Republican Mayor Introduces a Job Guarantee. One Year Later Sees Success – No Surprise There

As many of you know, I’m a strong proponent for the initiation of a federal Job Guarantee and speak of the initiative frequently on social media, particularly Twitter where I have held live discussions on the topic. The Hunter Keane Institute, for which I will now be writing policy notes, papers and doing research, was established primarily for the advancement of the federal Job Guarantee program in the United States, the United Kingdom and Australia. For those not up to speed on the program, let’s review it before I continue.

The Job Guarantee is a simple, yet elegant multi-purpose solution to reversing the damaging effects of 35 plus years of national governments intentionally maintaining long-term involuntary unemployment to fight non-existent accelerating inflation. The program is designed to serve both important social and macroeconomic purposes which benefit everyone, whether they work in the Job Guarantee or private sector.

The Job Guarantee will end all involuntary unemployment. Involuntary unemployment is when a person is willing and able to work, but cannot find a job. The federal government will fund the program, but will have no say in administering the program (the hiring of people, the type of jobs offered). Local communities will decide what jobs to create based on their particular needs and will hire all who apply. Once the program is initiated, those who are willing and able to work need only sign up at their local Job Guarantee center and a socially beneficial job will be tailored to that person. The person will be paid whilst work is being arranged for them. Pay is fixed at a flat rate (current proposals are $15 per hour for the unskilled).

A Job Guarantee worker can set his or her own schedule, working as little as one hour per week to 40 hours per week. The abusive private sector concept of “open availability” does not exist in the Job Guarantee. Weekends are not a must. A person can choose to work whatever day(s) of the week he or she sees fit. Ridiculous pre-applicant screening schemes such as “People Answers” used by many retailers also do not exist in the Job Guarantee. Simply put: if you want a job at a decent wage and are willing and able to work, you are guaranteed a job.

Workers are employed in their local communities doing socially productive, meaningful work such as, constructing nature trails, protecting wildlife habitats, clearing urban blight, planting trees and other beautification efforts, road clean-up – the list is endless and again, completely determined by the community itself based on its particular needs.

The Job Guarantee serves extremely important macroeconomic functions. First, the Job Guarantee pays a fixed minimum wage, set by the federal government, so the Job Guarantee fixed minimum becomes the national minimum wage. In other words, the floor price of labor is now fixed. Since the federal government fixes the floor price of labor, the Job Guarantee provides a nominal anchor against inflation.

Secondly, the Job Guarantee creates a pool of working labor which is much more desirable to private sector employers. The private sector can hire Job Guarantee workers at any time to meet their production needs by simply paying higher than the Job Guarantee fixed minimum wage, what we call “paying a premium”. This is because if the fixed Job Guarantee wage is $15, then that is the national minimum, so an employer cannot offer pay below that floor price. Since the private sector can hire from the pool, workers can clearly move back and forth between private sector work and the Job Guarantee. What this means is that in good economic times, the Job Guarantee pool will be smaller as many people are employed in higher paying private sector work and in a recession, the Job Guarantee pool will expand as more people lose their private sector jobs. Since the federal government pays the Job Guarantee wage, this means that the federal budget deficit will also automatically shrink in good times and expand in recessions, maintaining full employment indefinitely. Thus, the Job Guarantee is a powerful automatic stabilizer; far more powerful than welfare and unemployment insurance.

Third, since workers can move back and forth between private sector work and the Job Guarantee, should wage-price pressures rise in the private sector threatening inflation, the federal government will adjust fiscal or monetary policy to reduce aggregate demand and those who lose their private sector work in the process will simply transfer out of the inflating private sector and into the Job Guarantee. This demonstrates that the traditional mainstream belief of a trade-off between unemployment and inflation is complete nonsense. There is no trade-off. The Job Guarantee provides full employment (less than 2%, no underemployment, no hidden unemployment) with price stability.

For those of you who are unaware, about a year ago Albuquerque New Mexico’s Republican mayor, Richard Berry introduced a Job Guarantee for homeless people and panhandlers who were willing and able to work. Yesterday, the Washington Post ran a story with the headline, “This Republican mayor has an incredibly simple idea to help the homeless. And it seems to be working”. Of course it seems to be working. People have to work for a living. There are no jobs. People want jobs. Give them a job. Simple. And so, after wandering around the city of Albuquerque talking to panhandlers, this Republican (not Democrat we will note) mayor developed a keen grasp of the obvious – they don’t need or want more welfare, they need and want good paying jobs. Let’s give them jobs.

