Should the government guarantee jobs for people?

Adam Ozimek has a very good post on that question, here is one part of it:

(By the way, can you be fired from a guaranteed job? If you’re guaranteeing everyone can be hired, and nobody can be fired or even it’s very difficult to fire them, then that’s creating quite the management headache for whoever participates in this program.)

Crowd out is also a problem on the supply side of the labor market as well, and failing to accurately consider this means the estimated program costs are way too low. The goal of the program is to create 4.4 million jobs that will cost $36,000 a year each. CAP says this will only cost $158 billion. But this assumes there is no crowd out from people who already have jobs. If these are going to be “good jobs with good wages”, then why wouldn’t people who currently have jobs that aren’t as good or have lower wages from trying to get them? About a third of all workers earn less than $15 an hour, and EPI estimates that a $15 an hour minimum wage by 2024 would directly affect 22.5 million workers. So it’s easy to imagine that there would be 20 million people or more who want one of these guaranteed “good” jobs today. How do we decide who gets these jobs, and do we set a cap?

So it seems clear the $158 billion estimated cost is way, way too low. I don’t know if advocates know that this plan would result in a large scale nationalization of the economy and don’t care, perhaps even seeing this as a benefit, or if they are just making a mistake.

Do read the whole thing, Adam makes many good points.

Comments

I would imagine you could be fired from any particular job under the program and re-assigned. Of course, if you don't show up for work, you don't get paid under the system.

$158 billion is indeed too low. It would be much higher than that, although it ultimately depends on how private sector employers respond to the program (i.e. how much wages go up to match it at the bottom versus employers hiring less). The jobs that were listed are unfortunately bad examples, and there are others that would be more amenable to the program.

Will the employers being paid to create these “guaranteed jobs” actually create new jobs or just replace existing ones?

That's assuming that you lean on private employers to hire folks. It'd be much less corrupt just to do direct hiring for publicly-operated programs.

From the perspectives of advocates, "crowding out" isn't a big concern. You set the program at a level where it pays a certain amount at minimum for work, and if private sector employers can't compete on that then they go out of business. It's an improvement, in a way, over what you get in places like France where you have heavy labor market regulations but no real programs to soak up the higher unemployment level in the private sector that results from it.

"From the perspectives of advocates, 'crowding out' isn’t a big concern."

Your analysis of why it isn't a big concern doesn't mention the cost of the program at all. That is what the concern was about: many more people than projected will take up the program, costing far more money than projected.

It’d be much less corrupt just to do direct hiring for publicly-operated programs.

Because there would be no corruption there!

This doesn't have to be hard, unless you are refusing to accept obvious answers because it might possibly maybe benefit someone you don't like. Or are trying, yet again, to have the government run the economy, because stupid.

The government should stop taxing labor, and if necessary subsidize labor, but first things first stop taxing it.

Local governments could still do "direct employment" and ride off of the Federal government's benefits, provided they can outbid private industry for the labor.

Bingo! There's jobs and then there's employment. Guaranteed employment is perhaps bad, because well--no one can force you to actually do a job if you're employed regardless. Guaranteed jobs though are a different story.

I don't think it's the right fit, but Morgan Wastler's "Uber4Welfare" doesn't have the government responsible for employing you, but it says you'll get welfare if you can find someone willing to pay you $1/hour. That's pretty close to a guarantee as long as you can meet basic social expectations like not killing customers.

YES to Morgan Wastler’s “Uber4Welfare” -- or other types of plans where the gov't helps subsidize jobs.

This is the right gov't "welfare goal" -- jobs, NOT free money.

"The plan lists several jobs that apparently are a good fit for the currently non-working and also in high demand: home care workers to aid the aged and disabled, affordable child care, teachers’ aides, and EMTs. "

I imagine the last thing the elderly want is random people to take care of them at home. How do they guarantee against theft? Will this program have criminal background checks?

Most of the things listed above don't need a government jobs program. All they need is deregulation, zoning law updates, and less occupational licensing. Child Care was affordable before regulations. EMTs could be trained in half the time we spend to train them these days.

"I imagine the last thing the elderly want is random people to take care of them at home. How do they guarantee against theft? Will this program have criminal background checks?"

By the time this program becomes a reality, the technology will be advanced enough where there will be a drone the size of a volleyball that hovers around the house, ready to decide on its own whether or not to use its ray gun on the thief swiping grandma's heirloom.

Once you do all that deregulation, don't you have the same problem with vetting and "guaranteeing against theft"? Just sayin'.

It would not be the same problem because employers would not have to worry about government stupidity like "ban the box" regulations.

Uncertified willing to work illegally and uncertified willing to work legally are two different populations. This should adjust your assumptions slightly, at the least, msg.

Presumably without the "guarenteed jobs" program, employers would have a much easier time firing people and filtering against criminals.
Once you put that extra layer of regulation on top, people will come up with a million reasons why it's super-unfair to fire that guy just because he made a mistake, and anyway, maybe grandma is just senile.

Correct response. We've seen what programs deisgned to guarentee jobs do in other countries, and it is nothing good.
Why is this even a subject of discussion?

No, it should not. But it should apply levers, some of which haven't yet been applied, to minimize the # of people who want a job, are capable of holding down a job, but can't get hired.

Keynes did not advocate guaranteed jobs, but he did call for punishing not paying workers to extract rents and profits, speaking as an economist.

And I grew up with TANSTAAFL economics which held all rents and profits indicated an inefficient economy because they were possible only if all factors of production were not optimally employed. Any economic rents and profits should be short term and eliminated in the long run.

But capitalists should not be trusted with seeking the most efficient economy.

Thus, Keynes wrote:

"Whilst, therefore, the enlargement of the functions of government, involved in the task of adjusting to one another the propensity to consume and the inducement to invest, would seem to a nineteenth-century publicist or to a contemporary American financier to be a terrific encroachment on individualism. I defend it, on the contrary, both as the only practicable means of avoiding the destruction of existing economic forms in their entirety and as the condition of the successful functioning of individual initiative.

