U.K. to Propose Work-for-Benefits Program, Sunday Times Reports

By Svenja O’Donnell

Jan 8 (Bloomberg) — The U.K. coalition government is planning a compulsory community work program for the long-term unemployed, the Sunday Times said, citing Employment Minister Chris Grayling.

The plan will include stopping benefits for as many as three years for those who refuse to sign up, the newspaper said.

Grayling has indicated his support for the plan, saying a “work for dole” program will help curb the U.K.’s expenditure on benefits for the jobless, the paper said.

People who have been unemployed for three years or more will be forced to work unpaid for six months under the terms of the program, the Sunday Times said.

130 Responses

  1. The last labour government proposed a job guarantee (actually just a placement in keeping with their spinning credentials) for everybody unemployed over two years at the last election.

    This was based on the experience of the Future Jobs Fund, which placed unemployed people successfully (and paid by the state) in all the sectors.

  2. It’s compulsory.

    That’s not at all what the other MMT guys have been saying about JG.

    Except they’ve also been saying unemployment insurance program will be discontinued – which amounts to compulsory JG in effect.

    Seems contradictory on a critical moral point.

      1. @WARREN MOSLER,

        Warren, I agree that it is in some measure progress if people are starting to think that chronic unemployment is a problem. But it’s a step back if they then blame the problem on the unemployed, rather than on the failure of the public and private sector combined to provide everyone with an opportunity to work.

        Similarly, while it’s great if governments recognize that private sector debt is a problem, it’s bad if their solution is to blame the victim and reinstate debtor’s prisons.

    1. @JKH,

      What moral point? It’s a guaranteed JOB, not a guaranteed income whether you work or not. Are you saying we are morally obligated to pay benefits to people who claim to be “unemployed”, but really just don’t feel like working?

      1. @John O’Connell,

        the moral point is comparative

        those who currently need unemployment insurance income while seeking private sector re-employment will be precluded from the latter in terms of relative time allocation, if forced to accept a JG job in order to ensure a comparative level of income

      2. @JKH,

        JG is not “mandatory”, you can always remain unemployed.

        JG compensation is not comparative (comparable?) to unemployment insurance compensation, it is much more. JG is more cash wages, and includes health insurance and child care, which unemployment does not include, and JG only takes 40 hours a week, some of which might be used for job search (if I were king of JG). It is quite common for people of all income levels to work far more than 40 hours a week. And the theory is that someone on JG is more “employable” than someone who has been unemployed for a similar time.

        I don’t see that a sacrifice of some leisure time is too much to ask in return for the increased benefits of JG as compared to unemployment. But, JG need not preclude the continuation of unemployment insurance, for anyone who prefers that. When I read that JG would “replace” unemployment, my impression was that nobody would prefer unemployment if they had JG, so it would no longer be necessary.

        The idea is not to create an underclass of slave labor, it is to help people.

      3. @John O’Connell, That’s fine for the approximately 10% who could get work from the existing 450,000 vacancies, what about those 90% or 4.5 million who haven’t got jobs after the vacancies are gone, even if you assume that filling the vacancies generates say 45,000 jobs; whichever way you look at it, there’s a job famine; surely it’s immoral to demonise the victims?

      4. @Will Richardson,

        Nobody is demonising anyone. Well, that’s not completely true. Some people are loudly demonizing those they consider to be the “1%”.

        In the world of MMT ideas, JG is the last one on the list. First on the list is to increase deficits until most of those unemployed or underemployed have full-time jobs again, which will reduce the JG population to (I figure) about 2 million, near the level of continuing unemployment claims in 2006. Or less, if the “price anchor” thing works well and inflation remains low, and the Fed doesn’t panic.

      5. @Will Richardson,

        I’m confused. JG is for the ones who do NOT get those vacancies, not the ones who do.

        JG gives them more money and more benefits than unemployment, and helps them to get re-employed.

        I have no objection to continuing the current system of unemployment insurance for those who prefer it, and think they would be “demonized” if offered a job and more money and more benefits.

    2. @JKH,

      In my understanding, the MMT version of JG would be formally “volitional” as you know. As you rightly argue, this may in effect amount to “compulsion” for those who have nothing else.

      I would be curious to know, however, if you’ve seen any of the MMT pros stating that unemployment insurance should be abandoned – and in that case if you could refer me to that?

      I would have thought there could indeed be such insurance along with JG – for 26 or 52 weeks say? And there could obviously also be private or semi-private alternatives.

      Seems a matter of design – or has it been set in stone?

      1. @Hugo Heden,

        Sorry, I don’t recall the direct reference; I’ve only been reading blog posts on JG and comments sporadically, so I can’t confirm it. But I do seem to recall this being cited if not by the top group, by some high profilers who I assumed would reflect the top group’s position on it.

        Re design: yes, absolutely I think that’s the point; I’d be interested in seeing more on a 2 tier JG/unemployment insurance framework, with price anchoring algorithm – would be interesting I think.

