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Job Guarantee When?

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And we thought the last unemployment report was a disaster…

If anyone was still laboring under the misapprehension that the economic downturn was going to be a short one, this week’s unemployment report should come as a rude awakening. More people have now lost their jobs to the Great Cessation (hat tip to the excellent economic historian Rebecca Spang for this moniker) than during the Great Recession, and we know how long it took to recover from that economic catastrophe.

As comes as no surprise to people who participated in my book club, this has made me think a lot about job guarantees, or more precisely about the debate between proponents of job guarantees (JG) and universal basic incomes (UBI). This debate, which had been going on largely on the margins of economic discourse since its heyday in the 1970s, has become unusually prominent in the last few years, thanks in no small part to the fact that the 2020 Democratic primaries included vocal advocates of both strategies, either among the candidates or their advisors.

The current crisis hasn’t exactly settled this debate, but I do think there are important lessons to learn about how these policies work, both separately and potentially in conjunction.

Fully Automated Luxury Space Gay Communism or the Bear Necessities

One indisputable fact that UBI advocates have going for them is that we are currently in a moment where we don’t want people going to work but we do want them having income. In this context (or at least for this phase – more on this in a second), a UBI makes more sense than a job guarantee. (This point can be over-extended, however. It is absolutely the case that there is a lot of work that could be done remotely in the present moment, from doing health surveys of the population, taking on some of the burden from overstretched public communications and coordination infrastructure, or even producing surgical masks from home.)

At the same time, one of the things we’ve learned from the recent stimulus bill is that even if we pursue a maximal UBI strategy, it doesn’t cause normal politics to go away: Republicans will do their level best to make it difficult for anyone, be they immigrant workers who have taxpayer ID numbers but not Social Security numbers or retirees who don’t normally file taxes, to get help. In addition to political malpractice, there are real administrative difficulties in pushing the necessary income out to 128 million households in a timely fashion.

Moreover, even if we look to the best-case scenarios over in Europe, the end result is something a lot more measured than the wildest aspirations of UBI proponents. At the end of the day, it seems just about possible to push out enough money for people to pay for necessities like rent and food and to keep economies on life support, rather than outright replacing the welfare state or waged labor in the long run.

Longing for a V-Shape

So what then can we say for the Job Guarantee?

At some point, whether it’s six months or a year from now, when we shift from the immediate task of social distancing to the task of economic rebuilding, something more than conventional stimulus will be necessary.

To begin with, the U.S effort to protect payrolls was too slow and too kludgy to prevent mass layoffs, so the moment to apply the kurzarbeit model and avoid mass economic pain has probably been missed. But even had the United States gotten its act together more quickly, the unemployment data coming out of countries that did suggests that this would have blunted but not outright prevented the damage.

Thus, our economic task is going to be how to put more than ten million people to work when we can’t assume that the businesses that originally employed them are going to still be there on the other side, given the difficulty of getting loans out of the SBA.

However, the one indisputable fact that JG advocates have going for them is that the current crisis has shown there really aren’t fiscal limits for national governments facing down economic emergencies, at least not at the level that job guarantees would cost. To give an example, it would cost approximately $400-450 billion per year to directly employ the ten million newly unemployed. By the standards of the stimulus bill, this is practically loose change.

Conclusions

In the current crisis, therefore, UBIs and JGs seem genuinely complementary, with the strengths and weaknesses of each lining up with the other. UBIs are well-suited for a phase where we want people to stay at home, but they can’t rescue the economy on their own; JG programs will have to wait until people can once again leave the house to work, but once they can go into effect, they have a peerless ability to directly attack unemployment rates without having to wait on the rest of the economy.

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