – ‘the idea of a jobs guarantee should be taken seriously but not literally’. He seems to mean government should try to promote more employment, through ‘wage subsidies, targeted government spending, support for workers with dependants, and more training and job-matching programmes’. In other words, he reverts to the standard social democratic package that has not done very well in the past three decades.
Besides being a recipe for labour inefficiency and labour market distortions, tending to displace workers employed in the ‘free’ labour market and to depress their wages, the job guarantee proposal fails to recognise that today’s crisis is structural and requires transformative policies. Tax credits, job guarantees and statutory minimum wages would barely touch the precariat’s existential insecurity that is at the heart of the social and economic crisis, let alone address the aspirations of the progressive and growing part of the precariat for an ecologically grounded Good Society.
The emphasis on jobs is non-ecological, since it is tied to the constant pursuit of economic growth. There are many instances, with support for fracking and for the third runway at Heathrow airport being recent examples, where the promise of more jobs has trumped costs to health and the environment. And a job guarantee policy could have a strong appeal to the political right as a way to dismantle the welfare state. Why pay unemployment benefits if everybody has a guaranteed job? In the USA, one conservative commentator chortled that ‘over 100 federal welfare programs would be replaced with a single job guarantee program.’
Finally, there is what this writer regards as the policy’s worst feature. It would reinforce twentieth-century labourism, by failing to make the distinction between work and labour. Those who back guaranteed jobs typically ignore all forms of work that are not paid labour. A really progressive agenda would strengthen the values of work over the dictates of labour. It would seek to enable more people to develop their own sense of occupation.
A job is a means to an end, not an end in itself. Economists tend to be schizophrenic in this respect. In the textbooks, labour has ‘disutility’; it is negative for the worker. Yet many economists who use or write these textbooks then advocate putting everybody in jobs. Why make a fetish of ‘jobs’? A job is doing ‘labour’ for others. What about all the forms of work that we do for those we love or for our community or for ourselves?
Many forms of work that are not labour are more rewarding psychologically and socially. A regime of putting everybody into jobs, in unchosen activities, would be orchestrated alienation. Surely a progressive should want to minimise the time we spend in stultifying and subordinated jobs, so that we can increase the time and energy for forms of work and leisure that are self-chosen and oriented to personal and community development.
There is one last point, to do with the claim that a job guarantee would be politically popular. Much is made of a US poll which asked people whether they would support a scheme to guarantee a job for anybody ‘who can’t find employment in the private sector’, if paid from a 5% tax on those earning over $200,000. The result was 52% in favour. Supporters thought this was ‘stunning’. With such a loaded question, one should be stunned by the bare-majority support. After all, most respondents were being told they would not have to pay, and that there were no alternative jobs available, an unlikely scenario.
Rather than jobs per se, the primary challenge is to build a new income distribution system, recognising that the old one has broken down irretrievably. The rentiers are running away with all the revenue thrown up by rentier capitalism, and real wages will continue to lag. Putting people into static low-wage jobs is no response.