A "Job Guarantee" Sounds Like Bad News

A blog about business and economics.
Jan. 13 2014 12:20 PM

A "Job Guarantee" Sounds Like Bad News

106976253-paris-hilton-and-lexie-dreyfus-perform-community
Paris Hilton, enjoying the California Department of Corrections jobs guarantee

Photo by Kevork Djansezian/Getty Images

If you want to see a triumph of framing over policy analysis, I think the recent spurt of lefty enthusiasm for the idea of a federal jobs guarantee (Demos | Rolling Stone | The Nation | Jacobin) fits the bill perfectly.*

Imagine the following proposal—instead of handing out welfare checks and food stamps to these bums, we should make everyone who wants public assistance show up daily at a rally-point to be contracted out to do street-cleaning work. Think parolees sentenced to community service, or California using prison inmates to fight wildfires. That sounds to me mostly inhumane. What's more, by "solving" the problem of unemployment it will further empower the central bank to ignore labor market outcomes and focus exclusively on threading the needle between avoiding inflation and avoiding stock market crashes.

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Now of course when left-wing people talk about a jobs guarantee this isn't what they have in mind. But that's just to say that the devil isn't so much in the details here as he is saturating every aspect of program design and implementation.

It seems to me that a jobs guarantee of any kind would not obviate the desirability of the following:

  1. Some unconditional cash public assistance because this is the simplest way to help people in need.
  2. Some noncash public services because club goods and public goods are more efficiently organized this way.
  3. Balanced monetary policy that generates strong demand for labor.
  4. Wage subsidies to further lift low-end incomes will creating growth-friendly macroeconomic conditions.

But if you had those four things, would there also be a need for a jobs guarantee? It seems to me that there wouldn't. Any funds available for the jobs guarantee would be better spent on 1, 2, or 4 and broad labor market conditions are better addressed with 3. Obviously there's ample room for direct or indirect public-sector employment under any policy paradigm (gotta have cops, teachers, bus drivers, building inspectors, etc.), but trying to use public sector employment as a direct tool for boosting incomes or creating full employment seems messy and unnecessary.

It's the right-wing version of the idea in which the "jobs guarantee" becomes a way of restricting eligibility for public assistance that makes some logical, albeit not moral or economic, sense.

*Correction, Jan. 13, 2014: A previous version of this post misspelled the name of Jacobin magazine.

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