Wednesday, May 17, 2017

Lambert Strether — Toward a Jobs Guarantee at the Center for American Progress (!)

I had another topic lined up today, but this (hat tip alert reader ChrisAtRU) is so remarkable — and so necessary to frame contextualize immediately — I thought I should bring it your attention, dear readers. The headline is “Toward a Marshall Plan for America,” the authors are a gaggle of CAP luminaries with Neera Tanden leading and Rey Teixeira trailing, and the “Marshall Plan” indeed includes something called a “Jobs Guarantee.” Of course, I trust Clinton operatives like Tanden, and Third Way types like Teixeira, about as far as I can throw a concert grand piano. Nevertheless, one sign of an idea whose time has come is that sleazy opportunists and has-beens try to get out in front of it to seize credit[1] and stay relevant. So, modified rapture.
In this brief post, I’m going to look at the political context that drove CAP — taking Tanden, Teixeira, and the gaggle as a proxy for CAP — to consider a Jobs Guarantee (JG), briefly describe the nature and purpose of a JG, and conclude with some thoughts on how Tanden, Teixeira would screw the JG up, like the good liberals they are.
Naked Capitalism
Toward a Jobs Guarantee at the Center for American Progress (!)
Lambert Strether | Corrente


Andrew Anderson said...

Autonomy in the workplace has positive effects on well-being and job satisfaction, study finds

The ultimate autonomy is self employment. Thus our goal should be to allow people to work for themselves - which they largely could before family farms, family businesses and the commons were stolen from them.

Dan Lynch said...

CAP's JG proposal: "There are not nearly enough home care workers to aid the aged and disabled. Many working families with children under the age of 5 need access to affordable child care. Schools need teachers’ aides, and cities need EMTs."

I am not aware of any shortage of CNAs, but if there were a shortage, the appropriate market response would be to raise wages. Perhaps the reason CNA wages are low is because there is no shortage?

In addition, there are already several federal programs that fund home care workers to aid the aged and disabled. Medicaid, Medicare, etc.. There are also for-profit agencies that supply home care workers. One of the rules for the JG, which dates back to the rules for the New Deal programs, is that it must not duplicate existing government programs, nor should the JG compete with private enterprise. The JG home care proposal fails both tests.

JG child care would compete with for-profit child care. That's a no-no. Now, if I were king there would be universal public child care, but in the meantime if you are going to try to save capitalism from itself, then you have to play by the rules of capitalism.

Do schools want temporary aides? I wouldn't, if I were a teacher. Some states require that aides be certified. In Finland, the majority of aides have at least a bachelor's degree and some have masters, in fact Finland has such a thing as a "school assistant" degree. All require a criminal background check, which will eliminate many JG'ers. Ditto on the criminal background check for child care workers and home care workers.

If you are having a heart attack, would you rather be treated by a professional EMT, or by a minimum wage temp?

Are home care, child care, education, and EMTs only needed during recessions, or do we need them on a regular basis? Because who is going to take care of the sick, the elderly, and the children during booms when the JG pool shrinks?

CAP's proposal fails to budget for the cost of materials and overhead. CAP fails to consider appropriate jobs for skilled or educated workers who find themselves unemployed.

My counterproposal: if schools want teacher's aides but can't afford to hire them, then INCREASE SCHOOL FUNDING. If existing health programs don't pay for enough home care workers, then INCREASE HEALTH CARE FUNDING and coverage. If the working poor can't afford child care, then RAISE THE MINIMUM WAGE and/or do like Russia and offer generous paid maternity leave.

Yes, there are many things that need doing, but they need doing on a regular basis, and should be funded on a regular basis, and should be staffed with permanent, skilled staff.

Neil Wilson said...

"Yes, there are many things that need doing, but they need doing on a regular basis, and should be funded on a regular basis, and should be staffed with permanent, skilled staff."

There is what needs doing, and what wants doing. The Job Guarantee is designed to pick up those people that are currently not required by the rest of the system and adds labour resources to the latter category only. The rest of the system is the public purpose that needs doing and the private activity that is worth doing.

Only when all that is served can we turn to those things that want doing - the most important of which is ensuring that the condition for a sustainable social system is fulfilled.

That condition is that everybody has something to do with their day that is of service to others and that others consider to be of service.

Currently neither the very rich, nor the very poor can fulfil that condition.

Ralph Musgrave said...

Dan says, “One of the rules for the JG, which dates back to the rules for the New Deal programs, is that it must not duplicate existing government programs, nor should the JG compete with private enterprise.”

I suggest it’s plain impossible to prove whether or to what extent a JG scheme competes with existing employers. The WPA erected thousands of buildings and bridges. You could argue that that was “competition” and big time. Second, that’s irrelevant anyway, because it does not make sense to set up JG in WPA form: i.e. have specially set up projects (building roads, bridges, etc). I.e. it’s better to subsidise JG people into work with EXISTING employers. I set out reasons here:

Next Dan says, “Do schools want temporary aides? I wouldn't, if I were a teacher. Some states require that aides be certified.”

