America’s Low Wage Epidemic: a Job Guarantee vs. the Universal Basic Income
In my last post I talked about the three pillars of the Mike Sax NY 2 Congressional campaign.
The 3 pillars of the Mike Sax NY 2 campaign: 1. Legitimacy crisis. 2. Strong public option. 3 Low wage epidemic https://t.co/CNAoLonmZE
— mike sax (@mikesaxny2) June 29, 2017
Hopefully, my readers all know that-I’m Mike Sax.
I should also say that if you’re interested please tell all your friends and family-everyone you know. And please donate.
In this post, I want to discuss pillar three a little more: the low wage epidemic. As I’ve explained, this is not an abstract debate that I heard about at Peter King’s country club. I’ve been there, I’ve worked-and been unemployed and especially underemployed in this labor market, and I know how tough it is out there. I don’t need a Bernie Sanders lecture to know that.
I still remember the year 2001, when I was just out of college with my bachelor’s in accounting. I’d used Accountempts-the accounting temp agency throughout the first six months of that year. And they always came through. If one job ended, I’d be at another one within two days.
I was building up more experience to go with my degree. And then came late June 2001. And the temp job they’d got me at Waste Systems International-a very interesting job as WSI was in chapter 11-ended after three months. Jeff Ware, the agent at Accountemps I dealt with the most told me he’d get me a new job within a couple of days.
I was reassured. After all-he always had. But this time was different. He never called me again. I finally had to call him. He assured me he was working on it. Maybe he’s still working on it.
Overnight the economy had changed. And in the next few years I had to settle for service sector jobs. I got a job delivering pizza-that wasn’t so bad. Prices in Fitchburg, MA in 2002 weren’t that high-unlike NY where I was born and raised and where I returned in 2009.
I didn’t make as much delivering pizza than in early 2001 when I was an entry level accounts receivable temp. Heck, I got data entry jobs that paid $14 per hour. The job at WSI paid me $16-$17 per hour.
But I still made more delivering pizza than the people who worked inside the store-like the manager. And as Fitchburg was not an expensive city, I made enough-barely-to get by. But it wasn’t at the level I had believed I was going to be when I was in college and when I planned out my future.
And my story is very common.
One able proponent: Andy Stern the former leader of the SEIU. Wether he’s right that the UBI is the best way to deal with this, he correctly diagnoses the problem:
“College is no longer considered as good an investment: Although policy makers still tout college as a ticket to higher wages and a middle- or upper-middle-class lifestyle, more and more parents are questioning its value, especially as the cost of tuition continues to skyrocket. (At this writing, the cost of a four-year private college had risen to a high of $63,000 per year for tuition, room and board at some elite schools, more than most families earn.) As for the return on that investment, the BLS indicates that more than 15 percent of men and 11 percent of women under the age of twenty-nine with a bachelor’s degree are unemployed. In 2012, a record 21.6 million young adults, age eighteen to thirty-one, moved back in with their parents—typically to make ends meet in a tough job market.”
Stern is a proponent of the Universal Basic Income (UBI).
The other big idea we will consider in this post-and is being considered in the policy options of the Mike Sax NY 2 Congressional campaign-is the Job Guarantee (JG).
Which idea is better? Of course, as this is an economic question, there’s a fierce debate about this.
For some fun, in this post we will look at three answers to the question:
1. The JG is the answer and the UBI is a poor substitute.
2. The UBI is the answer and the JG is a poor substitute
3. Can’t we all get along? The JG and UBI can be complementary.
Let’s start with 1.
1. JG rules the UBI drools.
You can run across this view a lot if you hang with Bill Mitchell or Pavlina Tcherneva.
“Why a universal basic income is a poor substitute for a guaranteed job.”
“Creating a universal basic income as a means of addressing unemployment and productivity problems has become the topic du-jour as workers become increasingly separated from the means of production, with even modest salaries failing to cover the cost of living.”
“A universal basic income works as a partial or complete substitute for the existing welfare or social security system, in which every adult citizen is paid a flat rate fee by the Government – regardless of whether they are already working, and regardless of their age, ability, gender, health status or skill level.”
