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"METHANE" Can Kill You: Lessons in Crisis Management

Published by Anonymous (not verified) on Sat, 15/06/2019 - 1:48am in

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Procedures are supposed to help us act quickly in case of an emergency—but they can actually slow us down. Some lessons on the two-year anniversary of the Grenfell Tower tragedy.

How to debate universal basic income

Published by Anonymous (not verified) on Sun, 09/06/2019 - 11:00pm in

Daron Acemoglu has a piece at Project Syndicate arguing that basic income is a bad policy. His argument, in a nutshell, is that a truly universal basic income (UBI) would be prohibitively expensive, and that raising additional taxes to pay it “would impose massive distortionary costs on the economy”. The alternative, to cut all existing social programs for the sake of UBI, would be “a terrible idea”, since these programs are targeting those that are particularly vulnerable or needy. He argues that the political effects of a UBI would be bad – a UBI would “keep people at home, distracted, and otherwise pacified”, whereas “we need to rejuvenate democratic politics, boost civic involvement, and seek collective solutions”. For Acemoglu, the top priorities in the USA should be “universal health care, more generous unemployment benefits, better-designed retraining programs, and an expanded earned income tax credit (EITC)”, as well as higher minimum wages.

I share Acemoglu’s view that “One should always be wary of simple solutions to complex problems, and universal basic income is no exception.” In a paper I wrote last year (alas, in Dutch, and I haven’t had the time to translate it, but perhaps google translate can help us a little), I’ve argued that the debate on universal basic income is confused and confusing, and will not be getting us far, because too many papers/interventions are not clear about their assumptions, are not spelling out the goals (e.g. is the primary aim poverty reduction or creating freedom from the need to submit to the labour market for survival or something else), and are not giving the details of the package deal.

The detail of the package deal should include information on the level of the universal basic income (at the poverty level, or higher or lower?), who will receive it (only citizens or everyone who legally resides on the territory?), the age (what do children get?), and, importantly, how it will be funded. If the funding of the UBI occurs via cuts of existing social programs, those need to be spelled out. Finally, one needs to consider other policy options that are trying to reach the same policy goals, as well as other societal needs, such as providing better funding for existing underfunded public goods, such as, possibly, the judicial system, the police, or the public universities.

My view on the basic income debate is that too many people in this debate have already made up their minds whether they are in favor or against, and as a consequence there is not enough participation of people who do not have a strong conviction (for or against) but who are willing to take the idea seriously, and study it with an open mind. Since most people who write on basic income are arguing in favor, this closed-minded-activist mode is most visible among its advocates. But this piece by Acemoglu shows that my plea for a more nuanced, more detailed, and more comparative analysis also holds for those who attack basic income. Granted, on the comparative part he does say which other policies he favors, which is a good thing since it invites basic income advocates (in the USA) to argue why they believe a UBI is better than the social changes that Acemoglu advocates. It could also allow others to ask why none of the social programs that they would prioritize, such as free high-quality child care and parental leave, are on the list of priorities.

Acemoglu ignores the freedom-enhancing effects that UBI will have (even a small basic income). He ignores that it may empower workers relative to employers, since a UBI improves the quality of the exit options of the workers. His arguments that basic income would make people politically passive are exactly the opposite from the assumptions that basic income advocates make, and as far as I can tell these are things one cannot predict, either way. He assumes that holding a job is in itself a good thing (which arguably depends on whether it is good/decent work or not). The implicit account of well-being he is using seems very “productivist“, and does not take into account that there is more to life than earning a living on the market, and that some dimensions of well-being may be positively correlated with not having to take whatever job one can find. Moreover, his claim that raising the taxes for a basic income would be prohibitively expensive is just as unproven as the claim of some basic income advocates that a basic income can be funded (often these claims are rather simplistic calculations based on the aggregate availability of money/the size of GDP, not taking the disincentive effects of increased taxation into account, nor whether increasing taxation is politically feasible in a globalised economy; this is why I think one of the first tasks basic income advocates should now take on their plate is to propose how they would fund a basic income, and why they believe that their proposal for funding is politically feasible, and why those collected funds should not be spend on something else – for example, why ecological taxes should be spend on a UBI rather than on financing climate mitigation & adaptation funds).

How, then, should we debate basic income? Arguments for or against (or, simply, analyses) a basic income should:
1. make explicit what the goals are that a basic income is supposed to meet or what problems one hopes it will solve, and what values are taken to be at stake and how those are values are understood/conceptualized;
2. be careful about the (implicit) empirical assumptions that are made, and how much evidence we have that these will occur in the context for which we are writing (for example, we can’t simply assume that behavioral effects in context A will also occur in a different institutional or cultural or historical context);
3. give the details of the basic income (level, scope, how it will be funded, which social programs will be cut, etc.);
4. make a comparison with other policy options that serve the same goals/values.
And, of course, since money can be spent only once, why those goals are more urgent than other goals that require money.

Of course, Acemoglu’s piece is an Op-Ed and not a scientific paper, and the above requirements are difficult to examine all in a short piece. But the general point stands: he has made up his mind, and my point is that one can only do this if one has well-thought-trough answers to the above issues, and several of those are lacking in his piece.

An Experiment with Basic Income

Published by Anonymous (not verified) on Tue, 07/05/2019 - 11:34pm in


In 1795, the parish of Speen, in Berkshire, England, embarked on a radical new system of poor relief. Due to the ruinous French wars and a series of poor harvests, grain prices were rising sharply. As bread was the staple food of the poor, rising grain prices increased poverty and caused unrest. Concerned by the possibility of riots, the parish decided to provide subsistence-level income support to the working poor. The amounts paid were anchored to the price of bread. Each member of a family qualified for a payment, so the larger the family, the more they received. In effect, it was a system of in-work benefits.

Subsistence-level income support already existed for the non-working poor. The Poor Laws, first introduced in Elizabethan times, distinguished between different categories of “poor” and treated them differently. At the time that the Speenhamland system was introduced, the old, inflrm and children were placed in poorhouses, where they were cared for and were not expected to work (this was known as “indoor relief”), while the able-bodied poor were expected to work for their benefits (“outdoor relief”). There were a variety of measures forcing the unemployed to work, of which probably the most hated – and economically the most disastrous – was the roundsman system. Unemployed labourers (“roundsmen”) were “sold” to farmers at below market rates, and the parish topped up the wages to subsistence level. It was in effect a job guarantee.

