Some Reasons for Guaranteeing Both an Income and Job

Two policy proposals receiving increasing attention are the job guarantee (JG) and basic income guarantee (BIG). The first would provide everyone of working age with the option of a guaranteed job. The second would introduce an unconditional income payment. To be clear, I would support either of these as standalone programs, whichever happened to be on the policy agenda. Nevertheless, I think there are a few reasons to prefer a combined policy that integrates elements (perhaps all positive elements) of both programs. In its leanest form, a ‘job or income guarantee’ (JIG) could provide everyone with the option of accepting a job-guarantee position or, by opting out of the labor force, a means-tested but otherwise unconditional income payment. In expansive form, a JIG could provide a universal and unconditional basic income as well as the option of a guaranteed job for anyone who wanted one. Other intermediate variations on the theme would, of course, also be possible. The expansive form would be ideal, but even the lean version seems to offer some advantages over a standalone JG or BIG.

Enhancing opportunities for self realization

The JIG would ensure two new freedoms:

1. Nobody would be denied a job if they wanted one.

2. Nobody’s survival would depend on labor force participation.

A JG, of course, would ensure 1 but not 2. A BIG would ensure 2 but not 1. Each would be an improvement on the current situation in which neither 1 nor 2 applies but would fall short of a JIG on these criteria.

The significance of 1 and 2 can be viewed in the context of a future in which, increasingly, mechanization will present an opportunity to open up additional free time (to be used productively or in leisure at the individual’s discretion) while posing a challenge to employment policy.

There is nothing to prevent a currency-issuing government from meeting the jobs challenge, even in the face of dramatic sea shifts in employment patterns brought on by technical progress. But there still remains the question of whether employment levels should be maintained or increased as technology develops. In particular, it can be asked whether it makes sense to create jobs in cases where individuals would opt for free time if given the choice. To create jobs rather than provide basic income in such cases would not only constrain the affected individuals but occupy the time of administrators and coordinators of the JG program. The inclusion of the basic-income component in a JIG would mean that a job was only created when the individual desired it.

At the same time, many victims of mechanization have little desire to exit the labor force and settle for the lower income such a choice would entail. Many will feel ill equipped to shape their own activities and social networks after years, in many cases decades, of following work procedures laid out in a clearly defined role. They will continue to want jobs. The JG component of a JIG has this covered.

A JIG would have built-in safeguards

As standalone policies, both the JG and BIG appear to have certain vulnerabilities. In the case of a JG, there is a danger that opponents will succeed over time, if not immediately, in reducing it to workfare. The basic-income component of the JIG would build in an important protection against this. By giving individuals the power to say no, both to employers and to the JG provider, it would become difficult to impose workfare on anyone.

In the case of a BIG, there is some danger that the basic income payments would subsidize employers by enabling a reduction in wages. Although the effective subsidy could be taxed away, the effect, if any, on wages would remain. The extent of this danger is not clear, because the power of workers to say no introduces a significant counteracting influence and, in principle, minimum-wage legislation and centralized wage determination across various pay levels could prevent the erosion of pay and conditions. Considering the political feasibility of such regulatory policies varies from country to country, the danger may likewise vary. These factors make it difficult to predict the impact of a BIG on pay and conditions, leaving open the possibility of a negative outcome.

In contrast to the BIG, a well designed JG would be an effective protector of pay and working conditions. By setting a minimum standard, other employers would need to match or better it. A JIG, by including the JG component, ensures this same protection of pay and conditions along with the aforementioned safeguard against workfare.

A JIG enables a reduction in aggregate labor time with Minimal Coercion

I suggested in a recent post that a JIG would facilitate a reduction in aggregate labor time with minimal coercion. Not only would it accommodate a transition to greater free time – for both productive and leisure pursuits – but it would do so without compelling anyone to work more or less than they desired.

It is true that other methods of reducing aggregate labor time would, on some criteria, be fairer, but they would come with greater coercion. For example, imposition of an equal division of labor time would introduce coercion in two directions. On the one hand, there would be workers who want more, not fewer, hours on the job. Equal division of labor time would require them to accept fewer hours and a lower income. On the other hand, other people would prefer to exit the labor force and accept a basic income payment, or cut back their labor time, which an appropriately designed job guarantee could accommodate. Imposing equal labor time on all workers would prevent a considerable degree of voluntary self-selection into free time and labor-force participation.

By ensuring the freedom to opt out of a job, but also the right to opt in, a JIG would enable everyone to choose the number of hours they desired, given the options available to them. And, for most people, these options would be significantly broadened. Individuals working longer than average hours would be choosing to do so. Such a choice would be evidence that they felt compensated by higher pay, enjoyment of their roles or both. If not, they would have opted for fewer working hours.

The pace of transition from labor force to free time could be managed partly through appropriate adjustments of the JG wage relative to the BIG. The JG-wage/BIG differential would provide a mechanism for enticing a greater or lesser number of individuals out of the labor force, as appropriate, without requiring a resort to more coercive measures.

The JIG, if implemented in its expansive form, could assist in a separation of labor time and income as well as withering away of profit income that, far from being utopian, could be achieved in a very gradual way (over decades, a century or even longer, if preferred). I touched on the possibility in a recent post. Suffice to say that it would be quite possible to design policy that distributed productivity gains increasingly to basic income and yet, due to labor-force exit, still had individual labor-force participants receiving pay increases over time. Whether ever increasing pay to workers in an ever diminishing labor force would be necessary or desirable is another question, the answer to which would depend on the level of productivity and social attitudes. But the important point is that such policy designs are possible. The transition to free time in which production is increasingly undertaken on the basis of voluntary associations can be as gradual or rapid as we choose it to be, and would require very little coercion (and certainly far less coercion than is currently being exerted on the vast majority of individuals).

Closing remarks

There are other, minor points that could perhaps be added in support of combining job and income guarantees. For instance, the effectiveness of the JG in improving workers’ employability might be somewhat enhanced in a JIG. The availability of the basic income would ensure that only those committed to a JG position would opt for one. The signal to employers that the individual was intent on obtaining a job in the broader economy would be somewhat strengthened. All in all, though, the points discussed in previous sections seem the most pertinent: an easing of coercion alongside a positive right to employment; a safeguard against a standalone JG being turned into workfare; a safeguard against a standalone BIG undermining wages; and a mechanism for effecting a gradual transition to a society of freer and happier individuals.