A Job Guarantee Costs Far Less Than Unemployment

In 1944, President Franklin Roosevelt warned, “People who are hungry and out of a job are the stuff of which dictatorships are made.”

By this measure, the prospects for democracies around the world look particularly grim. In the United States, the COVID-19 crisis has exposed economic pathologies that include racial inequality, mass incarceration, and pervasive problems in the labor market. American workers live on poverty wages, endure dangerous working conditions, suffer discrimination, and receive inadequate protections. Worse, they face a perennial threat of unemployment that can no longer be ignored.

Nearly 33 million workers in the United States are receiving unemployment insurance as a consequence of the pandemic, and fully half of low-income Americans have lost jobs and wages due to COVID-19. The labor market has always been a cruel game of musical chairs, but it is more so today, as millions face unemployment rates not seen in the postwar era. Persistent unemployment (even in “good” economies) emboldens firms to cut wages and benefits and serves to crowd workers into precarious and poorly paid jobs. So long as the phantom of unemployment looms, good jobs won’t come back.

The current moment calls for bold thinking of the kind that the United States hasn’t dared since the New Deal. Roosevelt responded to the economic calamity of his time—the Great Depression and a second, devastating world war—with far-reaching economic policies and a call for what he named a Second Bill of Rights, designed to procure basic economic security for all people at all times. Chief among the rights he enumerated was the right to a job. Today, a proposal for a federal job guarantee, grounded in the same logic, holds particular promise for the nation’s recovery.

The job guarantee is a public option for jobs: a permanent, federally funded but locally administered program that would provide voluntary public-service employment opportunities at living wages to anyone looking for such work. The ambition to secure the right to work for all people through policy is not new. The Universal Declaration of Human Rights affirms the right to employment, a right that is etched into many nations’ constitutions but whose mandate remains unmet. Civil rights leaders in the United States, including Martin Luther King, Jr., and Coretta Scott King, made the right to work a signature issue on the grounds that securing it would help remove economic insecurity as a tool of racial subjugation. The architects of the Employment Act of 1946 and the Full Employment and Balanced Growth Act of 1978 tried, but ultimately failed, to secure such a right with policy and legislation. Today, it has become a pillar of the Green New Deal.

As the United States faces a long, uphill recovery from the COVID-19 pandemic, it would do well to consider a measure that could put its people to work, at a living wage, for the benefit of all. But a job guarantee is not a crisis measure: it must be a permanent policy, because unemployment devastates communities even when economies are relatively strong. The guarantee would recognize a legally enforceable right to a decent job for anyone of working age, regardless of labor-market status, race, gender, color, or creed. Not only would it offer employment on demand for useful public-service projects, but it would establish much-needed standards for wages and working conditions in all jobs and even help stave off the threat of climate change.  

Good and Green Jobs

One thousand women on horseback: these were the roving New Deal librarians who, starting in 1935, brought books and set up libraries in some of the most remote areas of Kentucky. The women rode across 29 counties, sometimes more than 100 miles a day. And where the terrain was difficult, they dismounted their horses and carried the books on foot. Their impact was far-reaching. As one recipient put it: “Them books you brought us has saved our lives.”

The Works Progress Administration (WPA) library projects, which served 45 states and employed 14,500 people, helped confront two problems at once: unemployment and illiteracy. “Unskilled,” unemployed women provided a public library option to some of the most remote regions in the nation at a time when most libraries were primarily funded privately, and most people lacked access to books. The project ultimately produced something that Americans now consider to be a permanent fixture of social life: public libraries in every corner of the country. 

Under the job guarantee, all jobs that address destitution and neglect, whether of people or of the planet, are considered green.

The New Deal saw millions of people hired for projects whose lasting effects are well documented. The era’s environmental work was especially successful: workers in what became known as the “Tree Army” planted 3 billion trees, created and rehabilitated 711 state parks, built 125,000 miles of truck trails, developed 800 new state parks, controlled soil erosion on 40 million acres of farmland, improved grazing conditions on public ranges, and increased the wildlife population. These projects breathed new life into the U.S. conservation movement, the forerunner of today’s climate activism.

Today’s American communities confront soaring unemployment, social neglect, and a climate crisis of planetary proportions. Employing the unemployed in a program that addresses the environmental threat could create millions of public-service jobs for years to come: urban tree planting, hazardous waste removal, fire prevention, flood control, and soil erosion and water-runoff solutions are just a few examples of the urgent environmental work to be done. But public programs can also offer care work that the private economy tends to undervalue, underpay, and ignore (for example, childcare, elder care, and special programs for veterans and at-risk youths). Under the job guarantee, all jobs that address destitution and neglect, whether of people or of the planet, are considered green.

