Job guarantee comparatively better than UBI – macroeconomic stabilizer and stable public services

[Pavlina, “The High Costs of UBI are Not Financial: They are Real,” Eastern Economic Journal volume 45, pages327–330 (2019), February 4, 2019, Springer Link, https://doi.org/10.1057/s41302-019-00134-7, accessed July 1, 2023, GDS-LL]

The best fiscal policy is one that serves as a thermostat for the economy and adjusts spending counter-cyclically. UBI has no such feature (remember the same grant is provided to all year after year, rain or shine).

By contrast, the Job Guarantee (JG), which David Colander (2016) has discussed previously, has a strong macroeconomic stabilizer. As a public option, which provides a basic job at a base wage to anyone who needs work, the JG employs the unemployed in recessions and helps them transition to better-paid private sector jobs in expansions. The JG eliminates involuntary unemployment, by replacing the NAIRU, i.e., the fluctuating pool of unemployed, with a fluctuating pool of employed people in the JG. It also provides a stable minimum wage floor. The countercyclical function of the program and the non-competitive base wage allows it to stabilize output and prices (Tcherneva 2013).

Crucially, the JG addresses another shortcoming of UBI—it produces the very output that is currently underprovided to families experiencing economic insecurity—affordable childcare and housing, free preventative care health clinics, affordable training and education opportunities, and locally sourced food in so-called “food desert” areas. The JG aims to provide a wide range of public services, including urban restoration, fire and flood prevention, stormwater maintenance, and other green projects. In other words, the Job Guarantee provides both the basic income and the output.

As we consider large-scale programs, we would do well to ask, not whether we can pay for them, but whether we are providing the needed output and resources in a manner that addresses economic insecurity, without compromising macroeconomic and price stability. Mailing a check is easy. Guaranteeing that every individual can acquire the needed real goods and services for a basic living standard is the hard part.