Job Guarantee
The Job Guarantee The Job Guarantee is a policy proposal that aims to provide for full employment by means of having the government hiring the unemployed as an employer of last result. It is a buffer stock program, creating a buffer of employed people, providing a protection against inflation, without using unemployment as a means of moderating inflation. There is a fixed wage job available on demand to anyone desiring a job. This stock expands when private sector employment contracts, and shrinks when private sector employment expands. The hiring by the government supports aggregate demand by increasing spending, in a recession, acting as an automatic stabilizer; while in a boom, employment shrinks as workers follow better paying jobs, reducing stimulus and thus inflationary pressure, providing another automatic stabilizer. Full employment is maintained at all times, with only the public-private employment mix changing.
A historical precedent for the concept can be found in the Byzantine Empire. The capital, Constantinople, had an officer invented by Justinian I, the Quaesitor. This officer would be in charge of immigrants and visitors to the city. He inquired as to where they were from, their business int eh city, and whether they were employed. As a means of minimizing the number of begging and unemployed idle persons, anyone who could not prove they had a job, would be assigned a job at the city bakeries, baking the bread distributed as the Annona grain dole, or at the city’s market gardens. Also, like the WPA, of the New Deal, which was meant to serve as a job guarantee to a degree, the Byzantines also ran a variety of state or imperial workshops, such as the Fabricae arms and armor factories, perfume shops, brocade looms and public works.
In 1671, Gottfried Leibniz, the German polymath and co-discoverer of the Calculus, wrote “Society and Economy”, where a society for the promotion of the arts and sciences would run, workshops, so that artisans would not be “kept inn continual poverty and toil…After all, is not the entire purpose of Society to release he artisan from his misery?” These national workshops would prevent artisans from being “ involuntarily idle” and while having room and board and necessities covered. Employment at the workshop would be open to all, who could also leave to work for private masters. In this sense, it serves the function of a job guarantee.
In 1791, Thomas Paine wrote The Rights of Man, and in the second volume’s Fifth chapter, when discussing how to distribute the budget surplus of his proposed reforms of the British government, after laying out a pension, a child grant, education and an education subsidy (a welfare state), he proposes:
" First, To erect two or more buildings, or take some already erected, capable of containing at least six thousand persons, and to have in each of these places as many kinds of employment as can be contrived, so that every person who shall come may find something which he or she can do.
Secondly, To receive all who shall come, without enquirers who or what they are. The only condition to be, that for so much, or so many hours’ work, each person shall receive so many meal of wholesome food, and a warm lodging, at least as good as a barrack That a retain portion of what each person’s work shall be worth shall be reserved, and given to him or her, on their going away; and that each person shall stay as long or as short a time, or come as often as he choose, on these conditions."
This is, in essence the national workshop of Leibniz. “By establishing an asylum of this kind, such persons to whom temporary distress occur, would have an opportunity to recruit themselves, and be enabled to look out for better employment.” This is an almost perfect description of a job guarantee. “Employment, at all times, for the casual poor…” is his own summary.
In 1848, Louis Blanc, a member of the Provisional Government after the 1848 French Revolution, established “National Workshops” (Atelier National) to guarantee government funded jobs. “The provisional government of the French Republic undertakes to guarantee the existence of the workmen by work. It undertakes to guarantee work for every citizen.” Workers received certificates from their landlord, which was stamped by the police commissary of a district, and presented to the district mayor, who then issued a pass for the national works. They were able to go to the workshops and take an open position. Closure of these workshops in June led to the June Days revolt.
John Stuart Mill in his Principles of Political Economy, praised this program as a way to end unemployment, along with the promotion of cooperatives by Proudhonists in the provisional government. The efficiency, productivity and profitability of the cooperatives were discussed in detail. These proposals also implemented a right to work a guaranteed by the 1792 Declaration of the Rights of Man and of the Citzen.