"For if effective demand is deficient, not only is the public scandal of wasted resources intolerable, but the individual enterpriser who seeks to bring these resources into action is operating with the odds loaded against him. The game of hazard which he plays is furnished with many zeros, so that the players as a whole will lose if they have the energy and hope to deal all the cards. Hitherto the increment of the world’s wealth has fallen short of the aggregate of positive individual savings; and the difference has been made up by the losses of those whose courage and initiative have not been supplemented by exceptional skill or unusual good fortune. But if effective demand is adequate, average skill and average good fortune will be enough.

"The authoritarian state systems of today seem to solve the problem of unemployment at the expense of efficiency and of freedom. It is certain that the world will not much longer tolerate the unemployment which, apart from brief intervals of excitement, is associated and in my opinion, inevitably associated with present-day capitalistic individualism. But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom."

His prescription was, and is,

"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure. This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment. In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs of production plus an allowance for risk and the costs of skill and supervision.

"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce.

"I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden, merely a gradual but prolonged continuance of what we have seen recently in Great Britain, and will need no revolution."

Milton Friedman circa 1970 fought Keynes prescription with condemnation of policies that drove full employment.

Friedman argued that high tax rates on profits punished businesses that failed to employ the maximum number of workers. The policies, in his view, we're harmful to shareholders because managers found hiring more workers and paying workers more to be more rewarding because the IRS paid more than half the costs, labor became easier to manage, consumer demand increased as all employers paid more increasing revenue which was rewarded by shareholders in those times. Along with building new factories to meet the increased demand from higher income workers creating more demand.

Friedman saw full employment and rising incomes as bad policy because they drove higher living costs, too much consumption, too much need to keep up with the Jones, too much building of capital to the point that returns on capital were driven toward zero, and he saw this as bad because it drove inflation.

Thus, Friedman wanted lower taxes on profits to reward not paying workers, to reward firing workers, to reward not building factories to increase capacity leading to higher prices and lower labor costs and thus much higher economic profits.

To sell this idea, the focus needs to be on the "supply side" benefits to shareholders while erasing the "demand side" implications of higher unemployment, lower wages, living costs higher than incomes, etc.

Trump wants to Make America Great Again which is likely when workers were benefiting from the punishing taxes on not paying workers. The regulations that punished not paying workers, ie, costly regulations.

Regulations are not costly because they force high profits on unwilling businesses, but because they cost businesses a lot more in labor costs.

But Trump wants to go back to 1969 when demand from so many workers paid so much was creating high growth, without punishing not paying workers, but by increasing the reward for not paying workers, to reward firing workers. Trump is promising a free lunch.

I see. If we impost costly regulations on businesses, they will extract less of the surplus labor value of the proletariat.

IMO there are intangible benefits to full employment in terms of citizens' psychological well-being, and the values passed on to their progeny. As an aside, I also think there's intangible value in maximizing the % of citizens who perceive themselves to be "self-supporting" (i.e. supporting themselves through the wages they earn) rather than perceiving their standard of living to hinge on government largesse (which would include the EITC).

But it's mainly about optics. The trick is to artificially juice the standard of living of the least productive citizens, relative to what the market would otherwise dictate, without their perceiving that this "juicing" is even happening.

So how are we to determine who is capable of holding down a job, but just can't get hired?
Are there objective ways of measuring those things?

My guess would be employment history but that can be lied about and probably will be if these posts are highly sought.

Plus, there's always the point that past spotty employment records were the result of any number of factors which don't actually affect job performance. Maybe you had a drug problem, but now you're clean. You're dying mother kept you from working but that's over. You had mental health problems but you're taking your meds now. Etc.

Employ them in some govt. jobs department, then fire them if they don't show up or if they fail to make a reasonable effort to perform their assigned tasks.

Or, in lieu of such a jobs department, just make it easier (read: cheaper) for the private sector to employ people, especially at the low end. The set of folks who remain jobless in this new scenario is likely to have a higher percentage of members that are flawed in some way. Lazy, character issues, etc.

'By the way, can you be fired from a guaranteed job? If you’re guaranteeing everyone can be hired, and nobody can be fired or even it’s very difficult to fire them, then that’s creating quite the management headache for whoever participates in this program.'

Man, someone needs to read some history concerning the Soviet Union and its East European protectorates, including not only the guaranteed job, but the guaranteed place to live.

Spoiler alert - it did not work out well for anyone.

As I understand it, Italy even today has legal protections that make it very difficult to fire workers, and it is indeed a massive, massive problem.

Not only Italy, which I know because I was born there, but a huge number of other countries. I myself was fired once as CEO of a 100M$ EBITDA company in Honduras (yes, it is telecom, pretty obvious, isn't it?), I sued to be reinstated, and I won (not my finest hour, I have to admit, but the schadenfreude was one my my life highs).

Start again at the last inn you were at.

Spoiler alert: the soviet union differed in many other ways as well. The fact that they commanded you to work and produce what wasn't demanded by the market was a much larger issue (and also jailing millions of people far basically no reason)

How is a guarenteed job really different from ordering people to "produce what isn't demanded by the market"?

Think about it for a minute. Labor is a product.

Really? They aren't even close to being the same. Just because I have a guaranteed job to fall back on in no way dissuades me from going to college and trying to improve my lot. If anything, it may encourage people to take more risks, starting businesses etc.

Join the military and you'll have a guaranteed job. And a required job. How quickly do "guaranteed jobs" become "required jobs" with enforcers to come get you up out of bed with force if necessary? After all, isn't that the Road to Serfdom?

