Universal basic income (UBI), an annual government-sponsored payment to all citizens, has been gaining traction across the American political landscape. Andy Stern, former Service Employees International Union president, believes the program will counteract the “acceleration of technology” that he believes will likely create “work but not reliable jobs or incomes.” On the Right, the American Enterprise Institute’s Charles Murray argues that we should replace the “entire bureaucratic apparatus of government social workers” with a UBI. Could this be a rare bipartisan groundswell?
Heavy-hitters agree it’s worth discussing. Robert Reich’s recent video calls on the government to provide a minimum payment for every citizen. President Obama told Wired that the United States will have to debate UBI and similar programs “over the next ten or twenty years.”
Further, UBI would cover workers who, thanks to technological progress, have lost their jobs. This often-cited report tells us that 47 percent of all jobs are at risk of being automated. Yet existing social insurance programs are insufficient. The current array of programs — such as unemployment insurance, the earned income tax credit, and the Supplemental Nutrition Assistance Program — help many Americans, but over forty-three million people still live below the poverty line. Children are among the most vulnerable, with nearly half living at or near poverty. That’s unacceptable — as a society we can, and must, do better.
The UBI represents one way to fight increasing deprivation. But another potential intervention — the federal job guarantee (FJG) — deserves our attention and our support.
A job guarantee is not a new idea. It has been part of the American conversation at least since Huey Long put forth his Share Our Wealth Plan.
In 1934, he argued that the United States should use public works to ensure “everybody [is] employed.” These calls were echoed by American politicians from Roosevelt in his Economic Bill of Rights to George McGovern during his 1972 presidential bid. Martin Luther King also stumped for a job guarantee, demanding immediate “employment for everyone in need of a job.” He saw “a guaranteed annual income at levels that sustain life and decent circumstances” as the second-best option.
Here are five reasons to agree with him.
1. Fewer Poor Americans
A job guarantee would reduce poverty more quickly and provide more benefits than UBI. To ensure a sufficient income, we argue for a FJG that would pay a minimum annual wage of at least $23,000 (the poverty line for a family of four), rising to a mean of $32,500. This would eliminate the “working poor” for full-time working households. In addition to the wage, workers in the FJG program would receive health insurance and pension benefits in line with those that all civil servants and elected federal officials receive.
In comparison, many of the UBI proposals promise around $10,000 annually to every citizen (for an example, see Charles Murray’s proposal here). On the one hand, this plan would break the link between employment and money. But it does so at half the rate that would be available under the FJG, not even considering lifesaving benefits like health insurance.
2. We Still Need Workers
The dangers of imminent full automation are overstated: there is little evidence that companies are largely replacing human workers with robots. As Dean Baker explains,
If technology were rapidly displacing workers then productivity growth — the rate of increase in the value of goods and services produced in an hour of work — should be very high, because machines are more efficient. In the last decade, however, productivity growth has risen at a sluggish 1.4 percent annual rate. In the last two years it has limped along at a pace of less than 1 percent annually. By comparison, in the post–World War II “Golden Age,” from 1947 to 1973, productivity grew at an annual rate of almost 3 percent.
No doubt, stable and high-paid employment opportunities are dwindling, but we shouldn’t blame the robots. Workers aren’t being replaced by automatons; they are being replaced with their lower-paid and more contingent neighbors. Nevertheless, technology, and globalization, have struck fear into American workers. Not because they are by nature a raw deal for the workers, but because the politicians in charge of writing the deals and holding our firms accountable have let them get away with providing workers a raw deal. Technology, nor globalization, need have negative employment effects on workers — but they certainly can. It’s time to get the rules right, and ensure workers are provided the dignity of a job. A federal job program would solve the real problem, while UBI would simply treat a side effect.
3. An Inclusive Economy
Conventional wisdom holds that people dislike work. Introductory economics classes will explain the disutility of labor, which is a direct trade-off with leisure. Granted, employment isn’t always fun, and many forms of employment are dangerous and exploitative. But idleness has its own downsides. As scholars like William A. Galston, a senior fellow at the Brookings Institute, argue, a UBI “systematically overlooks the positive dimensions of work.”