But the Speenhamland system did not make working a condition of benefit eligibility. Its combination of existing out-of-work relief – with or without job guarantee - with a new system of in-work benefits amounted to a basic income. The level of relief was the same whether or not family members were working, and because of concerns that people should not be discouraged from working, it did not taper off as wages rose.

And it worked. The Speenhamland system did relieve poverty and malnutrition, and prevent riots – which was its purpose. Because of this it was widely copied, and Pitt the Younger even tried to write it into national legislation. But it was not without its problems and its critics.

The great economist David Ricardo thought that the Speenhamland system reduced the supply of agricultural labour. On the face of it, this seems logical. The fact that income support was provided at the same level to both the working and the non-working poor created a disincentive to work. Or rather – since parishes found or created work for the benefit-receiving unemployed – it created a disincentive to look for work. If people opted to do the easy parish “make-work” rather than sell their labour to farms, there would indeed be shortages of agricultural labour. But I find this odd. Some people no doubt did take the easy option, but the Speenhamland poor relief was hardly generous, and it was not tapered, so getting a real job actually increased family incomes. The “benefits trap” of today, where marginal tax rates due to benefit withdrawal are so high it is not worth finding a job, did not exist. Therefore I question whether the Speenhamland system was really primarily responsible for reducing the supply of labour. I think the problem was something else.

The Poor Laws were not a consistent system. Poor relief was the responsibility of individual parishes, and coverage was therefore patchy and inconsistent. “Settlement laws” preventing people from moving from parish to parish in search of better benefits (today we call this “benefit tourism”) had the unfortunate consequence of preventing people moving from parish to parish in search of work, causing both unemployment and labour shortages. The practice of finding people work within the parish, either by auctioning out idle labour at below market rates or by assigning people to community tasks, meant that real jobs in other parishes went unfilled. And the drain of people to the factories from the land as the Industrial Revolution progressed caused shortages of agricultural labour. In my view the Speenhamland system of income support was unfairly blamed for agricultural labour shortages that were due to labour market rigidities, local job guarantees and technological change.

Ricardo also thought that the Speenhamland system depressed wages. But Deirdre McCloskey points out that this is illogical. If the Speenhamland system reduced labour supply as Ricardo thought – and McCloskey’s analysis supports this - then it should have increased wages. If wages were falling, therefore, this must have been due to other factors.

There is no doubt that the “roundsman” system depressed agricultural wages. Farmers had an incentive to use roundsmen in preference to free labourers because they could pay far below subsistence wages in the certain knowledge that the parish would top up the wages. Had the roundsman system been universally applied, eventually all agricultural labourers would have become roundsmen and wages would have been persistently below subsistence level. Admittedly this might have helped reduce the price of bread, thus reducing the benefits bill, but it would still not have been a sustainable system. Those in favour of a modern-day job guarantee might want to bear this in mind.

There was also a considerable problem with a system of income support in a fragmented parish structure. As income support was funded by a tax on land ownership (the “rates”), the income support system itself should have had no effect on wages, since yeomen farmers who paid agricultural wages were also ratepayers: if they paid lower wages, they paid higher rates. But if a farmer employed people from neighbouring parishes, the burden of income support fell not on him but on ratepayers in those workers’ home parishes. Settlement laws prevented the unemployed from moving from one parish to another in search of work, but there was no law preventing employers recruiting from neighbouring parishes. The effect of this was that landowners in one parish paid below subsistence wages to workers from neighbouring parishes, leaving the ratepayers of those parishes to top up the wages.

But there was a much more serious problem with land tax funding of poor relief during the Industrial Revolution. Agriculture used a relatively small number of people but a large amount of land, and therefore incurred most of the land tax. In contrast, industrial production used a large amount of people but a relatively small amount of land, and was therefore taxed much more lightly. Industrialists could therefore bid down wages of factory workers in the knowledge that the parishes would top them up: there would be a small cost to industrialists in increased rates, but the major burden would be borne by agricultural landowners. It amounted to a massive wealth transfer from agricultural landowners to industrialists. No wonder the Speenhamland system was hated by agricultural ratepayers.

So it is fair to say that Ricardo was right: the Speenhamland system did depress wages, though not because income support itself has that effect. The problem was the way it was funded.

Ricardo’s close friend Thomas Malthus criticised the Speenhamland system for its effect on population. As the amount of benefit received was determined by family size, he considered that it encouraged the poor to breed. The population of England did indeed grow very fast in the early 19th Century, but I find it hard to believe that the Speenhamland system was primarily responsible for this. There was actually an incentive to have large families even in areas that didn’t have the Speenhamland system – and that was the growing demand for child labour. Factories and mines employed children because they could pay them less than adults and because, being small, they could do tasks that adults could not – often the most dangerous tasks, such as clearing threads from under working looms. A family with several children could increase its income considerably by sending the children out to work. So Malthus was right – there was indeed an incentive for the poor to breed, and at the margin the lack of a taper on Speenhamland’s income support contributed to this. But it really can’t be regarded as the primary cause of England’s rapid population growth during the Industrial Revolution. Once again, the Speenhamland system was blamed for problems not really of its making.

But the worst criticism of the Speenhamland system, and the primary reason for its eventual abolition, was not its economic effects but its morality. And the moral criticisms still resonate today. Jeremy Bentham’s insistence that it must always be worthwhile to work, and that out-of-work benefits should therefore be difficult to obtain and set at levels below subsistence wages, has uncomfortable similarities to the calls from modern-day politicians that “work must pay”. The prevalent view of the time that working was a moral duty, and that the unemployed were morally defective, is echoed in the Conservative party’s glorification of “hard-working families” and the popular vilification of benefit claimants as “scroungers and shirkers”. And the idea that the unemployed must be forced to work to earn their benefits, even if that work is pointless and demeaning – and even if it disrupts the labour market - continues today in “workfare” schemes that force the unemployed to take basic unskilled jobs, however unsuitable for them, or lose benefits.

The Speenhamland system was a genuine attempt to ease the problems of poverty and unemployment at a time of depression and rapid technological change. It is tragic that it foundered not because it did not work, but because of inappropriate financing coupled with moral judgements about the virtue of work.