      2. @JKH,

        The general line I’ve seen has been that you pay the Job Guarantee wage first for anybody who turns up for work and then see what you can do with them later.

        I believe Warren’s position is that the existing unemployment arrangements stay the same.

        So it’s very much voluntary on all sides – reflecting the underlying thinking that unemployment is a systemic failure, not a failure of the individual to try hard enough.

    3. @JKH,

      Yep .. this is not even close to a JG.

      Person A gets unemployment benefits.

      Person A remains unemployed for a long time due to shortage of demand and hence a lack of jobs (though they will present it as if the person is not interested in working or finding a job).

      Government wants Person A to do work for six months to keep getting benefits.

      Person A won’t be paid salary during the six months.

      If Person A does not agree to do unpaid work, his benefits will be withdrawn.

    4. @JKH,

      Forcing people to work for now pay is slavery, not a job. That’s not a job guarantee, it’s a labor requirement. The job guarantee is voluntary. But still the question remains of what to do about people who don’t accept it and remain unemployed.

      How about this: There is a basic income floor (“the dole”) that is set at one living wage amount. The job guarantee floor wage is set at a an attractively higher amount. I think this is a version of Peter C’s J&I guarantee proposal, but with differentiation between the two wages.

      1. @Dan Kervick,

        “Forcing people to work for now pay is slavery, not a job.”

        Forcing people to work is slavery period. Whether they are paid or not. Of course, nobody is being forced as far as I can tell.

        “There is a basic income floor (“the dole”) that is set at one living wage amount. The job guarantee floor wage is set at a an attractively higher amount.”

        I have always felt that this was necessary to implement a JG.

        Note also that a JG would not really eliminate unemployment. MMT-ers define unemployment away under a JG, but of course a rocket scientist who loses his $200K/yr job is probably not going to show up to rake leaves for $8/hr.

      2. @Dan Kervick,

        My interpretation is that Peters JIG has one wage. You can work if you want to – there needs to be proper JG style job offers – but you don’to have to.

        Sounds odd at first, but he defends the position very well.

        See for example the last couple of posts – http://heteconomist.com

      3. @Dan Kervick,

        “I believe Warren’s position is that the existing unemployment arrangements stay the same…right”

        That’s good enough me for.

        What I’d like to see then is a (standard) JG proposal that is FULLY integrated with unemployment insurance along side – NO stand alone JG proposals

        Then I’d be interested in buffer stock pricing strategy, etc. along with it.

      4. my proposals are ‘additions’ to existing institutional structure.

        fica suspension
        revenue to the states
        $8/hr federally funded transition job for anyone willing and able to work

        no other changes

    5. @JKH,

      What I’ve found surprising is the MMT blogosphere states that unemployment insurance ends as an option, then I read Warren saying that it doesn’t. There is an issue with consistency.

      If unemployment is withheld, the JG effectively is compulsory. If unemployment is not withheld, the JG effectively is public sector employment to make up for the post-2008 public sector firings.

      1. @JKH,

        FYI,

        Randy Wray in 2000:

        “The ELR will eliminate the need for a minimum wage, as the ELR wage will become an effective minimum wage. It could also establish the base package of benefits that private employers would have to supply. It could replace unemployment compensation, although it could be simply added on to give workers who have lost their jobs more choices. In the US well under half of the officially unemployed even qualify for unemployment compensation. The point is that no matter what social safety net exists, ELR can be added to allow people to choose to work over whatever package of benefits might be made available to those who choose not to work. Obviously, generous benefits to those who do not work can affect willingness to work. The ELR benefit and wage package should be set higher than the benefit package given to similar individuals who do not work, but even this is not absolutely necessary. If ELR enhances one’s access to desirable private and public sector (non-ELR) jobs, then some individuals will choose to work in the ELR program even if this means taking a benefit cut. However, if society values work, it seems far more reasonable to reward ELR workers with a better compensation package than they would receive if they did not work.”

        http://www.cfeps.org/pubs/wp/wp9.html

      2. @Scott,

        thanks, that’s very reasonable.

        it may be the case that some blog discussions are distorting what’s actually been written in the formal papers; not so unusual

        it would be good for the bloggers to emphasize these intended relationships, I think

      3. Note that ‘Full Employment AND Price Stability’ that came out in maybe 1996 has remained definitive, along with
        similar papers I wrote with Bill Mitchell around that time. What they did was show how the traditional concerns about buffer stock policies did not apply to the JG.

  3. Yep, I figured it would be something like this. This is more like forced labor than a JG.

    As soon as the JG hits the real world, you’ve got to figure it’s going to be bastardized. It’s the way of politics.

    Just imagine the republican version of the JG. Imagine what concessions would need to be made to make it passable in the United States.

    I see a real possibility the JG becomes a privately run, mandatory work camp.

      1. @WARREN MOSLER, I can easily see the JG being framed as flat out communism.