You're completely missing my point. If employers wanted to hire these people - thought the product of their labor was worth paying for - they would be doing it. If the labor market does not demand the labor of certain people, inducing it to demand labor (i.e hire people that would not otherwise be hired) is inducing people to produce what is not demanded by the market.

@Hazel,

OK, I see what your saying. Yes, thats a valid point, but thats still a marginal part of the economy. Perhaps upwards of 10% of all jobs would be guaranteed jobs people fall back on? Compared to Russia where induced--not demanded by the market jobs were 100% of the economy. That's why I don't think its a fair comparison.

One needn't have a soviet-style "guarantee" to juice labor force participation at the low-end. Just subsidize hiring. For instance, create a new payroll tax on employers (with no employee income cap) and use the revenue to fund a per-full-time-employee-equivalent employer tax credit.

Why in the world would you subsidize hiring with an employment tax? Use a VAT.

...why would you subsidize something before at least trying to stop taxing it.

Because the per-FTE credit disproportionately helps at the low-end of compensation, which is the region with the worst problems in terms of unemployment and low labor force participation. What I proposed makes it more expensive to hire high-wage employees, but considerably cheaper to hire low-wage employees. It attempts to prompt the private sector to employ the "ZMP" workers, as they've been described elsewhere.

It's an employment tax coupled with an employer tax credit. The two, together, are intended to be revenue neutral. There is generally not an employment problem for people at the high end. For people at the low end it's a real problem. The reason I chose an employment tax is that there's very little overhead. Also, if I'm going to incentivize hiring by way of a tax credit, then it's useful to increase employers' tax burden by some amount so that the tax credit is actually usable.

If I were going to include a VAT, and remain revenue neutral, I'd do the following:

1. Remove the income cap on the current payroll tax.
2. Reduce the current payroll tax by some amount across the board, or eliminate entirely if the numbers permit. Fund SS/Medicare out of general revenue. (This is a much bigger change).
3. Introduce the per-FTE tax credit, but find a way to allow employers to apply it to their VAT payments.

Okay, fair enough.

But once you get rid of the payroll tax cap, you have probably taxed the upper class near their limit. You would be exceeding most Western European countries at that point. This gets rid of the ability to "just tax the rich" to fix other budget problems.

Yet, we have Tyler posting...

"Places like Singapore have nice infrastructure because they have pro-saving public policies and effective cost controls on construction projects. America has neither. As long as this is the state of affairs, we will not have top-notch infrastructure, no matter how much money the federal government throws at the problem."

Europe builds infrastructure for lower labor costs than the US. At the link to Sumner,

"The Second Avenue Subway in New York City, for example, is being built at a cost of nearly $1.7 billion per kilometer while new subway lines are being built in Paris, Copenhagen, and Berlin for about $250 million per kilometer."

Now if labor costs are the reason for the much higher costs of infrastructure in the US, then US labor costs are 7 times what they are in France where it's virtually impossible to fire workers.

So, TANSTAAFL: you can't claim European labor laws cost too much compared to the US and at the same time claim European economic policies deliver much lower labor costs than the US.

I can't believe that we are back to the distinction between negative and positive rights. I spend hours each months to explain it to primary school kids in Honduras, but I'd never thought it was an issue to raise with Mr Cowen and, I am pretty sure, ol' friend Thiago. A job is a contract between willing adults, not a property, it can't be a right.

I start to think mccloskey is right when she says our host is a great economist, but once in a while he goes native.

What makes you think that Tyler favors the idea? Some people from Center for American Progress and other progressives have proposed a guaranteed jobs program, Ozimek critiques it, and Tyler links to Ozimek's critique. It's called debate.

It's a false distinction.

To BC: Do you ask if somebody favors 2+2=4 , or 2+2= 5? It is not even something that should be asked. If you have the "right" to a job, it means you have the right of a recurrent revenue, whatever is your productivity. If your productivity is lower than your salary, you are stealing, or pimping through votes. Not much to discuss, next.

To Brett: how so?

plenty of people's salary's are higher then their productivity (I'm looking at many CEOs). There's a ton of things you could discuss

Yes, and no one claims that there is a right to be CEO. Your argument confirms Massimo's.

Massimo clearly claimed that receiving pay in excess of your productivity is stealing. Stealing violates other's rights. You seem to agree that a sizable chunk of the workforce is thus stealing and violating rights. If we already have rights being broken then clearly "rights" aren't some sanctimonious thing that must always hold, in which case guaranteeing a job is on the table and up for discussion

The Road to Serfdom: Guarantee a positive right. Some large portion slack off. Use force to ensure productivity. Hide force incidents by controlling media. Stop political opposition to force via political persecution, see: gulags and purges.

It's up to the board of directors to decide if the CEOs pay is higher than his productivity. Not you.

@hazel,

I'm simply making the point that being paid higher than productivity doesn't constitute stealing. There are, of course, much better arguments against guaranteed jobs to be discussed

Re: Massimo clearly claimed that receiving pay in excess of your productivity is stealing.

Wages are based on supply and demand-- repeat as many times as necessary until this is understood. Productivity is not the basis of people's wages (at a first approximation at least)-- the relative scarcity of what a person does vs how much demand there is for it sets the wage.

Re: The Road to Serfdom: Guarantee a positive right.

Oddly enough this so-called Road to Serfdom did not lead to serfdom, Maybe it's time to rethink the whole thesis?

How do you define "productivity"? How to you measure the productivity of a CEO? Someone has to make the decisions. If that person makes bad decisions costing the company billions of dollars (depending on the size of the company), that will impact a company much more than a typical file clerk.

Could tweak the statement. Rather than a carte blanche "right to a job", maybe stipulate that a job exists for you so long as you show up and make a reasonable effort to perform all tasks to the best of your ability. Also make no guarantee with respect to compensation, short of existing minimum wage law. So, in that formulation, every person has a "right" to $7.25/hr if they show up for 40 hr/week and put in reasonable effort. If you don't show up, or if you don't make an effort, you're not guaranteed anything, since the "guarantee" is contingent on those two things.