This touches on a heated debate on the Left. Ultimately, people want jobs, but they want good jobs. They want to contribute, to have a purpose, to participate in the economy and, most importantly, in society. Nevertheless, the private sector continues to leave millions without work, even during supposed “strong” economic times. T
he workplace is social, a place where we spend a great deal of our time interacting with others. In addition to the stress associated with limited resources, the loneliness that plagues many unemployed workers can exacerbate mental health problems. Employment — especially employment that provides added social benefits like communal coffee breaks — adds to workers’ well-being and productivity. A federal job guarantee can provide workers with socially beneficial employment — providing the dignity of a job to all that seek it.
The FJG would also act as a de facto wage floor — private employers will have to offer wages and benefits at least as enticing as the federal government to attract workers. There has been extensive public support for recent increases in the minimum wage, such as the Fight for $15 campaign, demonstrating that most Americans believe workers deserve a living wage. Fighting for a higher minimum wage is an important step to ensure that workers are compensated a living wage rather than a poverty wage, yet let us not forget that the effective minimum wage in this country without a UBI or a job guarantee is $0. This must change.
Finally, some argue that a “skills mismatch” explains why some workers remain unemployed. While we reject that narrative, a well-designed FJG will nevertheless include a training element to build workers’ skills and a jobs ladder to create upward mobility in the workplace.
All of these elements will build an inclusive economy that provides good jobs for all. The UBI, in contrast, would subsidize bad jobs — allowing low minimum wages and lack of benefits to persist and taking dignity out of the workplace.
4. Socially Useful Goods and Services
During the Great Depression, the Works Progress Administration (WPA) and Civilian Conservation Corps (CCC) were public employment programs designed to put Americans back to work after the national unemployment rate reached 25 percent. These programs, implemented under the Roosevelt administration, provided socially beneficial goods and services that benefited all Americans. Some of our national parks — Zion, Glacier, and Shenandoah — received substantial work contributions from employees of the federal jobs programs. The Blue Ridge Parkway was a federally funded and staffed infrastructure program.
A new federal job guarantee could undertake similarly bold and much-needed public-works projects.
The American Society of Civil Engineers gave the United States a D+ in infrastructure and prices necessary repairs at $3.6 trillion. This lack of investment has lowered employment rates, cost businesses sales, and reduced incomes for American families. Make no mistake, these are government choices. They could choose instead to hire unemployed workers to repair bridges, maintain roadways, and update power grids.
Likewise, Bill McKibben just called for us to “declare war” against climate change. With climate change being perhaps the largest threat to our well-being, bold action is needed. The job guarantee program would create the capacity to do just that. Professor Robert Pollin of the Political Economy Research Institute calls for scaling up the transition to a green economy, which would create millions of new jobs along the way. He and his colleagues estimate what a Green New Deal would look like, and find that a transition to a green economy would amount to an estimated $200 billion in investment annually, resulting in a drop in “US emission by 40 percent within 20 years, while creating a net increase of 2.7 million jobs.” In part, this is due to the labor-intensive nature of energy efficiency and other “green” investments.
The benefits don’t stop with employment: Massachusetts’s energy efficiency program, which invests revenue from a minor carbon tax on utilities, has generated $4.17 in benefits to homeowners and $5.10 for businesses per dollar invested. These are win-win-win programs, providing jobs, reducing carbon emissions, and saving taxpayers and businesses money.
Additional services, when combined with a FJG, would save average American families thousands, if not tens of thousands, a year. According to the Economic Policy Institute, for example, tuition-free and universal child-care and education — staffed by FJG workers — would trim an average of $22,631 annually from families’ budgets in expensive places such as D.C. while saving households in places like Arkansas a more modest $5,995 on average.
To be sure, a UBI would free up time to volunteer, to care for sick relatives, or to start small businesses. Additionally, the UBI would finally provide greater financial freedom to those that choose to stay at home and engage in care work — disproportionately provided by women.
5. Full Employment and Economic Stabilization
A FJG would bring us much closer to actual full employment, not the neoclassical full employment that subjectively allows for some optimal frictional unemployment. Most contemporary economists rely on the non-accelerating inflation rate of unemployment (NAIRU) to calculate this less-than-full full employment artificial statistic which functions as a disciplinary tool of the bourgeoisie, but this, according to Roger Farmer is “an idea past its sell-by date.”