        Comrade Mosler! 😉

        “Commie” is not a even a real critique. But the commmie label will get applied to the JG. Usually this isn’t a problem – because everything to the left of Ayn Rand is commie to some people.

        But the JG looks somewhat like actual communism. It’s millions of people employed by the government, in a massive program. That’s communism to my mom and dad and brothers.

        Can you imagine if these people had to wear some sort of uniform? My oh my…

        It’s so hard to explain MMT already. Add the JG on top.

        “These communists want to print all the funny money they can and force everyone to work for the government – and put a max speed limit of 30mph on every road!”

        MMT makes the JG possible, but that doesn’t mean it’s necessary immediately.

        I keep thinking back to a friend (now passed) who was part of the feminist movement. In her 20’s she thought a few protests and active engagement for a few years would change the world.

        In her 60’s she said it was going to take decades. She did change the world – her protests and active engagement made our world a better place.

        But this is 40 years after she did all those things, and the movement is slow.

        What would count for victory today? beo keeps saying “throw your golf club in the direction you’re walking”

      2. @TC,

        “What would count for victory today?”

        You have to start with cutting the subsidy on not spending your dollars – so no Treasuries. That boosts spending.

        Then you have to wind up the deficit. So cut taxes or finally get around to offering a decent healthcare service. That boosts spending

        And then when you’ve done all that you’ll still have people without work – because the system will always leave people without work.

        Then the question is one of morality. These people are without work due to a system failure – and therefore should be fully compensated for their loss, including their loss of socialisation and other detrements they suffer because of the system failure.

        Do we then need to let the lawyers start sueing for compensation before the state acknowledges it is the design of the economy that causes the unemployment and therefore it is the state’s job to resolve the consequences of that.

      3. @Neil Wilson,

        “You have to start with cutting the subsidy on not spending your dollars – so no Treasuries. That boosts spending.”

        Sounds like QE? How about interest income?

        “Do we then need to let the lawyers start sueing for compensation…”

        Hmm… How about if we START with that?

      4. Sounds like QE? How about interest income?

        I’d rather give domestic residents an extra tax cut than pay foreigners for hoarding the currency. They should have every encouragement to spend it.

        If they then don’t, that’s their lookout.

        Private pensions are a different matter, but can be dealt with by either special bonds, or special ‘deposit’ accounts at the Fed.

      5. @TC, Neil – agreed.

        Imagine the entire MMT crowd was talking about a variable payroll tax holiday for the 2012 election cycle, instead of creating a circular firing squad over something with zero political legs.

      6. @TC, oh the irony that balanced bugdets are the real communism by reducing net finanical non-government financial assets and would ultimately lead to government owning all property; reduced to it’s logial absurdity!

      7. all i know is that with my fica suspension adding heaps to aggregate demand, and the one time revenue distributions to the states adding a bit more,
        we need the $8/hr transition job for anyone willing and able to work to help the transition from unemployment to private sector employment or there could
        be a lot of unwelcome inflation. And if supporting that $8 transition job makes me an inflation hawk so be it!

      8. @Warren,

        Yeah, but there’s no need to pay them for it – just let the interest rate drop to zero. Paying people just encourages the speculators to distort things.

        If they then want to hoard dollars so be it. They stand the risk.

        Is it better for domestic borrowing to have a clean price (off zero), or cheap imports from the higher interest rates on Treasuries?

      9. @TC,
        What would count for victory today? beo keeps saying “throw your golf club in the direction you’re walking”

        Yeah, its a great Reagan line that Chris Matthews quotes in his “rules of politics” book, Hardball (chapter 6, Don’t Get Mad; Don’t Get Even; Get Ahead). In this context, I’d say its creating a variable payroll tax holiday foremost, enacting monetary reforms if possible and set up JG pilot programs in a few cities to establish a track record of success (Chapter 9, Always Concede on Principal). :o)
        http://www.wikisummaries.org/Hardball

        “These communists want to print all the funny money they can and force everyone to work for the government – and put a max speed limit of 30mph on every road!”
        That’s just mean! :o)

        Interesting no one even mentions anything close to my proposal:
        Lower the national speed limit to 30 mph for private ground transportation.

        http://moslereconomics.com/2008/05/22/energy-crisis-solution/

        Not that I have any room to talk, on TPC’s CNN Radio thread I was just plugging Marty Feldstein’s gasoline rationing plan.

      10. @TC, @beowulf

        I agree with Warren on reducing the speed limit. I’m also huge on the reducing long only speculation in commodity futures.

        And I am sympathetic to the JG, if not an out right supporter.

        I was just pointing out it’s really easy to smear even a capitalist like Warren.

        Take away the JG and the rest seems much less striking. Keep in the JG and we’re spittle-flecked commies.

        Politics aren’t about reasonable argument at all.

  4. “help curb the U.K.’s expenditure on benefits for the jobless”

    It’s deficit-cutting, not JG. It’s fundamentally different than JG in that it pays no more for work than it does for non-work.