There Is No Minimum Wage Without Work

In a few short years (1933–38), Roosevelt implemented policies that were truly transformative at the time. Imagine a United States without minimum wages, mandated days of rest, collective bargaining, unemployment insurance, and Social Security. But the country endorsed no guaranteed right to decent employment for all, and so its early labor laws were built on weak foundations. The threat of the sack loomed in every negotiation between unions and firms. Employers could easily outsource jobs and hire cheap migrant labor. Job insecurity broke the postwar social contract, eroded workplace solidarity, and helped bust unions, as firms held the threat of unemployment over their workers as a powerful cudgel.  

Conventional wisdom accepts unemployment as the inevitable collateral damage of economic fluctuations, trade, and shocks, such as pandemics and financial crises. But the social costs of this status quo are staggering. The unemployed often endure permanent loss of income, physical and mental health problems, and increased mortality. Their spouses and children suffer reduced health and educational prospects. Crime, homelessness, recidivism, and political instability are strongly correlated with unemployment. The job guarantee would prevent many of these outcomes and provide a minimum labor standard for all jobs, including a robust wage floor.

Without the guarantee of a job, the effective minimum wage for those seeking work but unable to find it is zero.

The road to establishing a labor standard has been long. When Roosevelt called on Frances Perkins to serve as Labor Secretary, she agreed on the condition that he support a federal minimum wage, a reduction in the workweek, and a revitalized public-service employment program (among other groundbreaking pieces of legislation). The 40-hour workweek she helped pass was a compromise: a very popular earlier bill for 30 hours had been narrowly defeated. The minimum wage she fought for did not extend to all workers, and over the intervening decades, it has in any case failed to keep pace with the cost of living. More than 40 percent of working people in the United States earn less than $15 an hour, and a campaign to raise the minimum wage has made slow progress in state legislatures.

More sweeping federal action is called for. Without the guarantee of a job, the effective minimum wage for those seeking work but unable to find it is zero. The job guarantee would help secure a true minimum wage and benefits package and establish standardized working hours and conditions, because it would eliminate unemployment and offer an alternative to unstable jobs that pay poverty wages. Indeed, poverty-wage-paying employers would be enticed to match or exceed the decent pay and benefits of the job guarantee if they wished to retain workers. But that would not be hard to do, because these firms, too, would be thriving in a stronger and more stable economy.

Our research at the Levy Economics Institute demonstrates that a large job guarantee program, employing 15 million people at $15 an hour with benefits, would permanently boost economic growth by $550 billion (more than 2.5 percent of GDP) and private-sector employment by three to four million jobs, without causing inflation. It would furnish considerable relief to state budgets and reduce overall welfare expenditures on other programs. The price tag? Only 1.3 percent of GDP—not a high price to pay for full employment, price stability, and economic security. The fallout from COVID-19 may require the program to be bigger than earlier anticipated, but one thing is certain: one way or another, the government and society will be paying unemployment. The question is how: whether by providing decent job opportunities or by sustaining an economy in which masses of people remain unemployed.

Unemployment Is Not Inevitable

New Deal programs made an enormous difference in the lives of Americans. As the Rutgers law and economics professor Philip Harvey has noted, the short-lived Civil Works Administration was so popular that workers started to regard the jobs and the projects it offered as opportunities the government owed them. The primary opposition to the program came from racist employers and farmers in the South, who wanted to be able to pay workers—especially black and migrant laborers—poverty wages. But as Harvey has noted, the program was so popular that both Roosevelt and his conservative budget director, Lewis Douglas (who was no friend of the CWA), believed that if they had reauthorized the program, they might never have been able to end it. 

Today, the job guarantee polls extremely well among Americans, including in deep red states. It is one of the rare policies that enjoys broad bipartisan support—and its popularity extends even beyond the borders of the United States.

Perhaps the policy owes its popularity to the basic logic at its core: to guarantee a right to work is to fundamentally reject the notion that people in economic distress, communities in disrepair, and an environment in peril are the unavoidable side effects of a market economy. As the world confronts the grim consequences of COVID-19, it could do worse than to inoculate itself against the devastating effects of mass unemployment. A job guarantee would be a long overdue step on the road to economic and social justice.