Not saying I support this; just that it might be possible to address the criticism of "people will just slack off if their job is guaranteed" by adding some nuance.

One issue: the overhead required to arbitrate cases where people feel they were fired unfairly. One way to keep costs low: only allow arbitration for employees who are terminated from their "guaranteed" government job. If you get fired by your private-sector employer then too bad.

The jobs program would be like a "public option" for people who can't find employment in the private sector. Pay would be low, so nobody should prefer it to the private sector if they're able to find work there.

In effect, these jobs would be "inferior goods" jobs.

It’s a false distinction.

Only if you think the distinction between action and inaction is also false.
Your positive right to health care is my positive duty to purchase community-rated health insurance.
My inaction much be considered equivalent to an active harm of you - a violation of your rights, to be punishable.
Is not rescuing equivalent to murder?

Fertile new fields for unionization. I believe the cost is being underestimated by over a factor of 5 or more.

The jobs will either be make-work government jobs, or if you do pay private employers to hire them, I am guessing that most of the "new" jobs will just be the old jobs, but now paid by the government, and with no net real employment increases, thus necessitating the make-work solution anyway. And Brett's assertion above notwithstanding, how rigorous would enforcing attendance likely be? I would guess it would be unlikely to be rigorous since the output itself isn't something anyone wanted to pay for previously, so who would really care?

Most of the existing government programs aren't over-run with waste, at least the ones aimed at poor people which are constantly under public criticism and scrutiny (not so much the defense industry). I don't see how that would be any different with a Job Guarantee program, especially since the program would have no lack of political enemies (particularly from employers actual and potential dependent on cheap labor).

au-revoir later, before sunrise

To Brett: I do not give a shit about poor people. If you do, open your wallet, it's your choice, but do not pick my pocket. And yes, if you choose the latter, I will shoot you in self-defense, this is why I moved where I am free to do it

That kind of LARPing is pretty unhelpful. You WILL be paying your taxes. Poor people can vote, we should try to help then in ways that cause the minimum amount of damage.

Our existing programs get less than 50% of the money to the recipients. I'd call that bad.

Sounds about right but where did you get that statistic?

For TANF:

https://fas.org/sgp/crs/misc/RL32760.pdf

Only 7.1% spent on admin costs nationally ... that's good.
But 34.1% spent on "Other" ... that's bad. But it's not necessarily waste. It's states deciding to spend TANF dollars on 'other state services' instead of the core TANF programs.

http://www.cbpp.org/research/family-income-support/how-states-use-federal-and-state-funds-under-the-tanf-block-grant
"States use a large and growing share of state and federal TANF funds that formerly helped poor families meet their basic needs for other state services."

Imagine the tasks that the DNC would devise for its new workforce. Imagine David Brock as the administrator of a 500,000 strong, poorly educated, welfare dependent, minimum wage army. You can bet that they'd all be bussed to polling stations on the government's dime, after their educational class on which party it is exactly that is intending to give them more free stuff.

why would these people be "welfare dependent"? Other than Medicaid and disability programs (and anyone on the latter would not qualify for a job by definition) a guaranteed jobs program would get rid of welfare programs.

Why would previously unemployed, now minimum wage employees be welfare dependent? Probably their low income.

I am assuming that these jobs would pay a (austere, bare-bones) living wage. Most proposals for UBI also assume that welfare programs for the able-bodied (except maybe health coverage) would be eliminated thereby. I am making the same assumption.

Over half of all households in the United States earn less than a salary equivalent of $20/hr. How many people would qualify for these new government jobs at a "living wage" ($20/hr + benefits?). We are talking about trillions of dollars.

Who said anything about 20$ per hour? That may be the livable wage in some high-cost metro areas, but certainly not in most of the rest of the country.

"a guaranteed jobs program would get rid of welfare programs."

No, it wouldn't. But, by all means, if the Democrats put forward a guaranteed employment bill (at minimum wage) which also specifically ends all welfare, I'm sure the Republicans will hop aboard.

I don't want to comment specifically on the CAP proposal, but workfare is inherently less costly than cash support for stay-at-home non-working. Besides the obvious reason of getting some labor value, people who are kept somehow anyhow working will be far more likely to rejoin the private workforce.

My opinion is that social support for the healthy under 65 population should as much as possible direct people into private workforce and temping agencies and to those who aren't ready provide remedial on-the-job training geared towards that. Of course the incentive structure is important, but before freaking out at some proposal to change it that may indeed be silly, do recognize that the current incentivize structure is already very silly, especially for entrepreneurs where the additional disposable income that one realizes per additional income earned as one grows one's business from say $25k to $50k annually is literally pennies on the dollar.

A businessman who increases is labor cost from $25k to $50k, ie increases his pay, sees no marginal increase in income??

Or are you speaking as an Uber driver paid 50 cents a mile to drive his car costing 50 cents a mile in capital and operating costs seeing no income increase as revenue and costs double? Uber is not government even though they control, or try to control their entrepreneur contractors.

"A businessman who increases is labor cost from $25k to $50k, ie increases his pay, sees no marginal increase in income??"

By this fantasy reasoning, Mulp could become a billionaire by the simple process of 1. selling a product, his writing perhaps, 2. giving away all his money. Think of the returns in demand!

He's talking about gross vs. net revenue. A self-employed person who takes in $25,000 in additional income might be spending it all on increased costs. Just hoping to keep growing to the point that the returns start increasing beyond the costs.

On the other hand, with no controversy, the Federal Reserve Board targets at a minimum of having 1.4 or so people looking for work for every job opening.

Ergo it is the policy of our federal government and central bankers to always have more unemployed people then there are job openings.