    1. @John O’Connell,

      There is no hard and fast rule as to what the JG wage should be, far as I know. Bill Mitchell, for example, proposes generous pay and conditions. But those who advocate this generosity must be aware of what the Swedish labour market economist Calmfors called the “iron law of active labour market policy”. This is that if JG type work is more attractive than unemployment, that reduces the relative attractions for those concerned of regular work: i.e. aggregate labour supply to the regular jobs market is reduced, which is inflationary.

      And that in turn means demand has to be reined in (assuming unemployment is anywhere NAIRU). And that in turn means JG type jobs will at least to some extent be AT THE EXPENSE OF regular employment. And that in turn raises the question as to whether those JG jobs add to GDP.

      1. @Ralph Musgrave,

        “aggregate labour supply to the regular jobs market is reduced, which is inflationary.”

        Is it? Who is to say that the JG work is going to be less productive that ‘regular jobs’?

        And what if JG jobs replace regular jobs? That suggests those ‘regular jobs’ weren’t very good and couldn’t stand the competition. The private sector then needs to raise their game to attract workers. After all doesn’t competition always make things better?

        How much JG style jobs should be allowed to compete with ‘regular jobs’ is very much up for debate. A healthy dose of competing for staff would be good for capitalists and force them to stop relying on cheap labour to create things.

      2. yes, if the jg wage is ‘too high’ there will be a one time adjustment to prices of everything else

        see ‘full employment and price stability’ on this website

      3. @WARREN MOSLER,

        From what it seems the JG is a conduit of deficit spending but resulting in the production of what aside from lowering the unemployment rate? I have stood in the middle according to every political compass test I’ve taken, so what exactly will be the offsetting output. Additionally, where I can locate data indicating what the spread in deficit spending resulting from the JG in comparison the unemployment insurance? Thank you.

      4. in theory in aggregate the additional deficit spending gets ‘saved’ by the economy. that’s why there is unemployment in the first place- govt. spending isn’t sufficient to cover the tax bill and net savings desires.

      5. @Fred,

        JG is not designed to raise output, it is designed to raise demand, as (potential) output is already higher than demand — that is the situation that creates unemployment.

        Since JG does not exist, there would be no data. The increase in the deficit due to JG is not an important data point anyway, as the JG program will naturally expand and contract in a countercyclical manner, tending to optimize the deficit, and making it easier to manage the policy options that do control the size of the deficit. It is likely that even with JG, there would need to be more of a move toward larger deficits, rather than smaller. We never got to full employment and rising inflation even when we had small deficits in 2004-2006 and even surpluses in 1999-2000.

      6. I didn’t design the JG to raise demand. It might even lower it, which would be a good thing, as that would mean lower taxes for the rest of us.

        It’s designed to get keep the unemployed shovel ready to go to work in the private sector, and at the same time reduce the real costs of sustaining an army of unemployed.

        As such the JG is a far superior price anchor to unemployment.

        So the question you should be asking yourself is,

        are you an inflation hawk like the MMT crowd,

        or an inflation dove like the Austrians?

        😉

      7. @WARREN MOSLER,

        “I didn’t design the JG to raise demand. It might even lower it,…”

        I can’t quite figure that one, but then I’m assuming that the typical unemployed takes a JG position because they are short of cash.

      8. @John O’Connell,

        “JG is not designed to raise output, it is designed to raise demand, as (potential) output is already higher than demand — that is the situation that creates unemployment.

        Since JG does not exist, there would be no data. The increase in the deficit due to JG is not an important data point anyway, as the JG program will naturally expand and contract in a countercyclical manner, tending to optimize the deficit, and making it easier to manage the policy options that do control the size of the deficit. It is likely that even with JG, there would need to be more of a move toward larger deficits, rather than smaller. We never got to full employment and rising inflation even when we had small deficits in 2004-2006 and even surpluses in 1999-2000.”

        I like Warren’s last explanation for this because without knowing the spread in deficit spending between a JG and what exists now, I don’t know what to make of any demand increase or lack thereof. The JG may not have the inflationary bias that UI has as a result regardless of output, but as Warren mentions, allows for a more shovel ready people, perhaps can be viewed as incurring costs of transition up front to more readily meet the increased aggregate demand that would result from the other counter-cyclical forces (spending increases, tax cuts).

      9. @Unforgiven,

        “I can’t quite figure that one, but then I’m assuming that the typical unemployed takes a JG position because they are short of cash.”

        Don’t know what typical unemployed means as those were people formerly employed and presumably making more than the $8/wage though I do not know nor do I know $8/hr is an improvement over UI currently received by those eligible. Whom the JG seems to more immediately benefit would be those who are unemployed but no longer eligible for benefits, or those who were never receiving them in the first place.

      10. it doesn’t pay much if any more than current unemployment benefits and people working and busy doing something at work probably spend less than people with nothing to do.

      11. @ John O’Connell

        > By what mechanism would JG lower demand? It would raise incomes, would it not?