And there is an awful warning for the present day. The Speenhamland system was replaced by one of the cruellest forms of “welfare” ever devised. The Poor Law Amendment of 1834 abolished “outdoor relief” and forced the unemployed into workhouses. Conditions in workhouses were deliberately harsh, to deter people from going into them: entry to a workhouse was for many a death sentence. Married couples were separated from each other and from their children, sometimes never to meet again. Work was tedious and routine, such as unpicking rope (“picking oakum”) or breaking stones. And inmates were abused and starved: in one workhouse, at Andover, inmates were so hungry they resorted to chewing the bones they had been set to grind down for fertilizer. But it is worth remembering that harsh though the workhouses were, conditions for the working poor outside workhouses were often worse. The threat of the workhouse enabled employers to pay starvation wages in the certain knowledge that workers would accept them even though there was no form of income support. Writers such as Dickens exposed the appalling conditions in which the poor were living both inside and outside workhouses. But they were deliberately created by well-meaning people convinced of the virtue of work, any work, however demeaning and however poorly paid.

We have come a long way since the days of Dickens. Let us not go back there again.

Related reading:

A very British disease
In the shadow of Speenhamland: Social policy and the Old Poor Law - Block & Somers
Nixon's Basic Income plan - Rutger Bregman

This post was first published on Pieria in January 2014.

Image is "Poverty and Wealth", by William Frith R.A., 1888.  Courtesy of VictorianWeb.

Strategies for Introverts: Easing Career Pain Points

Published by Anonymous (not verified) on Tue, 30/04/2019 - 11:20am in

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A career consultant's tips for introverts to rock the job interview, and the job.

All Work and No Play

Published by Anonymous (not verified) on Thu, 18/04/2019 - 5:00pm in

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Kasia Babis on burnout culture.

Meritocracy is Stupid and Evil and Must Die

Published by Anonymous (not verified) on Wed, 10/04/2019 - 11:43pm in

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You need three things to make it in America: talent, hard work and good luck.

What a stupid system.

Focus first on the last one, good luck: what we call “meritocracy” is actually “two-thirds meritocracy.” Odds are you’ve heard of a band or writer or artist or entrepreneur who worked hard and produced great work but failed because they were too ahead of their time, or never met the right gatekeeper, or the market tanked. This era of technological disruption probably makes the concept personal for you or someone you know; you could be the best damn factory worker in the world but if they move your job to Mexico you’re screwed through no fault of your own.

America’s pseudo-meritocracy purports to issue rewards (grades, diplomas, contacts, jobs, wages, social programs) based on conventionally accepted standards of worthiness (studiousness, obedience, affability, industriousness, cleverness, likeability). Setting aside for the moment the innate arbitrariness of those metrics, whether or not you measure up is based in large part on chance.

Any system that ranks its participants on luck is by definition unfair.

It’s hard to be studious if your home life is chaotic or violent, or you have no home at all. Whether people like you is a function of hard-wired genetically-inherited personality traits and upbringing, both the result of utter happenstance—who you get as parents.

Even ardent defenders of meritocracism concede that it only rewards the values, habits and personality traits the system wants to encourage. Arthur Brooks, president of the right-wing American Enterprise Institute, wrote in the Washington Post in 2011:

“We are not a perfect opportunity society in the United States. But if we want to approach that ideal, we must define fairness as meritocracy, embrace a system that rewards merit, and work tirelessly for true equal opportunity. The system that makes this possible, of course, is free enterprise. When I work harder or longer hours in the free-enterprise system, I am generally paid more than if I work less in the same job. Investments in my education translate into market rewards. Clever ideas usually garner more rewards than bad ones, as judged not by a Politburo, but by citizens in the marketplace.” [emphases mine]

Work hard or long, Brooks argues, and you’ll probably get paid more. Be smart or clever, he says, and you’re likelier than not to do well. Problem is, probably here is a synonym for maybe. Which means, maybe not. A system whose sales pitch is “work hard and you may (or may not) do well” cannot be fair. A teacher who told his students “do ‘A’ work and you might get an ‘A’ grade” should be fired.

As game theory experiments show, unfair incentive structures are ineffective because not everyone is optimistic. In a system with winners and losers some people reach for the brass ring because they think they might get win. Pessimists do not. They weigh the cost of effort and decide not to bother for there mere chance at success. In our economy this phenomenon is evidenced by the country’s falling worker participation rate (mostly because lower-skilled male workers know they can’t earn enough at a job) and the millions of citizens who choose to collect tiny government disability checks, effectively opting out of the workforce for life rather than look for a job.

The loose connection between work/talent and reward in meritocracy is problematic enough. What about the underlying assumptions that people who are talented and work hard (assuming those metrics can be objectively defined!) deserve higher salaries and social status than the untalented and the lazy?

The Protestant work ethic will serve America poorly in this newish century. “All premodern societies believed that wealth comes from God, or the gods. It is given. Food grows,” the British theologian Jonathan Clatworthy wrote in 2014. “Capitalism overturns all this. Capitalism presupposes shortage, while at the same time creating shortage. Its fundamental beliefs come from rich people in divided societies, for whom it seems that nature does not provide enough to meet our needs.”

But the myth of scarcity is no longer credible now that productivity is so high.

Robotics, algorithms, AR/VR and all manner of automation are replacing flesh-and-blood humans. Automation will eliminate 10% of all jobs in the U.S. in 2019 alone, while adding 3% for a net loss of 7%, according to Forrester Research. The numbers are shocking: experts predict that anywhere between a third to half of all jobs in the U.S. will be eliminated by automation by 2025. If we’re smart we’ll start paying people not to work. We can easily afford to care for everyone; we simply need to prioritize people and to stop denegrating nonworkers as lazy. Otherwise we will face soaring crime and political unrest.

In any case, who’s to say that hardworking people are better than the indolent? People who work long and hard may be good for their employers’ bottom lines but they’re less engaged parents, don’t have time for civic involvement, don’t have bandwidth to be as creative or productive in other aspects of life.

What Americans call meritocracy has worked great for me. I’m white, male, able-bodied, tall and intelligent enough to get into Mensa. I grew up poor, studied and worked hard and made a career for myself that I love. The American Dream personified! But I didn’t do well because I’m a “good” person. Being born into a society’s dominant race and gender and in good health are simply a matter of luck. IQ is half genetics, half environmental stuff like nutrition, education and parenting. My mom taught and yelled and hit me into my work ethic.

