Debate: Is This the Time for a Federal Jobs Program?

(Bloomberg View) -- Even though U.S. unemployment is at lows not seen since the dot-com boom, the idea of government job guarantees like those offered during the Great Depression is getting attention from some top U.S. political leaders. Bloomberg View columnists Conor Sen and Noah Smith met online to discuss how such a program might work.

SEN: Noah, I’ll admit, when I first saw headlines about job guarantee proposals I was dismissive. It seemed like such a big shift of the goalposts from where current political fights are about the role of government. But people I respect are taking it seriously, so I’m curious at least. 

My skepticism about such a program is different from my skepticism about universal basic income proposals. With the latter, the big question is: How much would it cost? With a jobs guarantee, it’s How would it work? You mentioned in your column about how there would be regional variations. Coastal California might offer beach cleanup, while Indianapolis might offer street sweeping. At a high level, this makes sense, but putting this into law requires making sure the details are right. Would we just delegate the specifics to the states? Additionally, would the program function differently when unemployment is low and private-sector employers are desperate for workers, like we see now, than when unemployment is high and make-work jobs provide employment opportunities the private sector fails to produce?

SMITH: These are all important questions. I obviously can’t say how the program would work — for that, you’ll have to ask Senators Cory Booker or Bernie Sanders — but I can give my thoughts on how it should work.

The simplest program at the federal level would be a funded mandate to the states. States would be required to provide employment at (or above) their local minimum wage, but if they went over a certain budget they’d have to pay for it themselves. This could be a total job guarantee — provide jobs to anyone who wants them, and if demand is unexpectedly high you’ll get extra money — or, more realistically, just a fixed pot of money that goes to provide jobs.

Implementing it this way would be a way to start small and build up. The pot of money could be limited at first, so states could experiment cheaply with figuring out what kind of jobs to provide, and whether people even wanted low-wage government jobs at all.

To make the policy countercyclical, the amount of money states get could be automatically raised in recessions. That would act as an automatic stabilizer.

How does that sound?

SEN: That sounds reasonable. I like the notion of allocating money to the states, which allows for experimentation both in terms of how many jobs to offer and what types of jobs to offer. And having that funding be countercyclical — increase during recessions, decrease during boom times — would address my concerns about crowding out the private sector when workers are in high demand.

The next big question would be how to ensure that workers are, well, working, or whether to ensure this at all. One can imagine a situation where some number of workers might show up late, leave early and generally slack off on their guaranteed government job. In addition to this being a poor value for government, such shiftlessness would reduce public confidence in the program and threaten its existence. Rather than a program to get discouraged workers fixing bridges or paving potholes, it might devolve into a program of lazy workers getting paid to stare at their phones.

SMITH: This is absolutely right. Government job guarantees would have to allow local supervisors to fire problem workers. The threat of firing would help motivate workers to learn basic job skills like showing up on time and getting along with coworkers, which is one of the big appeals of job provision in the first place. There’s precedent for this, of course — you could be fired from the Works Progress Administration. In fact, that’s the backstory of one of the characters in the novel “To Kill a Mockingbird”!

SEN: So the final piece of the puzzle for me is how you’d garner political support for such a proposal. I’ve heard the argument made that a jobs guarantee would differ politically from universal basic income because the former emphasizes work, which the public supports, whereas the latter is a pure handout that conservatives would oppose.

From a political standpoint  I’d accept, perhaps even emphasize, that the initial jobs guarantee allocations would go predominantly to rural communities. There’s more private-sector business creation and more job opportunities in metro areas, so the structural need for public-sector job creation is less there. And then it’s going to be harder for Republican senators in Kentucky and Arkansas to oppose a program that will focus on their base voters and help out rural communities that don’t have easy answers for an economic path forward.

Over time, assuming the program is a success and popular, I’d expect it to expand to metro and urban areas where more Democratic voters live.

SMITH: That’s an interesting idea. I hadn’t thought about geographic targeting.

Here are some reasons a job guarantee seems like it could be politically attractive. First, even as a full guarantee it would be much cheaper than programs like basic income, since it would only go to a small percent of the population. Second, it emphasizes work, which is important because lots of people want to see that recipients of government benefits are willing to contribute and give back, rather than just being takers. Third, it would almost certainly reduce crime, homelessness, and potentially drug use as well — all things that would make cities nicer places to live.

The idea of a guarantee almost certainly puts people off, because it sounds like a hard commitment that the government can’t back out of. That’s why I suggest starting the program small, and not calling it a guarantee, and seeing how well public job provision can work in the modern age, before scaling up.

Conor Sen is a Bloomberg View columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

Noah Smith is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

To contact the authors of this story: Conor Sen at csen9@bloomberg.net, Noah Smith at nsmith150@bloomberg.net.

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net.

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