By full employment, we mean simply that everyone seeking a job gets one. We’d wager that if you asked the average American what full employment means to them, they’d give you a similar answer — a job for all. Indeed, a plurality of Americans will also tell you they support a FJG.
The UBI would likely still leave a substantial segment of the population in poverty. As Belgian philosopher Philippe Van Parijs, one of the most prominent UBI advocates, acknowledged, even a large payment through the UBI won’t necessarily secure a comfortable living for all citizens. How about those without jobs, or those who earn below subsistence wages? Of course, a UBI coupled with a non-poverty wage option and strong unionization could seriously combat poverty. The UBI would eliminate the effective minimum wage of $0 currently offered in the United States, though it would fail to provide adequate employment for all that demanded it — a crucial shortfall of such a program.
An FJG is a sounder mechanism to combat structural inequalities, for instance through closing the persistent unemployment gap experienced by stigmatized groups who experience continued discrimination. (Note, since 1972 unemployment has average double digits for black workers and has never fallen below 7 percent — a level that is only reached during times of economic crisis for white workers).
Further, the FJG will have a strong macroeconomic stabilization effect. During economic downturns, it would expand and hire more people; it would then shrink during economic boom periods as people move from public to better-paying private employment. Pavlina R. Tcherneva, a leading voice on the FJG’s macroeconomic effects, argues that policies like the UBI have no countercyclical features. Thus, when the economy takes a downturn — say as it did in 2007 — basic incomes provide no automatic stabilizers to right the sinking ship.
This is good for the economy as a whole. Rather than expanding the unemployment insurance rolls during economic busts, the FJG would put folks to work and moderate the business cycle. Federal employees’ paychecks will increase demand, which will increase economic growth. Many economists agree that today’s secular stagnation — insufficient demand — is contributing to continued “lackluster” growth after the Great Recession. Only modest upticks in growth for the foreseeable future will come if we continue the status quo.
Finally, the FJG costs less than UBI and would keep taxes and the federal debt in check. Some estimate that basic income could easily cost more than $3 trillion each year, while others say it will only come to $2.7 trillion. The FJG, on the other hand, will cost orders of magnitude less. Even if we conservatively guess that fifteen million unemployed workers need jobs, funding the FJG would take about $750 billion. Much of that financing could come from reductions in other social insurance programs that would be made redundant by the job guarantee, while the remaining costs could be easily raised through a low-rate tax on financial transactions.
We want to build an inclusive economy. The FJG will build an economy that serves the 99 percent more efficiently and effectively than the UBI. Most basic income proposals provide uniform payments to every citizen or “participating” economic actor. That’s what makes it universal. This means that Donald Trump and his kids would receive the same payments as children born in poverty. This doesn’t move toward equity, but, in fact, enshrines current income inequality.
Further, wealthier individuals will use their UBI payments to subsidize wealth-enhancing endeavors, further compounding the exorbitant wealth inequality in this country. Even a large UBI will not be sufficient for lower-income individuals to accumulate wealth — they will most likely use them for basic consumption needs, which are not wealth-generating. While the FJG does not provide a mechanism for wealth generation for low-income individuals, it doesn’t put more money into the hands of the wealthy. To further the march towards equity, we need complimentary bold policy options, such as baby bonds — a bold progressive child development account.
The FJG, on the other hand, will directly target the unemployed — remedying a key predictor of poverty. By providing universal employment, it will also counteract employers’ systematic discrimination against ex-offenders, recent military veterans, and certain racial groups. Furthermore, through providing a guaranteed job, workers will be emboldened to take new actions in the private sector. This could be just the policy to reinvigorate the labor movement, spurring unionization drives to improve working conditions and return shared prosperity to the private workplace. These benefits will result in the federal jobs raising beneficiaries and their families above the poverty line. The UBI can make no such guarantee.
We must think big. Our economy is rigged, and politicians and policymakers seem stuck arguing over incremental changes. But marginal steps aren’t taking us anywhere — we demand a march towards an equitable economy.
Not only would a federal job guarantee restore psychological balance and dignity to the millions who desire work, but it would also address the long-standing unjust barriers that keep large segments of stigmatized populations out of the labor force.
Finally, it would reverse the rising tide of inequality for all workers. By strengthening their bargaining power and eliminating the threat of unemployment once and for all, a federal job guarantee would bring power back to the workers where it belongs.