Even a winner can see the system is unjust. Why should other people get paid less than me, merely because they didn’t luck into the same demographics? Because their parents didn’t bully them into working a lot? Because they don’t have a knack for drawing or playing basketball or writing code or whatever else the economy happens to be rewarding when they happen to be in the workforce?

Meritocracy is a toxic fiction that props up the fundamental evil of capitalism: the assumption that anyone deserves more anything than anyone else. Meritocracy must die.

(Ted Rall, the cartoonist, columnist and graphic novelist, is the author of “Francis: The People’s Pope.” You can support Ted’s hard-hitting political cartoons and columns and see his work first by sponsoring his work on Patreon.)

 

Can You Adapt Successfully to Living in a New Country?

Published by Anonymous (not verified) on Fri, 05/04/2019 - 7:56am in

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A new study identifies factors that may predict how well people adjust to living in a new country—and which countries are easier to adjust to.

Visual Thinking Often Involves Touch

Published by Anonymous (not verified) on Thu, 04/04/2019 - 8:12am in

Visual descriptions are rarely just visual.

When Is It Time to Say Goodbye to a Project?

Published by Anonymous (not verified) on Tue, 26/03/2019 - 10:41pm in

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I recently had to abandon a book project. What did I learn from the experience? Quite a bit, actually.

A Universal Job Guarantee: An End To The Neoliberal Employment Landscape?

Published by Anonymous (not verified) on Mon, 18/03/2019 - 4:00am in

Keeping with this week’s MMT Lens theme our regular Sunday reblog is by Edward Miller who is a senior campaigner for economic fairness at GETUP in Australia.

In this detailed analysis he discusses the Job Guarantee and its transformative potential and compares it to the increasingly popular Universal Basic Income proposals which will in effect offer no challenge to capitalism thus entrenching poverty and keeping the current economic power structures in place.

Originally posted on the Green Agenda website here

At any given moment there are an extraordinary number of people looking to participate and contribute to our society in ways that the private job market ignores or excludes. In this article, Senior Campaigner for Economic Fairness at GetUp Edward Miller explores the merits of a Universal Job Guarantee for confronting the perils of the neoliberal employment landscape.

At any given moment there are an extraordinary number of people looking to participate and contribute to our society in ways that the private job market ignores or excludes. Currently 700,000 people are actively looking for a job and unable to find one in a market that has only 200,000 vacancies [1]. A further one million Australians want to work more paid hours than they’re being offered [2]. And beyond that millions of Australians engage in daily work that isn’t rewarded by the market or counted in measures of output – care for families and homes, care for our land, and volunteer work to support those who have fallen through the cracks.

These are all groups of people who want to work. They want to contribute to their communities, and participate in something bigger than themselves.

Of course, some may be shackled to the labour market by a lack of alternative pathways to financial independence in a capitalist society. Others are doubtless victims of a social welfare system that stigmatises the acceptance of support so severely that people would rather the indignity of poor wages and conditions, than the perceived indignity of accepting income support. It’s even possible that we’re so deeply entrenched in neoliberal attitudes that we’ve come to see our own value through the lens of what we produce, rather than our humanity.

These are all groups of people who want to work. They want to contribute to their communities, and participate in something bigger than themselves.

But there’s also a simpler explanation, and it is the one often given by unwaged people when you ask them. At its best, work offers something far more than money or financial security. It provides social connection, a sense of purpose and contribution, an opportunity to develop new skills or discover hidden interests. Countless studies tell us that being in secure, structured work, at a living wage, creates measurable improvements in people’s physical and psychological wellbeing [3]. In other words, access to properly remunerated, meaningful work is a tremendously important pillar of individual wellbeing and social inclusion.

Countless studies tell us that being in secure, structured work, at a living wage, creates measurable improvements in people’s physical and psychological wellbeing.

A Job Guarantee is not a new idea. An individual right to work was the first proposal in FDR’s second bill of rights [4], and it was one of the primary demands in the Freedom Budget compiled by civil rights leaders like Martin Luther King and Bayard Rustin [5]. Since that time, decades of research have gone into the theoretical underpinnings and program design by economists such as Mitchell [6], Mosler [7], Wray [8], Tcherneva [9], and Kelton [10]. And we’ve seen a number of limited Job Guarantee-style policies implemented everywhere from India [11], Argentina [12], Australia [13], and the United States [14]. Today, the idea is resurgent amongst leftist movements, with Bernie Sanders bringing legislation before the US Senate [15], and GetUp in Australia making it a core part of their Future to Fight For agenda [16].

It is not possible to summarise here the entire body of literature, activism and experience that have brought this proposal back into mainstream consideration. Rather, this is an introduction to a transformative policy proposal to address the challenges of the modern employment landscape.

 

What is a Job Guarantee?

A Job Guarantee is a federally funded, locally operated program that provides anyone willing to work with the opportunity to do so in their own community. It seeks to match the untapped potential of people who are looking for work with the unmet needs of the communities in which they live. It’s a framework that would end the threat of involuntary unemployment, strengthen workers’ bargaining position, give local communities the power to redefine “work”, and provide targeted financial relief to the individuals and communities suffering the greatest social deprivation.

As with any policy proposal that sits outside the current political imagination, the devil is in the detail. In the same way that progressive advocates of a UBI would not support a version of the policy that provided individual payments in lieu of universal healthcare and education, there are iterations of a Job Guarantee that its core proponents would not support. It’s therefore necessary to begin by outlining the emerging consensus on the essential features of a progressive Job Guarantee [17].

1. Permanent & Federally Funded: A Job Guarantee should be a permanent feature of the social safety net in a society. It is not limited by a specific budget, in the same way that income support is not limited by a specific budget. Rather the amount spent in any given year will reflect the economic cycle – more people will accept work in private enterprise during periods of boom, and more people will rely on the public option during economic contractions. Various models demonstrate that the cost of a Job Guarantee would be between 1-3% of GDP [18]. The net cost in our current economy would be roughly $22 billion per year [19].

2. Locally Administered: The program is primarily administered by local governments, registered non-profits, social enterprises and cooperatives. It takes the contract to the worker, creating jobs where the unemployed live. As a result it is highly targeted, creating the greatest number of jobs and offering the greatest stimulus to communities with the greatest number of unemployed people. Being locally administered also means a broader definition of work can be adopted than we currently have. Care, cultural, environmental and charitable work can be fully remunerated, with local communities empowered to decide their own needs.