But self-employment opportunities are always open to them, so there's no necessary requirement for unemployment here.

Also, the total number of job offers and the mean duration of offer-fulfilment is unspecified. So you can't infer anything about the rate of unemployment and it's typical duration here.

"Ergo it is the policy of our federal government and central bankers to always have more unemployed people then there are job openings."

The government aims to have a firefighter response to a house fire within 15 minutes.

Ergo it is the policy of our local governments and finance officers to ensure that houses burn for at least 15 minutes.

1.4 is a national average. In an economically weak region like rural Mississippi their might be 3 job seekers for each available position. In a boomtown like Seattle there might be 1 job seeker for every 3 jobs.

We need better labor mobility to help move people to where the jobs are. That would close a lot of the jobs gap that we are seeing.

Increasing transfer payments that don't dependent on work might save a physical town but it won't be nearly as helpful for the people within the town.

In the 1930s, we didn't pay people to stay on their drought-stricken farms in Oklahoma, we let them move to California in search of work. A UBI in 1934 would have left lots of people trapped in hopeless farm towns in Oklahoma while California's ag sector suffered a labor shortage.

Probably not: they still would have lost the farms to foreclosure and had to move since I doubt we would have paid enough to make the mortgage payments-- maybe not even the taxes.
I see this assumption commonly-- that a UBI would be some sort of middle class income. No. It would be a livable (austere and bare bones livable) income only.

What shortcomings of the EITC is this proposal supposed to address? I briefly skimmed the CAP document to try to find the answer, but it became clear that the document is a political white paper not an economic one. (Much of the commentary is about recent election results.) If one didn't think that government knew better than market participants which jobs we need more of --- apparently, home care workers, child care workers, teachers’ aides, and EMTs --- then would one have a good reason to consider this proposal? In other words, the alternative to the government subsidizing the mentioned 4 jobs above all others would be for the government to remain agnostic and subsidize all jobs equally. But, that would just bring us back to (an expanded) EITC.

I agree with your point but one shortcoming of the EITC is that the maximum benefit for those who don't have children is $506 ($42 per month, in other words). That makes sense if you want the EITC to specifically target childhood poverty but it makes less sense if you are worried about too many young people being unemployed or underemployed.

+1

EITC is largely a welfare program for single mothers disguised as a negative income tax.

A welfare program for low-income parents, not, just single mothers. There is no sex selection criterion to it.

True enough but there is no race selection to crack possession charges or dress codes that ban baggy pants.

An expanded eitc doesnt create any more jobs. Since it will encourage those voluntarily out off the workforce to return, it will make the unemployment problem worse.

Advocating EITC is the same as advocating government paying many or all workers, with the profits of work going to private employers, who the advocates of government paying workers call for NOT taxing.

It's free lunch economics.

Ie Walmart is not profitable enough so they need government paying more of their workers wages by way of IRS paid wages, EITC, but Walmart is taxed too much on the huge profits not paid to workers, so tax rates need to be cut to reward Walmart for cutting pay to workers requiring the IRS increase what it pays Walmart workers to work at Walmart. Somehow, this will increase consumer spending so much that lower net tax revenue will increase enough to increase tax revenue.

Anecdote from the former German Democratic Republic where officially everybody had a job:

My mom had to do an apprenticeship as a machinist in the local sewer plant. There was a guy there who would check (tumble) into work each morning being flat out drunk. He was helped onto a stretcher by his colleagues and then got sober during the rest of the day. Then he went home. Repeat.

Having a straight a student in high school be a sewer plant machinist is a whole other story regarding the missallocation of talent in autocratic societies.

Willi, I'll bait. What is a "sewer plant machinist"? I mean, how exactly spends his days a "sewer plant machinist"?

First, 'she.' Second, a sewer plant actually consists of a number of mechanical items, not to mention the piping.

However, the translation from English into German for various 'Berufe' can be a bit tricky, not to mention the difference between how the BRD and DDR would classify things..

"Anecdote from the former German Democratic Republic where officially everybody had a job"

So what? In the Hungarian People's Republic, reportedly, everyone had three jobs.

Bet your mom's apprentiship existed because of that drunk. Ie, he was a party boss or related to one, and thus he was key to the swerve plant having a payroll to operate as opposed to simply bypassing all sewage into the river.

Ah, things to aspire to! Imagine how well the battalion of David Brock's distant relation, or the division led by WorkCorps General Chelsea Clinton would do at budget time?!

I am for a jobs program, something like a civilian army to absorve and employ the unemployed and underemployed.

The only even remotely sensible way of doing this would be to make the guaranteed jobs people work in the public goods sector.

Subsidizing people to work in the regular markets is just wasting money to make people do jobs they don't want to do to make stuff or services that no-one wants (we know this because otherwise the jobs wouldn't need to be subsidized). It is pretty much the same as making a group of people dig a hole and another group to fill it.

However, public goods are always massively underfunded. More skilled people participating in this program could contribute to open source programming or some creative commons culture projects. Less skilled people could do things like improve OpenStreetMap or clean the streets from trash.

Now that I think about this more, even in science there could be lots of work for people with varying skill levels. Less skilled people could help with more mundane aspects of building experimental setups or haul heavy stuff around the lab. Moderately skilled people could help with some repetitive steps in research, proof read stuff or basically work as secretaries for researchers. High skilled people could do the research or help with it themselves.

It boggles my mind that someone comes from the idea to pay companies to employ people while, as I see it, the world is full of extremely useful tasks that are not done because of some type of tragedy of the commons scenario. Give me a supply of people with arbitrary skill levels and I can immediately come up with something to do for them that is guaranteed to improve the world in small ways if I don't have to worry about how to make their work profitable in the markets.

if I don’t have to worry about how to make their work -valuable-.

Things can have utility for people even if their market price is zero. This type of things are called public goods.