        Yes, at first there could be an increase in aggregate demand.

        But a JG pool should have a better inflation fighting effect than an UE pool.

        So eventually, to achieve the same inflation control requires a smaller pool if the “quality” of the pool is better.

        If 5% unemployment is required to achieve some acceptable level of inflation, the same should be possible to achieve with a JG pool of only 3%.

        So, even if the JG income is higher and the JG system consumes more real resources, in time it could be a net decline in aggregate demand.

        (And we haven’t even started – consider the social costs that could be alleviated longer term.)

      12. @Ralph Musgrave,

        One principle is that it pays more than UI, else why would anyone do it? It is not a forced labor camp.

        Another principle is that it can’t pay too much more than minimum wage, else it would pull people away from private employment.

        Those two put some boundaries around the possible range of the JG wage, and allows us to say, I think, that with JG as an alternative to UI, many of the UI recipients would go to JG and get higher incomes as a result. Since it’s funded by the Federal government, then the deficit goes up, unless offsetting changes are made. I think it is safe to assume that this will not be enacted by non-believers, so there is no reason for them to do anything to offset the higher deficit.

        I don’t see how demand cannot go up.

      13. @John O’Connell,

        John, On your assumption that the JG wage is higher than unemployment benefit then yes – demand will rise. Moreover, unless you want JG schemes to have near zero levels of permanent skilled labour, capital equipment, materials, etc (in which case they’ll be very inefficient), those other factors of production have to be ordered up from the regular economy, which means demand rises even more!

        But there is a whapping great problem here, namely that I assumed above that unemployment was at or near NAIRU – and for the very good reason that if unemployment is way above NAIRU, much the best cure for unemployment is a straight rise in demand, not JG (not that I greatly object to JG continuing to operate where unemployment is well above NAIRU). Ergo the real role of JG consists of dealing with “at NAIRU” unemployment.

        Hugo Heden makes exactly the same “at NAIRU” assumption in a recent article. And quite right. See:

        http://econintersect.com/wordpress/?p=17643#comment-2266

        But if unemployment is at NAIRU, then a rise in demand is not permissible. Shock horror! JG that involves a wage higher than unemployment benefits is in check mate (unless, as I said above, we are prepared to see JG jobs created partly AT THE EXPENSE OF regular jobs).

        And there is empirical evidence which lends support to the latter conclusion. That is, the evidence from Sweden is that their active labour market policies (which included temporary subsidised employment) created such employment partly at the expense of regular employment. See:

        http://mitpress.mit.edu/books/chapters/0262012138chap1.pdf

        The authors say “ALMPs have probably reduced open unemployment, but also reduced regular employment”.

        BTW: I’m not 100% sure that answers your point, but hopefully it does.

      14. On NAIRU. AWOL – even in this study undertaken by economists working for our Reserve Bank.

        http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-03.pdf

        This is probably single most toxic invention and product of the neoclassical / Pseudo-Keynesien dismal science. Natural Rate of Unemployment or NAIRU or a “proof” that several % of the society (more than the “frictional” amount) must linger in unemployment or else unemployment will spiral out of control.

  5. “People who have been unemployed for three years or more will be forced to work unpaid for six months under the terms of the program …”

    That is some kind of guarantee, but not a Job Guarantee.

    1. @pebird,

      I think “unpaid” must mean they get the same dole they have been getting for not working, but not more. It can’t literally mean that they lose the dole AND become unpaid slaves for 6 months.

      1. @John O’Connell,

        The constant use of the word “slavery” here is PATHETIC. A slave is someone who is forced to work for a particular employer, and normally in a particular location. JG people are free to seek regular jobs – indeed I’d argue they should be ENCOURAGED to seek regular jobs.

      2. @Ralph Musgrave,

        And how are regular jobs in a supply constrained market not slavery?

        Slavery is when a person is not free to choose. You don’t have to slap irons on somebody to make them a slave. There are many other forms of coercion just as insidious.

      3. @Ralph Musgrave,

        Ralph, please read my comment again, I think you misunderstood it.

        Interesting, though, that by your definition the NBA players were somewhat justified in referring to themselves as slaves. They do not have a choice of employer or location, assuming they want to continue working in their profession.

      4. @Ralph Musgrave,

        Good point about the semantics, though. A slave is someone who is owned, like property is owned, by another person. There is no penalty for abusing or destroying one’s own property. JG does not approach that definition in any way. Even if the Brits were to suspend the dole for 6 months while a person worked, it is not slavery. Nobody is forced to accept the dole.

        That said, there are considerations of compassion and fairness, as well as economics, that would argue against harsh treatments that are less odious than slavery.

        Even communists must agree that JG’s higher wages and benefits are better for people than UI. Can’t we agree to improve the system a little, even if it does not meet everyone’s idea of utopian standards?