3. Award conditions and wages: The wages and benefits offered under a Job Guarantee reflect the minimum acceptable standards set forth in legislation. A Job Guarantee is not exploitative workfare. Job Guarantee workers are paid the full minimum wage, and have access to benefits such as sick leave and holiday leave calculated pro-rata based on the time worked. A Job Guarantee provides a floor on which all workers can expect to stand – removing the threat of unemployment during bargaining, and strengthening casual or contract workers’ negotiating position.

A Job Guarantee provides a floor on which all workers can expect to stand – removing the threat of unemployment during bargaining, and strengthening casual or contract workers’ negotiating position.

4. Voluntary, not workfare: A Job Guarantee does not require people to work in order to receive existing benefits (such as Newstart, DSP, Youth Allowance, etc.) It doesn’t displace these options either – providing people with a choice between the existing social safety net and enrolling in the Job Guarantee. If someone chooses to accept NewStart while continuing to seek a private sector job, they always retain the option to later enrol in the Job Guarantee program. Similarly, someone who joins the Job Guarantee program is free to opt out onto existing income support payments without penalty.

5. Flexible and accessible: It meets people where they are in terms of ability, providing suitable, useful work opportunities, designed to be appropriate for the education, skill level and experience of the applicant. It offers part-time and flexible work arrangements for students or the underemployed. It is sensitive to the particular needs of groups such as at-risk youth, people who have recently left prison, or people with disabilities.

6. It invests in people and communities: On-the-job training and apprenticeship opportunities are included under a Job Guarantee program to help people develop the skills and confidence to transition from public to private sector work should they want to. By allowing communities to democratically participate in deciding what work is socially useful, the offer of employment is separated from the profitability of employment. Projects are created to serve community needs, rather than prioritising “profitability” or “productivity” in a narrow sense

7. It invests in sustainability: The program should provide options for addressing environmental concerns. An early example of a guaranteed employment program, the Citizens Conservation Corps, planted 3.5 billion trees in a ten-year period [20]. A Job Guarantee program may provide a framework by which we can harness people seeking work to make a contribution and coordinate them to address the greatest moral, social and economic challenge of our era.

There are far more substantive explorations of the ways a Job Guarantee would work in practice, along with the kinds of work local councils need performed [21]. These features, however, are what distinguish a Job Guarantee from other job programs. Many job programs meet some of the above criteria (and may be worthwhile initiatives in their own right) without amounting to a Job Guarantee as envisaged by progressive economists, academics and activists.

An important thing to remember when thinking through the challenges and options that are present in the design of a Job Guarantee is that there are logistical challenges in delivering any right guaranteed by the state. Our healthcare and education systems are phenomenally complicated, expensive and imperfect – understandably so in a country as large, and regionally distributed, as Australia. But because we believe in a pre-logistical right to healthcare and education, we expect governments of all stripes to deploy the resources to figure it out, and improve over time. Shifting the debate from whether or not a right to work should exist to the quality, content and delivery of that right would itself be a powerful step.

Shifting the debate from whether or not a right to work should exist to the quality, content and delivery of that right would itself be a powerful step.

 

What are the benefits of a Job Guarantee?

Many of the benefits of a Job Guarantee may be inferred from the list of its essential features above. But it’s worth elaborating the unique benefits of a Job Guarantee to individuals, communities and the broader economy.

Secure employment for the unwaged, and underemployed

A Job Guarantee gives people seeking employment the very thing that they’re asking for: a job. It doesn’t provide them with a cheque in the mail, to address their immediate needs but then leave them to make their own way. It gives them access to, and a stake in, the means of production, by creating a legally enforceable right to work. It puts the onus on government to figure out how to include them in the labour market and provide on-the-job-training where necessary to give people the skills and competencies they need to make a difference in their communities. By targeting the unemployed, and offering them real wages and conditions rather than subsistence level income support we drastically reduce the social and economic stress placed upon many families especially during a period of economic transition and technological advance. It provides people with far more than an income, but with the significant improvements to health and wellbeing we know are attached to structured, secure employment.

More bargaining power for casual, low paid, and exploited workers.
The Australian workforce has been undergoing a trend of casualisation for at least the last two decades. The rise of the gig economy, labour-hire companies and other contract work has provided flexibility for some, while depriving a great many others of access to the workplace protections and entitlements the union movement has fought to secure. In addition to further regulatory oversight and the bargaining arrangements for contract workers being advocated by Australian unions, a Job Guarantee would create a meaningful alternative for those in casual work. Job Guarantee jobs are paid at the minimum wage, and carry the same entitlements and benefits as full time work provided pro-rata for the amount of time worked. Removing the threat of unemployment during workplace bargaining provides workers with a stronger negotiating position. Private sector employers have to offer conditions that are competitive with the Job Guarantee alternatives or they simply won’t have a workforce. This also means governments can readily enforce future changes to work requirements, shortening the working week or increasing wages and enforcing their adoption by guaranteeing access to a public alternative. This is a powerfully redistributive mechanism to reverse the downward trend in the wage-share of GDP.

Recognising and remunerating an expanded field of human activity as work.

The current boundaries of what we consider productive labour were set by capitalists, colonialists and patriarchs. Women perform significant quantities of labour that our communities would not function without, and yet which are neither remunerated nor recorded in measures of economic performance. Similarly, many regional Indigenous communities have seen young people forced to move off their land, or take work in local mines because governments have underfunded their communities and failed to provide longterm funding arrangements for successful initiatives like the ranger program [22].

The current boundaries of what we consider productive labour were set by capitalists, colonialists and patriarchs.

A Job Guarantee gives local councils, nonprofits and registered charities an unconditional pool of funding to create jobs, and to define the boundaries of work as they see fit.

Communities have diverse communal needs – from urban maintenance, to aged care, or additional help in classrooms. A Job Guarantee seeks to socialise the delivery and resourcing of community needs that aren’t sufficiently met by the market or volunteer labour. By separating the offer of employment, from the profitability of employment we are empowered to rethink what kinds of labour are socially and communally beneficial, and then pay people and train people to do it. An important feature of this model is that it breaks down the distinction between voluntary and paid labour. Rather than than paying everyone the same lump sum, and maintaining the gendered distribution of unpaid work thereafter – it offers full compensation to the people performing what would have been unpaid work.