“Leading economists claim creating a universal basic income is throwing money at a problem in lieu of actual solutions.”
“Besides which, from a cost of living standpoint, it could lead to inflation by increasing demand for goods and services.”
“They claim a job guarantee program would better address both inflation and unemployment.”
“We forget the most valuable commodity is people,” Fadhel Kaboub, Associate Professor of economics at Ohio’s Denison University said.
“We don’t allow the price of corn to drop to zero, or coffee, yet we allow the price of wages and labour to drop to zero.”
“A job guarantee program would act as a “Buffer Stock Mechanism” – a term coined by Australian economist Bill Mitchell, Professor of Economics at the University of Newcastle – to describe stabilising the cost of labour.”
“To paraphrase Bill Mitchell, corn doesn’t commit suicide when it’s unemployed,” said Professor Kaboub.
“Corn doesn’t increase the divorce rate. But there are serious negative economic, social consequences and costs associated with unemployment. Yet we have a buffer stock to keep these commodities fully employed regardless of conditions.”
“Basically, corn gets more market protection than you do.”
“Pavlina Tcherneva, Associate Professor and Chair of the Department of Economics and Research Scholar at the Levy Economics Institute, says a basic income program operates on the fantasy that somehow the market will provide things the recipient want or need.”
“The market already doesn’t provide the things that well-paying customers want: People with incomes and want affordable childcare, for example, and it’s not there,” Professor Tcherneva said.
I’m not sure that Tcheneva’s argument is really an argument against doing the UBI. But it is a good defense against one very popular criticism of the JG-that the JG can only mop up jobs that don’t serve any very important social need-as the market has mopped up all of those.
But that’s based on the assumption that the market in fact does take care of all social needs. But clearly it doesn’t. As she pointed out there is a need for affordable childcare.
A personal example of mine was a few years ago when I was living back in Baldwin, NY-the city were I grew up. Yes, I was stuck living in my parents’ basement for awhile-like I said, underemployment is a real thing that I know about first hand.
After my care repoed I had to take the bus to work. Then in 2013 the MTA bus line was privatized and taken over by a company that called itself NICE-yes some saw that as an irony.
And just as was suspected soon they begun dropping routes they believes were not profitable. So right there-why couldn’t JG workers handle those bus routes that were discontinued as many had counted on them?
Ok, back to the JG vs. UBI debate. It obviously can’t be complete without Bill Mitchell:
Professor Mitchell calculates the output gap caused by unemployment to be around $60 billion annually, or around 4 per cent of GDP.
“By accepting that all the Government has to do is provide a pretty basic income, you’re absolving the Government of that responsibility to provide work and to pursue full employment,” he said.
“You’re really ratifying the Liberal policy positions which deliberately create unemployment as a punishment incentive for work.”
He estimates a job guarantee program would cost Australia $22 billion a year (net) to employ around 595,000 unemployed people. It would also be taxed at the same rate as income.
“This would bring the official unemployment rate down to 2 per cent of the available labour force and eliminate hidden unemployment,” the Professor wrote recently.
What would the UBI cost I wonder?
But Mitchell is assuming that it’s either/or-that a UBI is a stand alone plan like he envisions the JG. But the two could be combined. More on that when we get to 3.
2. The UBI rules and the JG rules:
“Basic income is superior to the job guarantee.”
“There are studies (such as the Gallup World Poll) which point to a correlation between the unemployment situation and a relative reduction in people’s happiness. At first glance, one might immediately conclude that what we need is to provide jobs for everyone — problem solved. However, a rushed conclusion like this under-evaluates the situation, ignores its alternatives and can even become counterproductive.”
“These studies conclude that, beyond the obvious issue of income, jobs seem to be a source of meaning and self worth for people. This apparently only reinforces the above results, and so it seems that a Job Guarantee (JG) is a policy for the future and that we must implement it as soon as possible.”
But lets calm down.”
LOL. Let’s calm down. Ok. so let’s.