If creating something costs resources, but once the thing is made it can be used by anyone without any further costs, we have a market failure. This is why e.g. creation of scientific knowledge is often funded by governments or charity organizations. It might not always work perfectly, but it is the only way to fund the creation of non-excludable goods and often the best way to fund the creation of non-rivalrous goods.

Things can have utility for people even if their market price is zero. This type of things are called public goods.

This is an economics blog. Please don't make up new definitions for well-understood terms like "public goods."

The definition I had in mind seems to be the same Wikipedia uses: https://en.wikipedia.org/wiki/Public_good . Please tell me if the standard economics definition is something else.

To further clarify: it is true I'm not an economist and I might have instead used the term "market price" in a wrong way. What I meant by my original sentence was that people might not be willing to pay non-zero price for some good if they can get it anyway without paying, i.e. the good is un-excludable. Some utility is gained when such goods are created, but getting anyone to pay for them without collective coordination (like government subsidies) might be difficult. If the created goods are also non-rivalrous like the examples I gave (like having publicly available map data in OpenStreetMaps or free and open source software), they are then public goods.

The wikipedia entry you linked to says nothing about market prices being associated with public goods. Public goods are non-rivalrous and non-excludable.

" Less skilled people could help with more mundane aspects of building experimental setups or haul heavy stuff around the lab."

*gears turning slowly*

Aha! Think of all the servants we could provide to our political base!

Its not that no wants the stuff that could be made. Its that they don't want it at the prevailing market cost. Still, I'd much rather pay 100 cents for something that sells for 70 cents then pay someone 100 cents for nothing (which is what some of our social services do)

Consider two cases: 1) a company makes a computer program and sells it at some price (while preventing people from copying the software freely by using the copyright laws), 2) a group of people write a similar software and release the software as open source (which makes selling copies of the software rather difficult). In the first case, we have a software that is useful to the people who agree to pay the price set by the company while others gain nothing. In the second case, literally everyone in the world can use or modify the software without any limitations. Since the utility of the software does not diminish as more people use it, it is obvious that the total utility gained by the society from the software is much higher in case 2. However, in the second case the software also does not have any market value since it's a non-excludable resource. In other words, it's a public good.

One could argue that the work spent to create the software in case 2 still has market value. However, since the benefits of the work are spread to everyone in the world, no particular person has an incentive to fund the creation. We have a free-rider problem. This type of problems are what central governments are meant to fix.

In all of my examples, I would say that the problem is not that people don't want to pay for the stuff because it's useless. It is that they are subject to some type of free-rider or tragedy of the commons failure of the markets.

And yet this is the sort of problem a government is unlikely to fix -- there are so many possible public goods of this type that it is difficult to discover what should be produced -- you need markets to do that, and profit margins are a small price to pay.

Yeah-our real problem is the government spends way too little! And guaranteed government jobs will definitely attract the best & the brightest so we will not only spend more but do so with the efficiency of the DMV or post office! And the CAP in no why would want all those workers to be dues paying union members-whose dues will flow to the DNC & will lobby for more money to be spent on dubious government programs. Sounds like California or Illinois on steroids-but worse b/c they have a printing press to print money in the federal government. If you thought IKE was on to something with the government-industrial complex wait until you see this idea's effects on the unionized government worker-politician complex

I'm not from the US and I have no idea what this outburst was about or what half of the acronyms you used were. In any case, my comment was a reply to the original blog post about introducing guaranteed government jobs. I was simply making the argument that if government subsidizes jobs, it should do it to produce the kind of work that is likely to be underfunded because of market failures. Whether or not we should subsidize employment at all is another question which I don't feel confident enough to give my opinion on.

These days the DMV is not all that inefficient (see: information technology, which has made this function much more efficient). And I've never understood the complaints about the Post Office. I've only once had a (minor) problem with anyone at the post office.
My Customer Service Hall of Shame is not populated by public agencies at all, but by assorted fast food places, convenience sites, cable companies and the all time champion Expedia.com.

There's nothing generally 'wrong' with the Postal Service. They're just abnormally pokey at the desk. I did have a wretched experience with certified mail in 1995. I've heard stories from others.

My customer service hall of shame is populated by medical office staff in outpatient clinics. Pretty exclusively.

You probably have socialized medicine

"More skilled people participating in this program could contribute to open source programming or some creative commons culture projects."

1. Programmers would participate in a minimum wage DNC worker-army. Lol

2. "Artists"

While the government can and probably should produce more public goods (generate a bunch of public domain material to be used in textbooks, for example), the idea of using it to fight working class underemployment is silly.

See, this is how all the background bellyaching ends up framing all of these conversations. We live in the richest country in the history of the world, and one that provides abundant job opportunities for most people, but I'm considered a nut for saying so, and it's considered mainstream to discuss some make-work bs.

Unemployment:

https://fred.stlouisfed.org/series/UNRATE

Ah yes, you say. But what about labor force participation?:

https://fred.stlouisfed.org/series/CIVPART

Fair point. It's been going down. But it's still at a higher level now than it any time in history prior to 1978. Cuz, you know, women:

https://fred.stlouisfed.org/series/LNU01300002

So yeah, the real story is the millions of men that have been sidelined:

https://fred.stlouisfed.org/series/LNU01300001

If we want to treat the problem, there's the problem. Not sure why make-work would do a better job than it's ever done before though.

" I don’t know if advocates know that this plan would result in a large scale nationalization of the economy and don’t care, perhaps even seeing this as a benefit, or if they are just making a mistake."

Large scale nationalization, and control of such has always been the goal of these schemes. Big govt types like big govt because they can be in charge of more, not for any benefit other than their own.

