What Good is a Federal Job Guarantee: Another Basic Income Plug

What good is a Federal job guarantee, when states are putting their entire populations under quarantine?

This article has a dual purpose.  One purpose is to call on Bernie Sanders to drop his Federal Job Guarantee agenda, an ill advised program that can only ever delay but never solve the problem of declining numbers of jobs as more and more jobs are automated, in favor of a Universal Basic Income, which he once believed was a noble long term goal.  Of course, Sanders is never going to read this.  This blog does not have a very large number of followers, and last time I checked, it was not getting a whole lot of traffic.  The other purpose is to review the pros and cons of a basic income once again, with the addition of some things I have not discussed in the past, because no one was ready to listen.


What good is a Federal job guarantee, when states are putting their entire populations under quarantine?  U.S. culture has changed substantially just over the last few weeks as something that was unthinkable only a month ago has actually happened.  As such it is time to discuss Universal Basic Income in a context that people would have laughed at a month ago.  There are a lot of proven benefits a basic income can bring.  One of those is acting as a financial safety net for people who lose their jobs or are otherwise unable to work for more than a week or two.  Financial advisors recommend that people save around six months worth of wages, to cover unexpected situations of this nature, but few people do.  Most middle class and wealthy people, who are actually able to afford to do this, make poor financial decisions that make saving impossible.  Poor people do not get paid enough to afford to save, despite the fact that most of them are forced to make wiser financial decisions by high prices on housing and other things.  Further, how can anyone expect individuals to save significant amounts of money when economists are telling businesses and individuals to spend, spend, spend!  The fact is, the U.S. economy is built on a fundamental assumption that nothing bad can ever happen and the way things are now is how they are always going to be.  Business experts recommend businesses to take on all available debt that they can spend on things that will bring in more profits than the interest on the debt.  Individuals are recommended by financial advisors to go into debt on homes, so long as they can afford the mortgage payments.  Banks and real estate agents conspire to get home buyers to spend the maximum amount they can afford on a home.  The problem with all of this is that the recommendation to businesses is based on the assumption that the profits a business can make in the future will always be equal to or larger than the profits that business can make now.  What happens if profits drop below the cost of interest?  The recommendation to and pressure on individuals to buy homes that are barely within the limits of their budgets assumes that those individuals will continue to have the same or greater income until the debt is paid off.  Again, what happens if a job is lost or an injury makes an income earner unable to bring in wages for even a few months?  What happens if a global pandemic of a fairly mild diseases causes mass panic and most people are quarantined by government mandate, many unable to work, for a few weeks or even months?

Up to now, the impact of poor financial advice to businesses and individuals has been largely ignored, because it is easy to ignore when only a small percentage of the population is affected by these tragic events at a time.  We can deliberately ignore the injustice of people losing jobs when businesses fail due to following incredibly poor financial advice, because it is only a few businesses here and there, and society can pick up the slack.  We can ignore the incredible harm unexpected loss of income brings, because again, it only happens to a very small percentage of the population at a time.  This makes it easy for law makers to ignore the fact that programs like a Federal Job Guarantee cannot help people with major disabilities, people who are not suited to the kind of work the government is offering, and people who's time is more valuable to society as a whole doing domestic work like raising children and caring for old and disabled people.  It is also easy to ignore the fact that the government can never truly guarantee jobs.  Consider a Federal Job Guarantee program now.  Just last week, 3.3 million Americans (that's 10% of the population) filed for unemployment.  How fast could a well funded, very robust Federal Job Guarantee program find work for 3.3 million people?  It would probably take over a year to place everyone, and it would cost far more than the $2 trillion being spent on "economic stimulus" to create enough government projects to employ that many people.  That 3.3 million is just the tip of the iceberg.  In another recent article, the math demonstrates that a Federal Job Guarantee would already cost around $10 trillion, without this additional 3.3 million people.  Another 3.3 million workers would increase the cost by another $500 billion.  What else could we do with $10 trillion a year?  Oh right, give every single American man, woman, and child $30,303 a year, no strings attached!  The cost of a Federal Job Guarantee capable of providing all of the jobs we "need" could instead be used to fund a ludicrous Universal Basic Income, averaging $76,363 per U.S. household (2.52 people per U.S. household, on average).  On top of all of that, most of the government projects the Federal Job Guarantee would provide labor for would be closed down right now, due to stay-at-home orders and quarantines.  A Federal Job Guarantee cannot provide the kind of jobs people need, when they have to stay at home.