Targeted investment in communities suffering the greatest deprivation.

A Job Guarantee targets public funds towards areas of high unemployment and social deprivation. Many regional areas have unemployment rates that are four or five times higher than the national average, and need greater stimulus than populous major cities. As people enter the Job Guarantee program, they also become local consumers, with their higher wages going towards the stimulation of private businesses in areas that previously had no alternatives. For many people it will serve more as a transitional job in a revitalised community with the funds and income base to pursue its own development. It prevents the flight of young people from regional or rural areas, and addresses many of the flow-on anti-social consequences of widespread unemployment, by ensuring that if people want to stay in the places they and their families grew up there are options that make that financially viable.

Additional resources to address unmet community needs.

In addition to providing communities with a larger, higher income consumer base and solving many of the flow-on social problems that come from involuntary unemployment, a Job Guarantee also provides local communities with a ready supply of people to address unmet community needs. Whether it’s urban maintenance and renewal, employing local artists and musicians to run classes and enrich the cultural options for residents, or just better staffing of public infrastructure and services, a Job Guarantee mobilises a pool of people toward socially desirable community outcomes. These needs will change region to region, and are best determined by local councils, and community organisations embedded within the area. A Job Guarantee also changes the marginal cost of formal public service jobs. If the government has to offer employment to everyone who wants it, the cost of outsourcing public services becomes significantly higher than retaining and expanding local staff. Not only would governments need to pay the new contractors, but they’ll also pick up the tab for any workers displaced by the new arrangement who take advantage of the Job Guarantee. A Job Guarantee offers a vision of a large, skilled public service rather than a shrivelled state run by contractors, and aligns the financial incentives of government accordingly.

A Job Guarantee offers a vision of a large, skilled public service rather than a shrivelled state run by contractors, and aligns the financial incentives of government accordingly.

Macroeconomic stabilisation: sustainable, non-inflationary full employment.

The limit of what a sovereign, currency issuing government can afford is defined by the available real resources of the economy they manage. The Australian government can afford anything that people are willing to sell to it in exchange for the Australian dollar, but if it runs deficits so large that it pushes beyond our productive limits, it will drive up prices. The economic stimulus created by a Job Guarantee by definition focuses government spending on currently unemployed resources and operates countercyclically, creating a full employment economy without inflation. During an economic contraction, the number of people accessing the Job Guarantee will grow, increasing the stimulus provided and keeping the economy at full employment without pushing it beyond. As the private sector recovers and grows, it will hire people out of the Job Guarantee program, leading to less government investment when it’s not needed. Additionally, under a Job Guarantee government injections are linked to a concrete unit of real resources: an hour of socially useful work. It anchors the value of the currency for the people earning it, preventing a host of unpredictable and potentially undesirable financial behaviours.

 

What do the critics say?

Having examined what a Job Guarantee is, and what the benefits are – let’s move on to examine the criticisms offered of the program. Some of the criticisms below are valid, some are premised on a different understanding of the future, while some are simply based on a misunderstanding or misrepresentation of what a Job Guarantee is.

“Automation and technological progress mean there won’t be any work to do.”

Many people support policies like a Universal Basic Income on the basis that the world we are moving towards is one in which many jobs simply won’t exist, in which case we should transfer wealth from the owners of the robots to the people who have been replaced by them. Without a crystal ball it’s impossible to know for certain, and if automation is as pervasive as some predict, there’s a very strong case for that kind of policy program. In the meantime, there’s good evidence to suggest that we’re a long way off a world without work. Countless studies demonstrate that rather than automation decreasing the number of available jobs, it simply changes the composition of the work required within particular jobs [23]. Given that context, it’s important that we have a policy framework that gives people a right to access to the pool of available work rather than have that access determined by the whims of the market. Even if we were to give people enough of an income to survive without work, the more radical position is ensuring that everyone has access to the means of production.

Even if we were to give people enough of an income to survive without work, the more radical position is ensuring that everyone has access to the means of production.

“A Job Guarantee is coercive, paternalistic or workfare by another name.”

Definitionally, a Job Guarantee is voluntary and non-punitive. People are welcome to take existing unemployment benefits as an alternative. People are given the full wage-benefit complement society has determined as the minimum award. A Job Guarantee does, however, not allow people to absent themselves from community altogether. It requires people to bring their skills and experience to the table for the benefit of people beyond themselves, and offers them decent pay and conditions to do so. But it also creates an obligation on the state to show up for people, rather than casting them out on their own. A guaranteed income doesn’t give someone the ability to move towards being a carpenter, a teacher, or till the fields owned by mega farms. A guaranteed job requires the government to provide people with access to the necessary training, development, support and property to make good on that guarantee and make sure community needs are being met. Apprenticeships and on-the-job training is a crucial aspect of the Job Guarantee design, meeting people where they are, and helping them develop skills that may allow them to transition to the private sector should they wish to. It allows communities, and democratically elected local councils to have direct control over what is considered work – placing power in the hands of people rather than corporations. But importantly, a Job Guarantee is not paternalistic in that it takes someone who wants a job, and gives them one. It offers people the thing they were seeking directly, rather than ineffective job incentives or a cheque with no guarantee of work attached to it.

“People won’t have the skills to perform the work needed by communities.”

There is a logistical challenge in ensuring, on the one hand, people have access to work that meets them where they are in terms of ability, experience and interest, while on the other hand trying to ensure that community needs are addressed. A Job Guarantee program can largely address this through providing on the job training, apprenticeships or even formal higher education as a work option for the unemployed. By placing the obligation on the government to find people work, we create a framework by which the government participates in managing economic transitions directly. This is not dissimilar to the way the Commonwealth Employment Scheme operated – surplus public sector hiring and on the job training would often be funded in industries in which future private sector demand was expected, ensuring people could up-skill, or re-skill as they made their way through their career.

“A Job Guarantee is administratively impossible.”