      5. @Ralph Musgrave,
        Slave..Must work when and where his owner dictates. Is fed,clothed,sheltered,and has medical care as needed supplied by owner. Choice is work or face punishment

        Wage-slave{rent-a-slave} Must work wnen and where his Employer{owner}dictates. Is responsible for own food,clothes,shelter,medical care out of wages. Choice is work or starve..

        Which is better off ?? Which owner is better off ??

    2. @pebird,

      Sounds more like a “Mob Guarantee”.

      I think John O. must be right. If not, then politicians should be banned from making ANY decisions about the economy.

  6. Obviously the essence of the Tory/LibDem plan is make people who are receiving benefits ‘pay’ for them. The idea of ‘paying back’ for benefits already received (by working for free) shows this quite clearly. Labor’s shadow work and pensions secretary, Liam Byrne, is proposing something similar.

    We’ll never get to JG by this route, if by JG we mean something that will help with macro stabilization (of output, incomes, prices). What one hand giveth to the macroeconomy the other taketh away.

    The lesson of these workfare type schemes is that for the JG to become a reality–and still function anything like MMT envisions it functioning–it will need to walk a political tightrope: avoiding the wrath and suspicion of the millions who primarily want to punish the unemployed for their presumed sloth, and yet remaining enough like real JG to have the planned counter-cyclical benefits.

    This is a tall order but one way to fulfill it might be for any JG proposal to go out of its way to establish that the jobs being created are not public sector jobs, but rather jobs in a 3rd sector alongside government and private industry. This would be one advantage of having the volunteer (non-profit) sector propose and sponsor (provide the managerial oversight for) the projects to be carried out by JG labor.

    Public oversight would still be required, but should perhaps be carried out by boards or juries of local citizens, chosen more or less at random, and confined to approving or denying the proposed project’s access to JG labor. And finally the voluntary principle should be strictly applied to the actual labor contract–no one is forced to offer or accept a job, and the contract is as free as a private sector labor contract, except that the wage/benefit is fixed, and funded by the sovereign.

    Such a program would be far easier to defend against the inevitable menu of attacks (featherbedding, corruption or government aggrandizement) than would a more conventional, government-administered public jobs program.

      1. @Neil Wilson,

        The JG itself distorts this. Unemployment is your fault so the government needs to provide you with a JG. If it were the system’s fault, why not resolve the the issues, which are related to aggregate demand? Increase spending, reduce taxes and the unemployed should find employment as hiring increases. The JG redirects the focus to the unemployed portraying them as unhireable, so why fix the system? Give them a guarantee.

        The JG as I have seen it on blogs is exclusive of unemployment insurance, so it appears to be compulsory.

      2. @Fred.,

        > Increase spending, reduce taxes and the unemployed should find employment as hiring increases. The JG redirects the focus to the unemployed portraying them as unhireable, so why fix the system? Give them a guarantee.

        There’s the inflation barrier.

        With general demand stimulus, inflationary pressure arises long before full employment has been reached. It can not achieve full employment with acceptable levels of inflation.

        Cynical as it sounds, there has to be a bufferstock stabilizing prices and disciplining wage demands.

        With JG in place (after initial prices disturbances have stabilized), aggregate demand is kept at just the right level. This alleviates the need to create those last jobs using inflationary indirect general demand stimulus to “trickle down” via spending multipliers.

        The economy is instead stimulated “bubble up” at the “bottom” by employing the unemployed directly. They are hired at a constant wage floor so that market wages are not chased after in upwards spirals.

        See http://mmtwiki.org/wiki/Full_Employment_along_with_Price_Stability#Job_Guarantee_versus_General_Demand_Stimulus .. (although some changes needed maybe – will look at it)

      3. @Fred.,

        The whole argument about who is at fault is a bit fatuous. I know unemployed people turning down work that pays double the min wage because they are used to work that pays three or four times the min wage. Whose “fault” is their unemployment? There is no answer to that. Personally I’d blame the individuals concerned because I think there is an obligation on able bodied people to do something useful even if it’s just washing up dishes in a restaurant. But I appreciate there is some merit in the argument that the highly paid should be given some time to seek comparable work before being forced to wash up dishes.

      4. @Ralph,

        Oh come on Ralph. Let’s not play the Daily Mail “I know one example that counters what you say therefore its all rubbish” argument. It doesn’t stand up for a minute.

        There are 4.8 million people chasing 450,000 vacancies in the UK. The wage share is declining and the number of unpaid interns is up.

        None of that happens at macro level in a market where there are more jobs than people.

        There aren’t enough jobs to go round in a system that is supposed to automatically converge on ‘full employment’.

        That’s a broken system. There will always be individuals who cannot find work no matter how hard they try.

        There are 8 runners in the 100 metre final at the Olympics. Five of them will go home empty handed. That doesn’t make them crap runners.

      5. @Fred.,

        “There are 4.8 million people chasing 450,000 vacancies in the UK.”

        If Ralph’s argument doesn’t stand up, why are there any vacancies, let alone 450,000?

