The disconnect between what prominent job guarantee proponents have said about the program and how it has been recently messaged to the press is one of the more fascinating things going right now on the US left. Here is a collection of quotes I’ve kept from my readings about it that help illuminate what the job guarantee is and where it’s main proponents are coming from on it.
Hyman Minsky, who was Randy Wray’s advisor and who the Levy Institute is a shrine for, was an anti-welfare reactionary who hated the Great Society. For him, the job guarantee was meant to shrink the welfare state and promote a normative view that “one must earn one’s keep.”
The guarantee of an income through a job is the first step toward the elimination of the welfare mess.
A job-based, rather than a transfer-based, strategy against poverty is a first and vital step toward making our economy work better.
Permanent dependence on expanding systems of transfer payments that have not been earned is demeaning to the recipient and destructive of the social fabric. Social justice and individual liberty demand interventions to create an economy of opportunity in which everyone, except the severely handicapped, earns his or her way through the exchange of income for work.
In 2004, Stephanie Kelton and Randy Wray wrote a paper titled “The War On Poverty: A Minskyan Assessment” for the Levy Institute (Levy is a shrine to Minsky). The paper starts from the premise that poverty did not decline after the War On Poverty and then uses this premise to argue that the reason it did not was because it relied on the welfare state rather than a job guarantee.
The premise of the paper is completely wrong. Poverty fell by 40 percent in the years after the the War On Poverty and that decline was entirely attributable to welfare income (not labor market earnings).
Kelton gave a slideshow presentation based on this paper in 2012 at something called the Minsky Summer School (Levy is a shrine to Minsky). The presentation repeats the factual errors of the paper and then proceeds to promote the job guarantee with slides like these.
Speaking of Randy Wray, he authored a paper in 1997 that lays out the theoretical foundations of the job guarantee better than any other paper I’ve ever read. In it, Wray says the goal of a job guarantee is to find a way to get to zero unemployment without causing significant upward wage pressures in the private sector.
The way to do that, he says, is to give unemployed people a minimum-wage public job. This would technically employ them if you told the national accountants to treat the JG jobs that way, but, because having a minimum-wage public job basically sucks, JG workers would still nonetheless be constantly looking for ways to get a job in the private sector. And since the JG workers will be desperate to get out of the JG and into a better private sector job, private sector workers will be disciplined by the constant fear of being replaced by a JG worker.
Thus, he writes:
If the wage demands of workers in the private sector exceed by too great a margin the employer’s calculations of their productivity, the alternative is to obtain [JG] workers at a mark-up over the [minimum wage]. This will help to offset the wage pressures caused by elimination of the fear of unemployment.
He even goes as far as to explicitly say that the JG does not eliminate the “reserve army” of unemployed people who bid down private sector wages, but rather preserves them by keeping the JG jobs pinned to the minimum wage:
It must be remembered that the [JG] workers are not “lost” as a reserve army of potential employees; rather, they can always be obtained at a mark-up over $12,500 per year.
Most remarkably, Wray argues that the JG would create a more effective reserve army of the unemployed because the JG will be more unpleasant than just receiving unemployment benefits without a work requirement:
In the absence of [JG], these workers can be obtained at a mark-up over the value of the package of social spending and private income obtained when unemployed (unemployment compensation, food stamps, under-the-table work, handouts, etc); this mark-up, however, is likely to be higher than the markup over $12,500 since it must be sufficient to make employment preferable over idleness.
Bill Mitchell is the most prominent advocate of MMT and JG in Australia. He had this to say about his preference for implementing a job guarantee:
The existing unemployment benefits scheme could be maintained alongside the JG program, depending on the government’s preference and conception of mutual responsibility.
My personal preference is to abandon the unemployment benefits scheme and free the associated administrative infrastructure for JG operations.
The concept of mutual obligation from the workers’ side would become straightforward because the receipt of income by the unemployed worker would be conditional on taking a JG job.
The JG wage could be paid to anyone who turned up at some designated Government JG office even if the office had not yet organised work for that person.
I would also allow a person a short-period — perhaps two weeks — in between losing their job and starting a JG job — to sort out their affairs. This period would be covered by full JG pay.
That’s right, Mitchell wants to eliminate unemployment benefits in order to force all unemployed people to do the JG if they want income. He does graciously give them two weeks of JG pay without a work obligation though.
Warren Mosler is supposedly the founder of MMT and its main funder (he’s a hedge funder tax exile). Just last month, he had this to say about his understanding of the job guarantee:
And one very effective way to do that is to give them what I call “transition jobs,” what the MMT proponents call the “job guarantee.” By offering a “transition job” — let me call it that rather than the “job guarantee” at some, and I call it a non-disruptive wage, and we can argue whether that’s $10 per hour or $15 but it’s just a numerator; it doesn’t matter in theory. Having these people come into this job makes them now a whole lot more employable and they will then transition into the private sector.
The problem I see with these MMT proponents is they say they want a job guarantee and the first question is: what are they all going to do? And when they start explaining the types of jobs they are going to do: wrong answer. What they are going to do is transition into the private sector over some period of time: six months, a year, two years. And that’s the whole point of getting them into this job guarantee is to transition them into the private sector. It’s not about what they are going to do.
This is straight-up workfare. The goal of the JG in Mosler’s imagination is not the completion of some great public works or giving workers an extra job option or anything like that. Rather, the idea is simply to get unemployed people into a minimum wage make-work job doing anything so that they can hopefully attract a private employer who will hire them into a real job.
James Galbraith’s view of the JG is remarkably similar to Mosler’s. In response to an argument that Dean Baker made — saying that if the JG is really going to be a “good job,” then it’d lead to mass private sector exodus — Galbraith clarifies that the JG will not be a good job. Instead, JG jobs will be “stop-gap,” dead-end work, meaning people not in the program won’t want to enter and that people in it will want to exit to the private sector.
It’s true that $15 is better than current wages for many low-wage workers. But there is also the question of what the work is and where it leads. Would my son quit his cooking job to serve as a teacher’s aide or park monitor? I doubt it. Those public jobs are a stop-gap; they would not lead toward promotions, raises, and careers. To get those things, you’d mostly have to find your way back to the private sector. Yes, some workers would quit bad jobs to take advantage of the guarantee. Many would take stock, think it through, and stay where they are.
Source of Confusion
Despite the long-standing JG promise of a program featuring shit jobs at shit wages with the intent of undermining the regular welfare state and private sector workers, people have recently become very confused into thinking it is something else. Some of that confusion is just the result of clever messaging. For instance, nowadays JG proponents say the program eliminates the “reserve army” of the unemployed even though Wray clearly said in 1997 that it does not eliminate the reserve army. It’s the same program, but the exact opposite messaging. The left in particular seems especially vulnerable to people tricking them via adopting their rhetorical, aesthetic, and symbolic affinities.
The other source of confusion is that the most recent JG proposals have used $15 as the JG wage. This confuses people because they don’t realize that the $15 wage has been selected because it is intended to be the US minimum wage. So it still is a minimum-wage make-work job program like always, but because the JG program is being implemented alongside a minimum wage hike, they are able to cloud the issue and get people focused on the wage hike, not the program itself, which again remains a minimum-wage, dead-end make-work program.
As you can probably tell, I don’t find this agenda at all interesting. In regular countries, unemployed people get a welfare income (aka unemployment benefits) and help from active labor market policies. That’s a better life than toiling under workfare.