Of course there are significant challenges in making any large social program work well. Think of the amount of effort necessary to ensure a functional education system: curriculum design, physical infrastructure, sufficient teaching staff, effective assessment and grading, catering for different abilities and diverse classrooms. We don’t always get it right, but we’ve been on a century-long journey of improvement and progress because we agree with the aim. A Job Guarantee offers an expanded vision for the role of community and the state in people’s lives, rather than a system of individualised payments that enable participation in the private market. To support a Job Guarantee is to support the notion that everyone who wants a job should be entitled to one – the logistical details are a separate, and worthwhile,  debate that won’t be anywhere near concluded at the point of implementation.

But some of the logistical challenges are overstated. Most state governments are the largest single employers within their state economies. We have a model for government employment and administration of people that works. Most local councils, and registered charities already have a clear sense of additional work that could be done if they had the funding and the people to do it. At its simplest, you could imagine every Centrelink office in the country turning from an unemployment centre into an employment centre, matching people with work from job banks that are populated by local councils and community organisations.

“Full employment is inflationary.”

Recent analysis suggests that prices won’t increase significantly even at very low levels of unemployment [24]. But a Job Guarantee also mitigates inflation partly by operating countercyclically, and by anchoring government cash injections to a concrete unit of a person’s time. But significantly, a Job Guarantee also creates a buffer stock of employed people that operates in a very similar way to the buffer stock of unemployed people. The private sector can always hire out of the Job Guarantee pool of workers, just as they could out of the unemployed pool of workers – there’s a one time price effect of shifting the minimum wage-benefit package to low income private sector workers upwards [25].

“People will take advantage of the scheme to do bullshit jobs or no work at all.”

This point of view starts from a fundamentally suspicious and cynical view of human nature. By and large, unemployed people want to work. Their job status isn’t the result of a lack of character or effort, it’s the result of there not being enough jobs. People who are given the right level of ownership, training and support, and a clear sense of connection with the purpose and importance of their work – generally want to perform well. The flexibility and breadth of work under a Job Guarantee program means that many of the things people leave the private sector to concentrate on – childcare, volunteer work, care for the elderly, further education and re-training – are able to be remunerated under a Job Guarantee system. Some people may genuinely wish to absent themselves from the workforce altogether. Those people should be ensured a dignified quality of life, regardless of their engagement with the Job Guarantee program, but also be offered a level of support in case there is an underlying reason for wanting to opt out that can be resolved.

“We can’t afford it.”

In the current economy, a Job Guarantee in Australia would have a net cost of about $25 billion per year. There are numerous answers as to how governments will pay for that cost.The first and best answer is provided by an emergent stream of macroeconomic thinking sometimes referred to as Modern Monetary Theory: that sovereign, currency issuing governments can afford anything that is for sale in the currency they issue [26]. The real constraints on modern government spending isn’t whether the money exists, or the size of a specific deficit, or the public debt at a moment in time – it’s the availability of real resources in the economy. As a set of observations about the way the modern payment system works, Modern Monetary Theory is both accurate and a useful framework through which to think about progressive policy initiatives as it shifts the conversation to “is this spending worth it,” rather than the more misleading “can we afford it.”

The second answer, which is perhaps easier in the current political environment, is that the government has just passed income tax cuts worth $140 billion over the next decade. And until recently, the government was proposing corporate tax cuts worth $80 billion over the next decade. There are many arguments available to progressives in arguing against $220 billion in tax cuts over the next ten years, but my preferred answer is: we’ve got a better idea for how to spend that money. And conservatives have given up the right to tell us it’s an unaffordable amount.

The real constraints on modern government spending isn’t whether the money exists, or the size of a specific deficit, or the public debt at a moment in time – it’s the availability of real resources in the economy.

 

How does a Job Guarantee compare with a Universal Basic Income?

This article has not to this point, drawn a comparison with a Universal Basic Income. In part, this is because these policies are too often presented as in conflict or competition with each other, when really they are separate policy proposals with separate aims. Debates about policies and priorities are undoubtedly important and unavoidable within the left. But the level of energy and animosity that is often targeted at other left proposals is, I think, often destructive rather than constructive. Advocates for a Job Guarantee are not the enemy or roadblock to a UBI, or vice versa. The entrenched power of capital and the established political class are usually the common enemy of both.

Wherever possible, progressives should be looking for ways to express their views, while building the biggest, most inclusive tent possible and being generous to one another’s ideas. In that spirit, below are some observations that may help explain why many advocates have chosen to dedicate their time and energy to a Job Guarantee first.

Affordable UBIs are inadequate, and adequate UBIs are unaffordable [27].

The UK think tank Compass analysed a modest proposal for a UBI that would sit on top of existing welfare distributions. That analysis concluded that such a UBI would cost 6.5% of the UK’s GDP, but would only reduce poverty amongst working age people from 13.9 to 12% [28]. Proposals for a full-blown, living wage UBI like the one proposed by the Australian Greens would cost significantly more – in Australia, it is likely to be an annual cost of $254 billion, increasing government spending by 55% [29]. While the government can always afford such payments, for the reasons detailed above, the economy probably cannot. To prevent such a large injection from causing price increases that would negate the benefit of the policy, significant tax reform will be needed. Setting aside the political obstacles to achieving tax reform of the scope and scale required, the issue is then that the UBI is no longer universal. High, and even moderate income earners will be paying significantly higher tax such that they are no longer net-beneficiaries of the UBI payment. The key feature of a UBI as opposed to a Guaranteed Basic Income is that the universality of payment removes the stigma associated with receiving it. But it’s not hard to imagine a political future under a generous UBI where the class divide is exacerbated by the taxation rates necessary to prevent inflation, and in which net-UBI-recipients are seen as dependent on the net-tax-contributors very similarly to today.

By contrast, in most developed economies it’s estimated that the cost of entirely eradicating poverty through targeted payments that place people above the poverty line is 1% of GDP [30]. A Job Guarantee would address poverty, help redefine work and challenge neoliberal narratives of entitlement with a smaller, more immediately available step outside the political imagination and at 10% of the cost.

A standalone UBI doesn’t challenge capitalism, it enables participation in it.

Proponents of a UBI often argue that it recognises and compensates people for their humanity rather than their work. It’s a powerful idea, and an even more powerful message. The reality is, however, that unconditional payments enable people to become consumers without challenging the domain of the market over production. It entrenches an aristocracy of producers who serve a democracy of consumers. A Job Guarantee by contrast expands the pool of services, products, places, and experiences that are provided by communities rather than companies. It challenges the state to give people access to the socially owned means of production, or abridge private ownership of capital as necessary to secure access to work for all.