      6. the reason unemployment doesn’t drop when someone who is unemployed takes one of those jobs is because it means somone else is losing his job. that’s what a shortage of aggregate demand is all about.

      7. @Hugo.,

        “With general demand stimulus, inflationary pressure arises long before full employment has been reached. It can not achieve full employment with acceptable levels of inflation.”

        Demand leads employment I interpret this as without reading the link.

        “Cynical as it sounds, there has to be a bufferstock stabilizing prices and disciplining wage demands.”

        Disciplining wage demands when wages have not kept up with productivity? Who is this assisting again?

      8. @Warren Mosler,

        The left thinks its slavery and the right thinks its socialism.

        So it will never be enacted until the right thinks its slavery and the left thinks its socialism. :o)

      9. @Beowulf,

        “So it will never be enacted until the right thinks its slavery and the left thinks its socialism. :o)”

        I know its early, but this is comment of the year!

        I think it might hold up for the remaining 11.5 months

      10. @Fred.,

        @Beowulf.

        Funny, but the association of slavery with the right is pretty out of line. The association with socialism on the left is a compliment to many on the left — meaning they would accept it as a compliment.

        I could even disingenuously cite the Civil Rights Act passage. But if you look at it carefully, it’s not an Elephant/Donkey thing it was a North/South issue.

        I do take from this Comments section that there isn’t really much agreement about what JG is in detail. So let’s lower taxes and decrease unemployment! And if you want to hand everyone $X per year across the board to sustain life, go ahead. But it does seem that you can probably accomplish a lot without a giant JG immediately, and trying out little experiments here and there could be possible.

      11. my concern remains that lowering taxes to decrease unemployment can lead to unwelcome ‘inflation’ long before unemployment gets below 5% without the $8 transition job.

        Call me an inflation hawk if you like, but that’s my take.

      12. @Neil Wilson, I agree but I also the solution needs to be as carefully framed as the problem.

        Let me put it this way: Can we think of ways of divorcing the JG from the perception that it is intended primarily for the ‘losers’ in the economic game?

        And this is not just a matter of framing: can we imagine the program structured in such as way that it might genuinely attract people seeking alternatives to wage work, rather than a stopgap replacement for it?

      13. you could, but i’d propose that be a separate govt. program

        right now we need a transition job to facilitate the transition from unemployment to private sector employment
        to keep an expansion from bringing on unwelcome inflation long before unemployment gets below 5%

      14. @Amileoj,

        Neil’s above point about the current grossly excessive levels of unemployment being the fault of the system rather than the fault of the unemployed is fair enough – point taken. On the other hand my point about it being hard to say who is to blame becomes more relevant as unemployment declines to NAIRU – the “natural level” or whatever you call it.

      15. It’s a micro/macro/fallacy of composition question. Any one person can get a job by trying harder, being willing to work for less, etc. but the total employment won’t change either way, all else equal

      16. @Ralph,

        No. The NAIRU idea is a system designed barrier. With that approach the system *cannot* create enough for people to do.

        Its simply impossible with the system as it is designed because the matching process doesn’t have perfect forsight – and therefore there is no ‘clearance’.

        It’s the same issue with banks. The matching process prevents them from matching up savers and borrowers precisely and because of endogenous money you get net-savings popping up – which the government then has to accommodate to maintain production.

        Similarly the government has to accommodate a certain level of unemployed to maintain production. Therefore they should receive full compensation for their loss. It is a systemic issue.

        The only way round that is to use a buffering system like the JG, where the state money is used to filter the remainder and look for the nuggets of gold in there. That reduces the size of the buffer the government has to maintain.

  7. Sorry, I don’t see this as a step toward a JG. It is the product of conservative moralizing based on resentment.

    1. @Tom Hickey,

      The problem is if the progressive side of the argument doesn’t push a job guarantee based on freedom and ‘giving people something to do’ then you get these interment camps.

      We are already seeing the rise of ‘interns’ in the UK job market – which is just a price mechanism to determine who can afford to ‘buy’ a job. Those with the most third party support win the job.

      1. @Neil Wilson,

        In the US one of the few places you can be an unpaid intern is in government — like Pelosi’s office. How come she gets to have people work for below minimum wage, but Walmart can’t?

        Btw, I’ll agree that a fixed per-capita distribution to ensure essentials, coupled with lowering taxes would be a great fix. Meaning, I agree with Warren that we are overtaxed. I would choose a per-capita distribution to remove distortions and potential corruption regarding who gets the favor of a handout.

  8. I haven’t read the comments but nah that’s just workfare or “work-for-the dole” by Australian standards. Notice how heavy handed the stick is? That’s why it wont work in the long run.