First Dan seems to be going along with the above “subsidise into work with existing employers model”. Second, teachers assistants (as they’re called in the UK) obviously tend not to be as well qualified as full time established teachers. But no harm in hiring an assistant for a few weeks or months surely, even if they’re not very well qualified, surely?

Next, Dan says “My counterproposal: if schools want teacher's aides but can't afford to hire them, then INCREASE SCHOOL FUNDING.” Well obviously that’s possible (i.e. a net increase in public spending or AD is possible) given very high unemployment levels (i.e. well above Bill Mitchell’s “inflation barrier” level. But the fact that conventional stimulus deals with the problem there (at least in principle) proves that that is not really the area where JG comes into its own. I.e. the unique job that JG can (hopefully) do is to take unemployment below IB. Ergo I suggest that subsidising JG people into temporary jobs with existing employers does make sense.

Dan Lynch said...

@Ralph, your proposal to create jobs by subsidizing existing employers has been tried, both in the UK and the US (i.e., the Georgia Works program), as well as indirect employer subsidies for low wage workers like SNAP and EITC. And let us not forget the ultimate employer-based job subsidy program, the UK's Speenhamland program. Those employer subsidies benefit the business class, not the working class. There is no evidence or reason to believe that they create new jobs, which requires increased aggregate demand that can only come through increased deficit spending or increased private debt. There is little public support for subsidizing businesses or even private non-profits.

I have a teaching degree and did a stint as a student teacher (an unpaid teacher-in-training). The only use I would have had for an assistant would have been to work with special needs students, and indeed that is what TA's are often assigned to do. The other thing TA's typically do is grade tests, but unlike most teachers I enjoyed grading tests and had no desire to delegate that task. What harm would a JG TA do? It would require the already overworked teacher to spend time supervising and training the JG. Now if the TA were a permanent position (and if the teacher's job were also permanent, which is increasingly not the case in the U.S.) and the individual had an aptitude for the work and desired to make a career out it, then it might be worthwhile to train them.

The original promise of the ELR was "take them as they are, create jobs that match their skills." Yet when pressed for details, the various ELR proposals actually amount to "take our JG jobs as they are, lower your career goals to match our sorry offerings. If you don't like it there must be something wrong with you because our economic model could not possibly be flawed."

Mind you, I do support direct job creation programs, but unlike ivory tower JG advocates I acknowledge that both the politics and the logistics of such programs are very difficult. To be sure, the alternatives -- like functional finance budgeting, the various BIG proposals, or a planned command economy -- have difficulties, too. If it were easy it would have happened a long time ago and we would not be having this discussion.

Ralph Musgrave said...

Dan, A form of “subsidising existing employers” has been running for several years in the UK: the so called “Work Programme”.

As for reasons why that might be expected to work, the reason is thus: it’s the less skilled or less valuable employees who have difficulty finding work. I.e. the lower is unemployment, the more employers give up on the less skilled labour available from the ranks of the unemployed, and instead try to bid up the price of more productive / skilled labour. That equals inflation.

Ergo, if one subsidises the low paid / less skilled, it ought to be possible to raise demand without too much inflation kicking in.

One option there is to simply subsidise ALL the low paid. I’m fairly sure Martin Baily and James Tobin advocated that sort of thing. See p.211 here:

I prefer being more selective, which is more “JG like”. That involves subsidising JUST the people who would otherwise be unemployed. Of course it’s not possible to distinguish in any sort of perfect fashion between those who would otherwise have been unemployed and those who would not. I.e. a proportion of employment subsidies is always wasted subsidising those who would have been employed anyway. But that’s par for the course with employment subsidies, including traditional JG.

Tom Hickey said...

I big problem in the US is age-discrimination. Firms prefer to hire the young, so very often not-young but not "older" people that loos their jobs don't get rehired and the longer they are out of work, the less likely it becomes they will be hired.

When they run out of unemployment benefits, the choice is generally becoming underemployed.

This is wasteful.

Neil Wilson said...

"take our JG jobs as they are, lower your career goals to match our sorry offerings"

Not sure where you got that from Dan. You can pursue your career as you see fit under a Job Guarantee - at the living wage. You can work at as high a level as you want pursuing the personal goals you want.

Because by definition other than the Job Guarantee bid your market value is zero. Otherwise you wouldn't be on the Job Guarantee.

The provision of jobs on the Job Guarantee is no more difficult than the provision of jobs by private operations. It's only the hire parameters that are different - wages are paid at an equal wage level and the job matches the person rather than the other way around.

The majority of jobs will be low skill level jobs provided for people because that is what the majority demand will be. Most other people will get a job in the main private or public sectors.

Unknown said...