From today's WSJ "Runaway disability payments invite fraud and punish work." :

"The Trump budget proposes to reduce spending by $72 billion over 10 years on federal disability programs, the largest of which is Social Security Disability Insurance (SSDI). The cuts would be achieved by testing and adopting incentives for individuals to return to the workforce; reducing retroactive payments; tweaking the appeals process for denied claims; holding swindlers liable for overpayments; and other measures to make sure applicants are genuinely disabled."

I wonder, would the CAP jobs proposal likely be one of the "incentive for individuals to return to the workforce?"

I would wager if you removed the impediments to hiring and employing people (as well as public policies which increase an employee's reservation wage) you could get by with a modest program like the Job Corps. 'Removing the impediments' would include:

1. Restructuring the finance of medical care and long-term care. You could have a public program which provides catastrophic care over very high deductibles (for the working-aged and their dependents) and lower deductibles (for the aged, the disabled, and dialysis patients). and is financed by dedicated income tax which takes x% of your per income up to a maximal value (which last is adjusted annually). Supplementing that would be cooperative insurance which would supply benefits in value which would not exceed in value the difference between the deductible on your public plan and the deductible on your co-operative plan. The actuarial pools would consist of people who met the criteria of a certain bond of association: members of a given trade union, eligible for membership in a certain credit union, employees of the same company. Supplementing that would be household insurance for services not covered on standard public and co-operative plans. Medical costs would not be on the employer's books. Rather, the employer would sluice income to the plan according to its terms (i.e. clip a % of the employee's compensation with the total remittance to the plan not falling below or a certain floor value or exceeding a certain ceiling). The income clip would vary little from plan to plan. Plans would remain solvent through annual adjustments to deductibles. Deductibles for each member would be set according to the number of household members covered and according to the employee's longevity with the plan. What's salient here is that the employer would face for his workforce a fixed and predictable assessment on the wages and salaries paid, without any uncertainty.

2. Provide a legal facility for more rapid replacement of defined benefit plans, with the eventual goal of eliminating them entirely.

3. Eliminate employment discrimination law. Certain activities which would fall under the heading of 'harassment' or 'extortion' in the penal code would remain actionable torts (with the law as clear as possible as to when individuals were liable and when companies were liable), but otherwise the whole edifice should go.

4. Adjust the law on collective bargaining. Going forward, there should be two types of unions: mutual aid societies which run insurance programs, credit unions, &c (on the one hand), and collective bargaining agents (on the other). The functions would never be combined. All collective bargaining agents would be company unions which would exclude from the bargaining unit just a standard menu of managers and confidential employees. In the public sector, you would have no collective bargaining agents, just mutual aid societies. The law might provide for collective bargaining agreements which provide for co-determination or agreements which stick to wages, benefits, working conditions, and grievance procedures.

5. Provide in law a facility for flexible compensation. Every employee of a corporation would receive a base salary or wage (which would be supplemented in some cases with commissions or a discretionary bonus). All employees (bar some casuals) would after a probationary period be paid a standard bonus declared each quarter and paid out in installments through the quarter. A given employee's bonus would be equal to corporate earnings in quarter x-2 divided by the number of FTE in quarter x-1 and then multiplied by a constant (which value would be the same for every employee of a given job-type, stratum, and seniority). You can have nuttin' personal compensation cuts per company performance, something that's not done now.

6. End tenure for civil servants. The public interest is served when hiring and promotion is done strictly according to timely competitive examinations. It's not served by weak labor discipline. If three superodinates in an employee's chain of command (or fewer if there are fewer than three layers above him) counter-sign a letter of dismissal, that should suffice. Labor lawyers on the union's retainer could assist the employee in making the case to an arbitrator that the employee was dismissed for one of a a half-dozen ignoble reasons. Should the arbitrator so decide, the employee would be due a large indemnity and be eligible to apply for public service employment elsewhere. An ombudsman could then bring charges against those who fired the employee, possibly leading to their dismissal and debarment from public service for a term of years.

7. Limit compensation-per-worker in the public services to a fixed % of compensation-per-worker in the private economy of a given geographic region (say, 110%). Require that any employee compensated beyond a certain rate (say, 3.5x mean compensation-per-worker in the region's private sector) only be so consequent to a specific one year contract approved by local elected officials (yeas and nays recorded) after a public hearing.

8. Replace the current minimum wage with a pro-forma minimum adjusted each year per the year-to-year change in nominal compensation-per-worker a given region's economy. This year's pro-forma minimum might be $1.60 per hour (for wage-earners) or $250 a month (for salaried employees).

9. Replacing EITC, TANF, residual general relief, SNAP cards, LIHEAP, Section 8, miscellaneous housing subsidies, and odds and ends with a general tax credit. The taxpayer's liability would be equal to x% of his personal income (which rate would be uniform) less a large credit for himself and each household member. The taxpayer would receive a rebate if the liability so calculated was negative. However, the rebate paid would not exceed a cap equal to a fixed % of his earned income (a cap you could relax if the tax payer were aged or disabled).

10. Enforce the immigration law (a Wall, please, and a dedicated federal police force that chases down visa overstayers), fix the number of temporary residents (students, refugees) at a fixed % of the native population (issuing entry visas pari passu with departures), and limit the number of settler's visas to a sum necessary to correct for fertility deficits (say, 400,000 per year at this time). Issue settlers' visas only to people who can pass an English proficiency test (unless they be juvenile dependents). It's time to mobilize our low-skill population, not replace them with Guatemalan imports.

>"I don’t know if advocates know that this plan would result in a large scale nationalization of the economy and don’t care, perhaps even seeing this as a benefit, or if they are just making a mistake."

Oh sure, people accidentally promote nationalizing the economy all the time.

In fact, Venezuela accidentally DID it, and boy do they feel silly now.

People should really be more careful. About these accidents.