Also in 1848, Friedrich Engels wrote the Principles of Communism, an early draft of the Communist Manifesto. Section 18 contains a list of policies, which are later modified as the ten point program laid out in chapter two of the Manifesto. Item (vii) lays out national workshops like Blanc’s, along with factories, ships, railroads and land colonization for full employment. “Democracy would be valueless to the proletariat if it were not immediately used as a means for…ensuring the livelihood of the proletariat.”
Soon after the Manifesto was released, the 1848 German Revolution occurred. Engels wrote a supplement “Demands of the Communist Party in Germany.” Demand 16 is: “Inauguration of national workshops. The State guarantees a livelihood to all workers and provides for those who are incapacitated for work.” These 1848 proposals are clearly in the same vein as the proposals for Leibniz and Paine, and are an early form of the Job Guarantee. It was a position held by both liberals such as Paine, JS Mill, and the French Revolutionaries, as well as socialists and communists like Blanc, Marx and Engels.
In the 1870s, Ferdinand LaSalle, one of the founders of the Social democratic Party of Germany revived the national workshop concept. By this time, after the Paris Commune, Marx and Engels had soured on the idea of a state connection with the workshops and proposed their being worker opened, but not state sponsored or funded.
As mentioned earlier, elements of the national workshops and job guarantee were seen in the New Deal with the Works Progress Administration (WPA) and Public Works Administration (PWA) and Civilian Conservation Corps (CCC). The WPA tried to supply one paid job for every family where the breadwinner had long term unemployment, preferring work relief over public assistance.
The concept of a Job Guarantee was resurrected by the Hyman Minksy in 1965. It was further pursued in the Humphrey-Hawkins Full Employment Act of 1978, which authorized Congress to create. “Reservoir of public employment” in the lower range of skill and pay to ensure employment if private enterprise was not meeting the goal of an unemployment rate of 3% for persons 20 or over, and 4% for ages 16-19, by 1983 and inflation of 4%, with a goal of 0% inflation by 1988.
Like other laws of the late 1970s (such as the Magnetic Fusion Energy Engineering Act of 1980 which lay out specific funding goals and technological goals and targets) were ignored by Reagan (who failed to attain the goals of a balanced trade balance, employment and inflation targets laid out in the law).
Bill Mitchell in his 1998 Job Guarantee has a built in inflation control mechanism, the Buffer Employment Ratio (BER), which manages wage demands (demand pull inflation). If the BER is high, wage demands will be low. If inflation rises, policy for tight fiscal and monetary policy would increase the BER, lessening inflationary pressures as workers move from inflating sectors to the fixed wage guaranteed sector. A non-accelerating inflation buffer employment ratio (NAIBER) would replace the conventional non-accelerating inflation rate of employment (NAIRU).
The wage paid by the guaranteed jobs would be adjusted to match productivity growth to avoid distortions caused by wage and productivity differentials opening up between the free market and guaranteed employment sectors.
It is my view that a jobs guarantee, and even something akin to the national workshops and WPA would be an excellent way to fulfill the long held goals of full employment, while providing economic and price level stabilization. With our recent experience of inflation, we have the understanding of a need for controlling inflation. While the dislocations of unemployment and the concomitant suffering to attain inflation stabilization, as we experienced in the aftermath of the Great Recession of 2008, and which pundits such as Lawrence Summers ghoulishly pushed for in the post 2020 COVID period. The ability to provide full employment while also controlling inflation is a preferable way of killing two birds with one stone.
The fact the job guarantee is also an automatic stabilizer that would moderate the depth and length of a recession without requiring the delays in formulation and implementation of stimulus, as we saw after 2008, where stimulus was often delayed until well past the time the recession itself had ended.
Like other automatic stabilizers, such as unemployment insurance (which would be effectively obviated in function by the job guarantee), and various other transfer payments (SNAP, TANF) which also automatically extend themselves when the economy slows; but also resolve themselves as the economy recovers, their operation is mostly automatic and does not face the legislative delays other public works and employment programs suffer from. This is a major advantage over conventional macroeconomic tools.