Could you give an example of the JG jobs you propose - concrete examples - no hand waving allowed. Matt Bruenig and Yves Smith had related issues with the CAP proposal see Matt Bruenig: More Job Guarantee Muddle

Perhaps Ralph's idea of counter cyclical employer subsidies along with a more robust permanent public sector (jobs that should not (ever?) be privatized) could have legs, An example of jobs that it could well work with are jobs like farm labor that are currently primarily manned by illegal immigrants (being illegal depresses wages) - and which would be snapped up by legal workers if the wages were higher - example of such an effect - How this garlic farm went from a labor shortage to over 150 people on its applicant wait list

The labor shortage came around, because ICE has been targeting such labor in California. This type of work would be ideally suited for a counter-cyclical wage subsidy. There could be other such jobs - which would likely be automated if not for the availability of cheap illegal immigrants and absent a wage subsidy.

Tom Hickey said...

The conventional approach of fiscal policy is to create jobs by boosting private investment and growth. This approach is backward, says Research Associate Pavlina R. Tcherneva. Policy must begin by fixing the unemployment situation because growth is a byproduct of strong employment—not the other way around. Tcherneva proposes a bottom-up approach based on community programs that can be implemented at all phases of the business cycle; that is, a grass-roots job-guarantee program run by the nonprofit sector (with participation by the social entrepreneurial sector) but financed by the government. A job-guarantee program would lead to full employment over the long run and address an outstanding fault of modern market economies.

The Nonprofit Model for Implementing a Job Guarantee (Policy Note 2012/2)

The job guarantee is a proposal that provides greater macroeconomic stability and secures a fundamental human right. Despite the economic and moral merits of this policy, often the program is rejected because of concerns about its administration. How would the program be implemented? Who will create the jobs? Can work be found for every unemployed individual who wishes to work? This policy note addresses these concerns by elaborating on a proposal for the United States that would run the job guarantee through the social enterprise sector, which includes traditional nonprofit organizations and emerging nonprofit social entrepreneurial ventures.

The Social Enterprise Model for a Job Guarantee in the United States (POLICY NOTE 2014/1)

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Unknown said...


Again a lot of hand waving by Tcherneva, couched in pretty words. But no concrete examples of what these types of jobs would be, and why these jobs would not be needed on an ongoing basis, but only needed counter cyclically - and why these types of jobs would be available in a sufficiently large quantity.

Tom Hickey said...

I think the next step to take is to prepare a bill with a view toward getting some congressperson to submit it. This would force dealing with specifics.

Dan Lynch said...

H.R. 1000 has been submitted numerous times, and of course never went anywhere.

full text of H.R. 1000

-- "paid for" by a financial transaction tax, so it would be deficit-neutral, though at least redistributive.
-- during recessions the JG trust fund could borrow money from the Federal Reserve, but would have to pay it back later. Imagine all the political drama that would occur because "the JG trust fund is running out of money and your grandchildren will have to pay off its debt."
-- Labor Dept would issue JG grants to state & local govts. Total grants would be finite depending on size of trust fund. Page 22-23 says grant priority based on local unemployment rate & poverty rate.
-- acceptable grant programs would include building or maintaining public infrastructure, child care, health care, education, demolishing vacant buildings, and food banks.
-- 80% of grant must be for wages, which rules out any sort of infrastructure work or technical work unless local govt. supplies materials and equipment.
-- employer must retain each JG worker for a minimum of 1 year.
-- must pay prevailing wages for each occupation rather than minimum wage. YEA !!!!
-- JG workers may not replace regular workers. Laid off workers must be called back to work prior to giving the job to a JG. However a loophole on page 18 allows employers to replace regular workers with a JG simply by leaving the position vacant for at least one month. Also it would simply be impossible to enforce in practice, and employers would have an incentive to cheat.
-- only people who have been unemployed for > 60 days are eligible. While it doesn't come out and say it, that implies that self-employed people would never be eligible to work in a JG.
-- JG workers would be required to continue looking for work and accept job offers for "suitable work" whatever in hell that means. If the individual refuses the outside job offer he would be fired from the JG. Some job guarantee, huh?

-- like the WPA, H.R.1000 delegates the actual JG administration to state and local govt. That leaves us still unsure what kind of jobs would be created.
-- while H.R.1000 does not specifically require local govt. to kick in funds, the 80% wages rule dictates that local govt. will have to kick in a lot for anything other than service jobs.
-- in a recession state & local govt revenues fall and discretionary projects are cut. This was a major problem for the WPA, whose job creation was limited by cash-strapped state & local govts. No reason to believe H.R.1000 would be different in that respect.

While not perfect, H.R.1000 is fairly well thought out. Basically it is Nixonian revenue sharing with an 80% wages stipulation. In some ways H.R. 1000 is better than a JG, like paying prevailing wages. In other ways it is worse, like the limits on eligibility and funding. The 80% wages rule would favor service jobs, making it less appealing to many men.