Labor Day: UBI versus Job Guarantee

The majority of the 2020 presidential candidates on the Democratic side support a Federal Job Guarantee with Andrew Yang being the lone voice in favor of a Universal Basic Income. Both of these policies are aiming to address the changes taking place in the labor market as our automation capabilities improve. In my book World After Capital and here on Continuations I have been a vocal supporter of a Universal Basic Income. But what about a Job Guarantee?

Before getting into the issues with a Federal Job Guarantee, I want to point out a related potential federal program that is worth investigating. I believe some kind of Civilian Corps, a la the Civilian Conservation Corps, could be a good idea to the extent it is broadly mandatory and kept relatively short (1 year or less). The goals here would be less employment per see but rather (a) increasing coherence of civil society by bringing people from all different walks of life together and (b) reconnecting people with nature.

Now another area that I am supportive of are massive infrastructure investments. But these will not, or at least should not, be huge employment creators. Take a high speed rail connection for the Northeast Corridor as an example. We need one badly – it would cut air travel between DC, New York and Boston significantly. But if constructed with modern technology it will not create a ton of employment. Long gone are the times where thousands of people with shovels building railroads. And that immediately brings me to one of the first issues with a Federal Job Guarantee. It will be extremely tempting to simply make more work by going backwards in technology, which would be a terrible misallocation of human effort.

But what about jobs like taking care of the aging population? Yes, we definitely need lots of work in this area and it is one where technology provides little in the ways of productivity. So why not target a Federal Job Guarantee at that? The key reason is that eldercare is super local and should be figured out by the respective communities. That’s virtually impossible with a federally run program. Now there may be ways to do this a bit better than strictly federal by making block grants that states can use to provide eldercare. Still these will be political footballs with myriads of opportunities for misallocation (eg lots of eldercare in a local politician’s hometown). Universal Basic Income, by contrast, puts each community into a position to organize eldercare the way it sees fit.

The same logic applies to taking care of the very young. Add one more point here: Universal Basic Income also enables parents to take care of children (or aging parents for that matter) by themselves. It fundamentally recognizes the value of this massive unpaid labor, most of it provided today by women.

So on this Labor Day, I would encourage everyone who is in favor of a Job Guarantee to come up with something more detailed than what is on the Bernie Sanders website and then see if it makes any sense at all.