    Work-for-the-dole in Aus is about $250 p.w. that’s with an optional additional payment of $10 thrown in but that’s with additional paper work (It’s actually per fortnight but I believe that’s a confusing term for the US)

    Otherwise the benefits are $240 p.w. with job search requirements. Oh and job search doesn’t end when you do WFD

    1. @Senexx, It never really took off here in Australia, and is being quietly wound back, possibly because it doesn’t help, and may actually be counterproductive for finding a job if this article is anything to go by:

      “In the early 2000s, in work with my University of Melbourne colleague Yi-Ping Tseng that was funded by the Commonwealth Department of Family and Community Services, I examined how participation in Work for the Dole affected the amount of time an unemployed person spent in receipt of welfare payments.

      We focused on the experiences of 888 Newstart allowance recipients aged 18 to 24 years who participated in the pilot phase of the Work for the Dole program from late 1997 to mid 1998. We were able to compare the group of WfD participants with Newstart allowance recipients who had the same characteristics (such as gender and age) and same labour market background (for example, living in a region with the same rate of unemployment, and having a similar personal history of welfare receipt in the past 12 months) but who had not participated in Work for the Dole.

      The main finding from our study was that there appeared to be quite large adverse effects of participation in WfD.

      Participants were less likely to move off payments. Six months after commencing in the Work for the Dole program, 71.4% of participants were still in receipt of unemployment payments, compared to only 59.1% of non-participants.”
      Full article: http://theconversation.edu.au/work-for-the-dole-doesnt-work-so-why-is-it-coalition-policy-784

      At least with the Australian program it wasn’t compulsory, and you could choose to undertake training instead, though like this British proposal, it was more about punitive action against “dole bludgers” than any sort of Job Guarantee. The fact that it was actually officially called “Work for the Dole”, rather than something more neutral underlines this attitude.

    2. @Senexx,

      My physics instructor, in teaching us unit conversions, used to require us to give velocity answers in furlongs per fortnight, rather than meters per second or miles per hour.

  9. “Are there specifics concerning what the JG jobs exactly will be?”

    “yes, heaps”

    Where, please? There are discussions going on at a couple of Wray blogs about this. Nobody seems to have access to these “heaps” of specifics. Lots of opinions and objections, but no design info. Dr. Wray himself is asking for input, withholding his own opinion. (I am assuming he has the answer, and it is simply an educational technique, him being an educator after all, making us find the answer on our own.)

    I would expect you, Warren, as a proponent (co-designer?) of JG, to have some specifics yourself. Ones that you prefer over others, as you have expressed preferences for certain specific policy options flowing from MMT over others. Ones that you would love to make public and take credit for, as opposed to making us find them on our own?

    1. as I just answered on this website this am:

      WARREN MOSLER
      moslereconomics.com
      smosler@valance.us
      208.84.198.50
      Submitted on 2012/01/10 at 7:01am
      i’ve proposed we first allow all federal agencies to hire as many additional people as they wish who will work for the $8/hr wage with no prospects of advancement, and with those agencies being aware that these people will likely be hired away from them by the private sector over time because they can’t compete on a wage basis.

      After that, the program can be expanded to state and local govts with the federal govt picking up the $8 tab, and then further expanded to qualifying non profits, etc. as needed.

      At that point I’d suggest there will be very few people left for the last step of a designated jg job for
      for whoever is left over.

      [ Reply ]

      Unapprove | Reply | Quick Edit | Edit | Spam | Trash

      1. @WARREN MOSLER,

        The program sounds much better when you or Scott explain it. It is very difficult to expect the non-economist or MMT layperson to review a staggering amount of working papers, and perhaps even your mandatory readings. It is far more convenient to view the comments of MMT proponents in this format. Unfortunately, those comments have often portrayed the JG in a coercive light. It is good that you have posted this clarification even under a headline that also portrays the JG in a less than flattering way.

  10. Just a quick note,
    Work for benefits is probably a more politically palatable name than Job Guarantee, especially among conservatives who would think that a “guarantee” is just another damn entitlement, whereas, working for something is much better. Stupid, I know, but polling changes significantly with simple word changes.

  11. WM: Don’t agree with your “fallacy of composition” point (Jan 10th, 2012 at 11:22 am).

    Over the last two centuries, about a million people a year have arrived in the US, and have “tried hard” to get work on arrival. That increase in aggregate labour supply facilitated a rise in demand (demand for labour in particular). Result: jobs were created at about the same rate as job seekers landed in the US.

    Likewise, if X people already in some country decide to earnestly seek work rather than stay at home looking after kids or whatever, then the number of vacancies will rise by X sooner or later.

  12. It is unbelievable how much people blame unemployed for their own condition. If there is 100 jobseekers and 70 job openings, 30 will be unemployed no matter what!

    It is no use to punish these individuals with mandatory work and whatnot – more they work towards the goal of being accepted in the job markets the tighter the competition will be. At the end of the day, there still will be 30 people unemployed, plus, everyone will be more stressed out!

    Hiring standards will just rise when employers come to expect more – not taking people as they are, but demanding extraordinary high-achieving people. And the attidute in that kind of society blames the victims: you are not just good enough, you don’t try hard enough.

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