A Federal Jobs Guarantee Will Not Solve America's Economic Woes

September 13, 2020 Topic: Politics Region: Americas Blog Brand: The Reboot Tags: U.S. EconomyEconomicsJobsCongress

A Federal Jobs Guarantee Will Not Solve America's Economic Woes

It’s the kind of a silver-bullet solution a left-of-center screenwriter might think is pretty cool.


In the smart and whimsical 1993 political comedy Dave, the eponymous character is the owner of a temp agency who has a side gig impersonating the president. And when the real deal suffers a stroke, a cabal of White House advisers offer Dave his own temp job: playing the commander-in-chief until the genuine article recovers. Many twists and turns later, the pretend president announces his very own plan to have Washington find a job for every American who wants one.

Pull up the Wikipedia entry for Dave and you’ll see that last plot beat is hyperlinked. Clicking that link brings you to the Wikipedia entry for “job guarantee,” defined as an “economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability, by having the state promise to hire unemployed workers as an employer of last resort.”


So, yeah, it’s the kind of a silver-bullet solution a left-of-center screenwriter might think is pretty cool. Hey, if someone needs a job and can’t find a job, just have the government give them a job doing something or other. Public policy is so easy peasy.

Journalist and acerbic social critic H. L. Mencken once wrote that “there is always a well-known solution to every human problem — neat, plausible, and wrong.” It’s a line that is often misquoted, sometimes like this: “For every complex problem, there is an answer that is clear, simple, and wrong.” It is the faux quote that maybe better describes the big idea of that faux president in Dave.

A federal jobs guarantee is an underwhelming idea. And perhaps if Dave were remade as an HBO mini-series or something, the many, many downsides would become evident. To think it is a good idea means thinking that (a) Washington could anytime soon successfully direct a workforce that would be multiples (maybe many multiples) larger than the number of K-12 teachers (but less educated) to do meaningful, socially productive work that they are not currently trained to do; (b) even if that managerial Manhattan Project took decades to accomplish, it could be sustained amid “stories about how these are disorganized make-work programs” and the “stigma” that follows; (c) running such a program might not be made even more maddeningly complicated by the possible inability to actually fire anyone; (d) these permanent government gigs would not “crowd out” existing jobs that actually matched the skills of the workers; (e) we could ever figure out if these new government-supplied jobs were replacing existing jobs or jobs that would have been created anyway; (f) private employers in high poverty areas would not see an employee drain to these probably better-paying jobs; (g) these voluntary jobs would not become mandatory; and (h) the cost would not be crazy tremendous.

So, yeah, kind of a lot. Let me end with two additional bits of analysis. First, from economist Timothy Taylor:

A growing and healthy economy will be in a continual process of evolution and adjustment. We want the labor market to be part of that adjustment. We want people to move to continually acquire new skills, which can mostly happen within existing jobs, but sometimes needs to happen between jobs. We want some people to move to new areas, either across their metro area or sometimes to new state[s]. The government has several important roles to play in this vision of a labor market. At the big-picture macroeconomic level it has some responsibility for using fiscal policy, monetary policy, and financial regulation to reduce the risk of recessions and to soften the blow of recessions when they arise. At a smaller-picture level, it has … important roles to play in providing support for education, worker training, as well as in providing a safety net.

Second, my AEI colleague Michael Strain on a better path forward than a job guarantee:

The right place to start is with policies to help individuals become more successful workers. One example is the federal earned-income tax credit, which uses taxpayer dollars to subsidize the earnings of low-income, working households. By increasing the financial rewards of working, previous EITC expansions have pulled people into the workforce. Or take work-based learning programs, like apprenticeships, which can be successful by combining skill-building with formal instruction in order to increase workers’ productivity and wages. … Through programs like the earned-income tax credit, public policy should support low-wage workers, helping to ensure that no one who works full time and heads a household lives in poverty.

Again, a federal jobs guarantee is an underwhelming idea.

This article first appeared at the American Enterprise Institute.

Image: Reuters.