Basically the author-Andre Coelho-that jobs are a source of worth because of our social and cultural patterns. There is a stigma to being unemployed. Take that away and this would change.
“However, if proof of this argument is needed, retired people are relatively less unhappy than unemployed people, although they do not have jobs (Clemens Hetschko et al., 2012). Why? Because retirement is socially accepted; it is expected that, after decades of valid contributions to society, through a job, the person can finally rest and became free to spend the rest of his/her life just walking at the park (if so he/she wishes).”
“What’s really at stake here, and again beyond the mere income situation, is that we live in a culture based on jobs as a source of meaning and value, and so the lack of a job is seen as a problem. However, the income situation is a major one, since lacking income represents a great source of unhappiness for individuals. So, the unemployed’s relative unhappiness when compared to employed individuals is only clear when seen in the context of our present culture, and not necessarily outside it. Basic Income (BI) can – and hopefully will – create conditions under which that connection does not exist. To guarantee jobs for everyone, in this first sense, does not necessarily generate more happiness for individuals than BI, simply because the cultural environment around work gets totally transformed.”
I guess on argument in support of his premise is that neoclassical economists themselves see leisure as wealth. But the issue is
A. Do you have the income or ability to meet your basic needs and beyond?
B. Your perceived social status.
Coelho also distinguishes between
A. A job
B. Contributing to society
“The JG will only be beneficial to those searching for jobs – any job, we can assume in desperation – and cannot find them. For those currently and comfortably employed it would be innocuous, and for those who actually choose not to be employed (whether presently employed or not), in order to have time to pursue their passions and talents, it would only cause suffering and would be a waste of time.”
“On the other hand, BI is beneficial for all those who prefer not to be formally employed, are currently unhappily employed, or are indifferent, such as those individuals who are satisfied with their job at the moment. Moreover, BI will benefit the presently unemployed, offering them the chance to informally contribute to society and/or develop their capacities in order to be fit for jobs they see as more adequate to their profiles and preferences.”
The JG will help those who are unemployed and don’t want to be. And the jobs could help them to build up their resume and possibly to learn skills that will make them more marketable in future jobs.
Again-like with the JG rules and the UBI drools crowd-I don’t necessarily see why it’s one or the other.
Regarding whether people would rather
A. Have a job
B. Take more leisure
C. Maybe preferences will vary
Though Coelho makes a good point about the social stigma in not having a job. It seems to me this remains a subject of debate: do we want to be a society were most people have jobs or do we want to be one where the stigma around ‘something for nothing’-aka welfare-goes away?
3. Can’t we all get along? JG and UBI are complementary.
The Basic Income and Job Guarantee are Complementary, not Opposing Policies
Let’s see what happens when everyone has some cash on hand.”
“It’s disappointing to see debates between proponents of the Basic Income Guarantee (BIG) and the Job Guarantee (JG). These discussions detract from the fact that both of these ideal policies are distant from the policies we currently have in place. Supporters of either of these policies should be working together to get either one implemented, and we can debate adding the other later. Today, we need to move beyond our current disjointed welfare system to one that will help Americans, and either policy (or both!) seems like a step in the right direction.”
Amen. I’ve argued exhaustively since the Dem primary against the tendency of sectarianism on the Left of the circular firing squad. But this sums up the ridiculous opprobrium of the Bernie Bros towards Hillary for calling for a $12 federal MW-No! It’s $15 or it’s nothing. And of course, we got Trump and it’s nothing.
Or a Holy War over the public option vs. single payer. But as Brad Voracek notes, either JG or UBI would be exponentially better than the current status quo.
Well this post is certainly long enough and I’m calling this debate on time. But position 3 clearly wins-we should all just get along and tackle the problems together. UBI or JG? Either/or. Whichever gets there first.
P.S. If you believe that 25 years is enough for an imperious monarch like Peter King NY-2 who is a Republican first and an American second and is too arrogant to even speak to his own constituents please help me in my challenge to him in any way you can. If you live in the area you can volunteer-or at least tell everyone you know. And no matter where you are in the country, donations help.
Mike Sax is the One to Dethrone the King. All Sax is good Sax.