A basic income is not bound to people being able to leave their homes.  A simple basic income, providing an average of $2,500 per U.S. household per month ($30,000 per year) would only cost $3.8 trillion.  We can do better though.  A basic income of $1,000 per adult per month and $500 per child per month (the most recent version of Yang's Freedom Dividend plan) would only cost around $3.3 trillion a year.  Perhaps a future article will demonstrate how this can be reduced to less than $500 billion with a simple recovery tax that guarantees everyone gets to keep some of the basic income at the same time as recovering part of it from people who have enough other income that they do not need it.

Universal Basic Income has a lot of serious benefits.  Among them are significantly lower crimes rates, rearrangement of jobs that significantly increases economic productivity, the creation of many new businesses, the creation of new jobs, the potential to lower or eliminate minimum wage for a freer market without oppressively low wages, elimination of poverty, easier access to higher education, lower drug use, economic stimulus, greater economic freedom, and a financial safety net in hard times.  And now, we add to that, an extension of the financial safety net, a financial safety net even during broad reaching events that affect everyone.  A Federal Job Guarantee can provide some of these benefits for a portion of the population, most of the time, but the idea that it is even a guarantee is wrong.  A basic income can serve everyone all of the time.  A Federal Job Guarantee can easily be overwhelmed by a fairly mild but highly contagious disease in less than a week.

What about the cons?  If the government gives people free money, they will just quit working, won't they?  Nope.  Many will quit their current jobs and get new ones.  This will be more like shuffling than anything else though.  A great many U.S. workers are stuck in jobs they do not like and are not good at.  A basic income will allow them to quit those jobs, opening their positions for people who do want them and are good at them.  The result will be a shuffling around of jobs that ultimately makes people happier and more productive.  Some will not return to work, but most of those will either start new businesses or move to more economically valuable unpaid work, like caring for dependents.  The evidence of this is strong, from a number of basic income experiments.  The evidence also shows that currently unemployed people are more likely to work when they have a basic income, if work is available, and if it is not, they are more likely to pursue education to become qualified in work that is available.  The fact is, the biggest con of a basic income is the cost, and in the long run the economic improvement and lower law enforcement and judicial costs associated with less crime will end up covering most or even all of that.  In addition, the cost of a basic income can be easily mitigated with a progressive recovery tax designed to recover most (but not all) of the basic income from those who already have high incomes.  In short, a well designed basic income program can actually provide a net gain in the long run.

The main point here is that basic income is a well tested and proven idea, and our current situation has made it very clear that our current welfare is insufficient and a Federal Job Guarantee would be an equally poor substitute.  With a basic income, the $2 trillion stimulus package would be largely unnecessary.  Yes, a Federal Job Guarantee with as-needed stimulus packages might be able to accomplish the same thing for the majority of those in need, but a system that requires massive government borrowing every time there is some minor global disaster is a poorly designed a system.  A well designed system would have been able to handle the economic and financial issues of the current situation without any additional action from Congress.  The fact that a stimulus package is deemed necessary is evidence of the weakness and fragility of our economy, including the labor portion.  Our current welfare system has utterly failed to handle the situation.  A Federal Job Guarantee would fail just as dramatically if not significantly more dramatically.  A basic income, however, would already be here, helping the people meet their needs, without any additional government intervention.  A basic income is the enlightened solution to our current problem and many future problems we are bound to encounter.  The only true weakness it has is that it cannot be implemented any faster than the recently passed stimulus bill.  Had we concerned ourselves just a little bit more with future, instead of deluding ourselves into believing we were too big and powerful to fall, perhaps we would already have one.  It is not too late to start though.  Yes, we will suffer for our refusal to look beyond the current moment, but we will recover, and with a basic income we will recover faster and be more resilient in the future.