Moreover, a guaranteed income takes a great many people who want a job but can’t find one, and simply gives them a cheque. It does nothing to provide people who are discriminated against, or marginalised from the labor market due to their location, disability, or educational background with access to the means of production. People unable to find paid work under the status quo will be unable to find paid work under a UBI. It creates no structure or framework to give people a path to forms of social inclusion that financial independence alone doesn’t offer. The best a UBI does for these groups is give them a near-poverty wage, and leave them dependent entirely upon the private or charitable sector to produce the goods and services they need.

 

Conclusion

The last two years in global politics have been a source of both angst and inspiration for progressives. As reactionary, racist, and regressive political movements and leaders have won key victories, the left has been forced to confront the notion that the boundaries of what’s politically possible are far wider than we imagined. But within that opening, old ideas have found new purchase and debates have reignited as we search for policies that are scaled up the challenges of the world in which we live. A Job Guarantee is but one proposal but it has transformative potential, and mainstream appeal [31].

 

Edward Miller is a Senior Campaigner for Economic Fairness at GetUp. He lead the development of GetUp’s Future to Fight for policy vision and hosts the accompanying podcast. Ed was the Deans Undergraduate Scholar for Economics at the University of Sydney, where he won both the World and Australasian Debating Championships. Ed is passionate about social justice, economic fairness and effective charity, in addition to his work at GetUp he serves on the Board of 180 Degrees Consulting, the world’s largest university based consultancy. 

 

References:

  1. Australian Bureau of Statistics, Job Vacancies, Australia cat. no. 6354.0;
  2. Australian Bureau of Statistics, 2018, Labour Force, Australia cat. no. 6202.0
  3. Cristobal Young, “Losing a Job: The Nonpecuniary Cost of Unemployment in the United States” Social Forces 91(2) 609–634, Oxford University Press, December 2012
  4. Franklin D. Roosevelt, State of the Union Address, 1944
  5. Philip Randolph and Bayard Rustin, “How the Civil-Rights Movement Aimed to End Poverty,” The Atlantic, February 2018
  6. William Mitchell, “The Job Guarantee and NAIRU”, Centre for Full Employment and Equity, The University of Newcastle 1998
  7. William F. Mitchell and Warren B. Mosler “Fiscal Policy and the Job Guarantee”, Centre for Full Employment and Equity, The University of Newcastle 2002
  8. Randall Wray, “A Consensus Strategy or a Universal Job Guarantee Program”, Policy Note, Levy Economics Institute, March 2018
  9. Pavlina R. Tcherneva “The Job Guarantee: Design, Jobs, and Implementation”, Working Paper, Levy Economics Institute, April 2018
  10. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, and Stephanie A. Kelton, “Public Service Employment: A Path to Full Employment”, Report, Levy Economics Institute, April 2018.
  11. Jayati Ghosh, “Can Employment Schemes Work? The Case of the Rural Employment Guarantee in India”, in Contributions to Economic Theory, Policy, Development and Finance (2014), edited by D.B. Papadimitriou, Levy Institute Advanced Research in Economic Policy, Palgrave Macmillan, London.
  12. Pavlina R. Tcherneva, “Beyond Full Employment: What Argentina’s Plan Jefes Can Teach us About the Employer of Last resort,” Employment Guarantee Schemes Job Creation and Policy in Developing Countries and Emerging Markets, (2012) edited by Michael Murray and Mathew Forstater, 79–102. New York: Palgrave Macmillan.
  13. Steve O’Neill, “Working Nation: A Progress Report”, Parliamentary Research Service, Current Issues Brief No.32, 1995
  14. Nick Taylor, American-Made: The Enduring Legacy of the WPA: When FDR Put the Nation to Work (2008), New York: Bantam Books
  15. Jeff Stein, “Bernie Sanders to announce plan to guarantee every American a job”, The Washington Post, April 23, 2018.
  16. GetUp, “Job Guarantee: Well-paid work for all who want it,” Future to Fight For, 2018.
  17. These core features have been distilled from the summary contained in Pavlina R. Tcherneva “The Job Guarantee: Design, Jobs, and Implementation”, Working Paper, Levy Economics Institute, April 2018
  18. Randall Wray, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, and Stephanie A. Kelton, “Public Service Employment: A Path to Full Employment”, Report, Levy Economics Institute, April 2018.
  19. Claire Connolly, “Why a universal basic income is a poor substitute for a guaranteed job,” The Conversation, January 2017.
  20. John A. Salmond, The Civilian Conservation Corps 1933–1942: a New Deal case study. (1967)
  21. Beth Cook, William Mitchell, Victor Quirk and Martin Watts, “Creating effective local labour markets: a new framework for regional employment policy”, Policy Report, Center for Full Employment and Equity, November 2008
  22. Melinda Boutkasaka, Greg Dunlop, “’Invest in success’: Indigenous rangers eagerly await funding boost,” NITV News, July 2018
  23. AlphaBeta, “The Automation Advantage,” Insights, August 2017
  24. Steven Hail, Economics for Sustainable Prosperity, Binzagr Institute for Sustainable Prosperity, 2018, p234.
  25. William Mitchell, “The Buffer-Stock Employment Model and the NAIRU: The Path to Full Employment” Journal of Economic Issues 32, no 2: 547–555.
  26. For an introduction to Modern Monetary Theory, see: Steven Hail, “Explainer: what is modern monetary theory?” The Conversation, January 2017. For an academic introduction, see: Stephanie Bell, “Can Taxes and Bonds Finance Government Spending?” Levy Economics Institute, Working Paper No. 244, July 1998.
  27. Luke Martinelli, “Assessing the case for a Basic Income in the UK”, University of Bath, IPR Policy Brief, September 2017
  28. Daniel Zamora, “The Case Against a Basic Income”, Jacobin, December 2017
  29. Howard Reed and Stewart Lansley, “Universal Basic Income: An idea whose time has come?” Compass Report, May 2016 at p17.
  30. Matt Bruenig, “How much money would it take to eliminate poverty in America?” The American Prospect, September 2013.
  31. Essential Research, Weekly Omnibus survey of 1027 Respondents, 10th to 13th of 2018

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The post A Universal Job Guarantee: An End To The Neoliberal Employment Landscape? appeared first on The Gower Initiative for Modern Money Studies.

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