ScoMo is right about Jobseeker, but wrong about what gives a human life value. A UBI is the way forward.
The Australian prime minister caused a ruckus yesterday with comments to the effect that the current JobSeeker payment disincentivizes work. His critics responded that there aren’t jobs there to be taken, and if there were people would be jumping to take them.
The first part of that response is true. With 13 unemployed people for every vacancy advertised, it’s mathematically impossible for everyone currently on the dole to get a job. And that’s not counting the millions more on JobKeeper, many of whom are likely to join the ranks of the officially unemployed when that scheme ends.
But the second part, the claim that the increased payment doesn’t disincentivise a return to the workforce where it’s possible, is far less solid.
The CEO of the Australian Council of Social Services Dr Cassandra Goldie argued “the current rate of $550 per week is still $200 per week less than the minimum wage”.
One might ask whether, once costs like rent, food and bills are covered, an extra $200 is actually sufficient motivation for a person to drag themselves to work each morning, spend eight hours toiling (plus an unpaid lunch break), then commute home in time to tell their family how tired they are, five days a week, but even that is rounding up (to $750, from $740), and doesn’t consider tax obligations.
Once tax comes out it’s $648 a week for a minimum wage worker and $502 a week for someone on JobSeeker. So a net gain of $146.
But it’s worse than that. Having a job is expensive. In Sydney, as of 2005, the average commuting cost was $123. Adjusted for inflation (ignoring changes to fuel costs, fares and tolls), that’s $175.64.
Then there’s work clothes, meals bought out or semi-prepared rather than made from scratch at home, and the increased housing costs associated with living where the jobs are, rather than where rents are cheaper (and the surf is better). Even before we count a drink or two after work to take the edge off the despair, a low wage worker in most cases will be substantially worse off than they were on the payment.
And that’s without considering the loss of time for leisure, child rearing, friends, home-making (beyond mere survival level housework), sport, exercise, music, art, politics, community groups, volunteering and self development. These are things which pundits and policy makers on both sides of politics might be shocked to learn low income Australians actually care about.
The clear subtext of Morrison’s comments is that we should all be good little worker bees, keen to eat our vegetables, get an early night, and leap out of bed to the sound of the alarm, chomping at the bit to get to work, pulling beers, pouring coffee, stacking shelves, or any other number of imminently automatable tasks. But since we aren’t, we must be disciplined with poverty and deprivation until we mend our ways.
The response from the left is that actually, we are already the virtuously industrious citizens he desires us to be, perpetually eager for a chance to prove ourselves in the glorious arenas of retail, hospitality and call centre work. We hate having time to ourselves, listening to music or walking in the sunshine. We hate free money, and would rush to replace every unearned dollar with an honest one.
And some people, no doubt, have internalised the social compulsion to work, the idea that if they aren’t “earning their keep” through waged labour then they are, rather than a real human person, essentially a very tall parasite.
You might call this an extrinsic, or instrumental view of human value — that we are worthwhile to the extent that we are useful to others, minus the cost of keeping us alive. In a situation of true scarcity — a medieval village, or a group of survivors wandering a post-apocalyptic zombie infected landscape — such a view may be defensible. Someone who eats more than they kill is a drag on the group, and cannot be tolerated, with temporary exemptions only for the very young, the sick, and the elderly.
But in a modern society, where productive capacity far outstrips demand, this view becomes absurd, and must give way to an intrinsic view — that each and every one of us has inherent, even inalienable, value. After all, it’s not like we have the right to opt out of the monetary economy, either as an individual or as a member of a group, and take our sustenance directly from nature. Society has already taken that option away from us, and owes us something (a living, one might even say) in return.
But rather than asserting dignified survival as a birthright, we allow the labour market to be the arbiter of our worth. And so bundling mortgages into collateralized debt obligations and working as the bouncer at a strip club (not even as one of the strippers!) is encouraged, and rated above reading, thinking, laughing, making love, listening to a friend’s problems, or teaching our children (at least those over the age of six) to fish or garden or play an instrument.
If we were to abandon this outdated value set, we might look at the conundrum of the JobSeeker disincentive differently, and come up with some different responses. These might include a universal basic income.
A UBI would solve the problem of the JobSeeker disincentive without pushing the unemployed back into poverty, since earned income would stack on top of the base amount. That means someone working a minimum wage job would end up with a total weekly income of $1,290 before tax, and $1,007 after, doubling the income of someone living only on the (now unconditional) payment. It’s less than the PM makes before lunch, but it’s still a major improvement on where we are now.
Given people would have the genuine option of opting out of work without skipping meals or engaging in survival sex, employers may in some cases have to offer more than this minimum — but the increase in consumer demand would more than make up for these increased labour costs.
Some people will balk at the cost of such a project (between $250 and $300 billion a year), but some of this , especially the portion going to those on higher incomes, would automatically come back in taxes, and we could increase the extent of that. We could even achieve effective targeting by raising income taxes on those earning above a certain threshold (the median income, perhaps) which has the advantage over means testing that no-one misses out, and income is measured once, in the tax office, not twice.
But some deficit spending is not only acceptable. it’s actually the norm, and right now it’s required to provide stimulus, of the kind economists and the reserve bank were calling for before covid-19 was even a thing, and which could help mitigate what might otherwise be a deep and sustained economic downturn — a downturn that any attempt by the Morrison government to “snapback” to the dysfunctional austerity once considered normal will only make worse.