Brilliant!

So, the city of Albuquerque sends around a van to pick up homeless people and panhandlers who are willing and able to work and employs them at $9 per hour (higher than the minimum wage, I might add) cleaning up litter, clearing out weeds and also provides them a free lunch. According to the report, not only has the city become a nicer place to look at, but some of the Job Guarantee workers now have permanent employment:

“In less than a year since its start, the program has given out 932 jobs clearing 69,601 pounds of litter and weeds from 196 city blocks. And more than 100 people have been connected to permanent employment.”

When asked about the results, Mayor Berry said:

“You can just see the spiral they’ve been on to end up on the corner. Sometimes it takes a little catalyst in their lives to stop the downward spiral, to let them catch their breath, and it’s remarkable,… They’ve had the dignity of work for a day; someone believed in them today.”

What is also interesting is that the program puts to rest the delusion that poor people are unemployed, because they are lazy. That is not true. On the macro level, the federal government causes unemployment. But, on the micro level, there can be hundreds of reasons why an individual can’t find a job when jobs are available. Kellie Tillerson, director of Employment Services at St. Martin’s Hospitality Center, was good enough to point out that we should:

“Genuinely ask why they are in the predicament they are… Many have medical conditions, they don’t have the proper identification — you can’t get a job without one. They don’t have a Social Security card. Those little things we take for granted prohibit people from getting a job. Don’t assume they are lazy.”

Well said. Ms. Tillerson is absolutely correct. The claim that all poor people are unemployed simply because they are lazy, is both a sweeping generalization and political nonsense. Or, more to the point, such claims are the result of political BS, just like the micro level nonsense that all unemployment exists because poor people want welfare. All unemployment exists because the federal deficit is too low – period. The federal government chooses the unemployment rate.

What some people fail to realize is that unemployment isn’t just job loss. It is also an inability to find another job as well. Just as these nonsensical people focus only on the cost side of wages and ignore the demand side, they also focus only on the reasons why people lose their jobs. Afterwards, they manage to ridiculously apply those reasons to why people cannot find another job, resulting in a thoroughly incompetent, uneducated, grand theory of macro level unemployment. “A person can lose their job if they don’t show up, if they show up late too often, or if they call off too much. That person is clearly lazy and irresponsible and that is why that person cannot find a job. Therefore, the reason why we have unemployment is because too many people are lazy.”

Major LOL moment, there. Again, there are many reasons why an individual on the micro level can both lose their job and not be able to find another job. However, none of this applies to why there is unemployment. The micro level does not translate to the macro level at all. It is not the same thing. Joe Poor might lose his job and have a hard time finding another one, because there are fewer jobs than there are people applying. But on the macro level, only the federal government can ensure that there are enough jobs for every, single person on the micro level who wants a job, because, again, the federal government determines the unemployment rate through its deficit spending. If the federal government chose to provide a situation of full employment, then if Joe Blow on the micro level lost his job, he could easily find another one right away.

It turns out that the program is so successful that other cities want in on Mayor Berry’s act:

“Dozens of cities around the country have reached out to Berry wanting to copy the program.”

The federal Job Guarantee isn’t designed to eliminate all unemployment, but rather, all involuntary unemployment. It isn’t forced labor. It is voluntary. And similarly, Mayor Berry’s program isn’t intended to end all panhandling. It’s intent lies in the value of people:

“The program hasn’t weeded out all panhandling in the city, and supporters say that’s not really the point. It’s connecting people who would otherwise not seek help to needed services. And it’s showing them when they are at their lowest that they have real value, and that others are willing to show them kindness to help them have a better life.”

But, wouldn’t these “lazy, bottom-feeders” prefer a welfare check to an actual job? Apparently not:

“When the van fills, people have begged to get a spot next time..”

and:

“One man who recently got out of prison returned to St. Martin’s the day after taking one of the city’s jobs.. He was one that said, ‘I would much rather earn my money than have someone hand it to me.’ ”

Most people want work, not handouts. Whenever politicians in Washington propose solutions it is always another type of handout, but never a job. How ironic. We live within a society that looks down on handouts and demands that people work for a living, yet that same society prefers to provide handouts rather than decent paying jobs.

The time has come to end the nonsense once and for all. The time has come for a federal Job Guarantee.