The CAP types want to run it-and Podesta can't even come up with a password for his computer that a 8 yo couldn't hack

Having worked a state job with full time state workers, I think a guaranteed job is a terrible idea. Guys used to just drive around in circles all day, very little work was done. If you guarantee jobs you will guarantee that very little work gets done. Blue collar government workers already slack off a tremendous amount. The other day I saw a state worker picking up litter, he was driving along in a little vehicle on the side of the road pick up about every 10th piece of litter, not much good and using up fuel and deterioration on the vehicle.
Better an hourly wage subsidy. Sure, the employers would capture some of the subsidy but in the progressive tax regime that we have they would be paying for it too.

Even so, I'd prefer people doing something, even driving around in circles, than sitting at home collecting welfare/disability. Work is good in and of itself.

How does retirement fit into your personal philosophy? Of course when public employees retire at 55 yrs. they don't quit "working", they take another public job or one with a contractor to that sector. While work may be good in and of itself in the Puritan universe, plenty of others don't see the point, especially those at the top of the Puritan corporate/capitalist pyramid. They advocate physical labor for others but eschew it themselves. It's not only fatiguing, it's low status. Members of societies with a status independent of consumer goods don't work any harder than they must and laugh at those who do.

Able-bodied people -- especially able-bodied men -- who aren't employed engage in crime. The 70 year old carpenter probably isn't breaking into houses.

Like Floccina, I say give an hourly wage subsidy. Employers will undoubtedly capture some of the surplus, but I guarantee you it will improve the economic outcomes of the unskilled. We don't even need to make it a 40-hour workweek if you want the unskilled to capture some of these benefits as leisure.

There comes a point when most of us (unless we die young) will be too old to work. I am talking about working-age, non-disabled (as in, seriously disabled) people. I would also allow an exception for a parent (note the singular) of a very young child. I may not have children, but even I know that child-rearing is a job in and of itself and anyone with a pre-school child around does not spend the day sitting around watching soap operas and eating bon-bons.

Then you want a subsidy program combined with low/no minimum wage. You encourage people to work even if the pay is low by giving them an hourly subsidy. You don't create programs that subsidizes bogus jobs ala CAP program b/c the cronyism that it would entail. Instead you encourage people to work even if the pay is too low to live on, in the private sector b/c that would ensure the jobs actually produce something the public desires (i.e. The employer must remain efficient and provide value to the customer). You don't subsidize the employer you subsidize the employee-he has to work not sit at home ( b/c you are right work is important for individual flourishing). That way few can complain that the job is worth less than the value of all the welfare benefits they receive-which s too often true today. We also gain the fact that many of the formerly unemployed will move up the ladder & not require a subsidy in the future.

Very few people actually want a "job". What most people want are "things", which they must usually obtain with money. When people get a job the first things they want to know are when it's break time, when it's quitting time and when they're eligible for vacation. Retirement or disability closely follow. They dislike going to their job but like having money to spend on bass boats, smart phone contracts, clothes from Ralph Lauren and pasta dinners at Olive Garden.

You're like that and have persuaded yourself that everyone else is like you. They are not.

"Like having money to spend on (...) pasta dinners at Olive Garden."
I doubt it. Anyway, I believe in a day's pay for a day's work.

And yet the vast majority of us continue to slog off to uninspiring jobs day after day. Your point is?

You're no doubt proud of that.

Much of life is doing what one must. Deal with it.

Jobs guaranteed by the government sounds like a recipe for disaster. Why not utilize certain levers to encourage better outcomes?

High school counselors should offer trade school and internships in lieu of college. Mike Rowe has interesting ideas regarding this. College counselors should inject realism into their conversations with students; % of jobs available, internships, salaries. Colleges themselves must become more results oriented.

Provide grants and loans for trade school/internships. Provide relocation incentives for citizens below a given income threshold to increase mobility.

Establish a minimal UBI and increase EITC while reducing other safety net programs.

Last, but not least, businesses must adopt an America first agenda. Provide internships, jobs, and loan forgiveness and in turn we will reduce the company's tax burden. You want 0%, then earn it.

But more than likely we will continue down the same path with similar results.

I support a plan to pay students to get good grades at highschool. This would nudge (as the cool kids here say) present-oriented students into educating themselves and preparing them, intellectually and morally, for college or the trades.

This way they'd have enough money to bribe teachers to give them better grades.

The jobs guarantee program is very high on many MMT'ers list. After all, one goal of creating and spending central money is to have higher employment.
Workers willing and able is one part. Second is to not compete with local business, or to train for absorption into local business. Third is to allow the local communities lay out the jobs needed. Public landscaping and cleanup. Senior/disabled care. All sorts of unmet needs for local formally volunteer work. Security, school crossings. This should be an improvement over more simple welfare and unemployment payouts.

I believe it’s not fair to expect government to do everything, it’s important for us to do things on our own. I am doing Forex trading which is the best business and with broker like OctaFX, I find it ever easy in every way to do with wide range of features and facilities which counts from 0.1 pips to high leverage up to 1.500 while there are over 70 instruments to pick from and then there is smooth trading platform too, so all this is tremendous.

Re: But this assumes there is no crowd out from people who already have jobs.

That can be solved by a requiring a six month stint as unemployed (the normal length that UI benefits last) before someone signs up for such a job. The how-to-fire-them conundrum can be solved with a similar requirement.

Could it really be true that Vonnegut's Player Piano has never been discussed on this blog? We need an MR book club to take it up immediately.

I've mentioned it. Vonnegut was off by at least fifty years on his prognostications, and may yet be wrong altogether. This hasn't stopped loads of people from decrying the imminent end of work since then.

Only if they work.

If people are forced to do real work, they will choose the highest paying or personally rewarding option which probably is not the government. Government employees begin to realize they perform in the theater of the absurd.

These minimum wage jobs are very unproductive. If you raise their pay 100% will they produce 100% more? Not likely. But the liberals and socialists feel better about themselves. Good intentions do not provide good results. There is no such thing as magic except for politicians and academics.

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