A Job Guarantee

We are in a new depression due to the COVID-19 pandemic: untold numbers of businesses have closed, unemployment has skyrocketed, opportunities for contract workers have disappeared.

Economic depression creates problems in three distinct but entangled spheres: the financial, the material, and the psychological. A job guarantee offers a potent solution to all three.

The financial system requires a continual churn of money. Rents paid to landlords become mortgage payments to banks become debt service to other banks become payments to employees and shareholders and on and on it goes. The global financial crisis of 2007–08 showed what happens when money stops flowing. Defaults on questionable mortgages cascaded through the financial system until some major companies went bankrupt. Job losses, foreclosures, and evictions followed. To prevent a repeat of the harm caused in 2008–09 when money stopped flowing, we need immediate, massive injections of money.

A universal basic income (UBI) is one proposition to provide some of that liquidity—to keep money flowing. More importantly, UBI addresses the material and psychological effects of a depression by ensuring everyone has at least some of the money they need to survive.

But we need more than a universal income. We need a job guarantee.

A major reason for this is that money does not just circulate. It accumulates.

We have a “trickle up” economy. Most of us spend all, almost all, or even more than we earn. Some of it is for survival. Some of it is for pleasure or to modestly improve our quality of life. And some of it is spent succumbing to marketing and other social pressures. The money circulates as businesses pay workers and buy supplies. However, portions of the money get siphoned off, where it accumulates under the control of the already wealthy. The primary purpose of this money is to attract yet more money, which is achieved through both passive investment in financial assets and active intervention in every facet of society.

While some of the money controlled by the wealthy gets invested into production, it also gets spent lobbying politicians for things like elimination of environmental protections and corporate tax breaks. Under the pandemic-created economic conditions, the wealthy will see even fewer opportunities for profit via production. As all kinds of jobs are disappearing, very few will be created.

At this moment a job guarantee would take advantage of the fact that there is plenty of work to be done and there are plenty of people to do it.

To facilitate a job guarantee, the federal government could provide money to municipalities, which are best placed to know what kind of jobs they need performed. There is much work to be done to deal with the current pandemic, as well as the climate crisis, caring for our aging population, and other social sea changes. We could pay people to train as healthcare workers, to phone elderly people isolating alone, to make public art, to clean up orphaned oil wells, and to perform many other necessary jobs that profit-seeking companies would never create.

A job guarantee would add even more money into the economy. While a basic income could provide for the bare minimum, a job guarantee on top would provide additional income and benefits in exchange for work. This would also establish a wage and benefit floor.

A job guarantee also has the psychological benefit of keeping people engaged in skills acquisition, occupying their time and reducing risks of isolation and boredom, and offering workers a sense of purpose amid great uncertainty. Unemployment is psychologically damaging. The pandemic-induced economic depression will generate a mental-health crisis unless we get people back to work.

How would we ensure the wealthy do not derive unfair advantages from this injection of money? Taxes. Because of our “trickle up” system, money created to hire everyone who needs a job would still accumulate under the control of the wealthy. This is why highly progressive taxes are needed. Reducing the wealth of the wealthy with taxes—thereby reducing their spending on socially detrimental things like obscene luxuries and political lobbyists—ensures that job-guarantee funding benefits those who need it most.