The 2018 midterm primary season is really heating up this week, which means it’s time to think about elections… like the 2020 Democratic presidential primaries.
No major candidates have declared that they’re preparing a run against Donald Trump in two years, but whispers are already building around potential candidates. A few of them have coalesced around a seriously ambitious policy idea — guaranteeing a job for every American who wants one.
If enacted, such a program could be big or small; it could create massive reverberations in the private sector; and it could reshape monetary policy. One thing that’s more certain is that Americans will be hearing about the idea of job guarantees for the next few years.
But why now?
“My impression is it may have been the shock effect of Trump’s election and the recognition that there are a host of policies, projects, that we previously didn’t think were imaginable or reasonable that are being considered on the other end of the political spectrum,” said William Darity, an economist at Duke University and a proponent of job guarantee programs.
On top of that, even before Trump won the presidency, Vermont Independent Sen. Bernie Sanders also showed that voters could be won over by a “Democratic socialist,” as he describes himself, who proposed massive, progressive policy overhauls that opponents also derided as being unfeasible.
Proposals like a job guarantee, Medicare for all, and tuition-free college have moved from the policy fringe on the left toward the mainstream in the Democratic Party, embraced by some of those interested in challenging President Trump as the party tries to give voters a clear, memorable outline of what Democrats stand for.
So here’s a primer on jobs guarantees — what they are, how they’d work, and why we’re hearing about them now, when unemployment is already really low.
What is a jobs guarantee?
A jobs guarantee program can take different forms, but the basic idea behind any program is the same, according to Darity:
“Under the conditions of a federal job guarantee, everybody would be assured of getting to work if they were seeking work. So in effect, the unemployment rate would be zero,” said Darity. “In an ideal world, if I lost my job in the morning I could walk over to what we would now truly call an employment office and have new work by the afternoon.”
This separates it from a job subsidy program, he added, in which the government would help boost the number of jobs — perhaps massively so — but neither create all those jobs itself nor guarantee the jobs to job-seekers.
The idea is that the job guarantee program could be what economists call an “automatic stabilizer” — a program that grows when the economy is in a downturn and shrinks when things are going well.
But many job guarantee programs are about more than just assuring a certain quantity of jobs; they also focus on quality.
Several plans — one co-designed by Darity, a proposal from New Jersey Sen. Cory Booker, another outline from Sen. Bernie Sanders — also would provide wages much higher than the federal minimum wage (currently $7.25) and benefits that are unheard-of for many current low-wage workers.
“The idea is that we would then drive bad jobs out of existence,” said Darity, “because no one would be obligated to take those jobs since they would have a superior option.”
All of which is to say, this is a big policy idea. Implementing a job guarantee would make the federal government the employer for potentially millions — or even tens of millions — of Americans.
Who is backing one?
Most notably: New Jersey Democratic Sen. Cory Booker, New York Democratic Sen. Kirsten Gillibrand, and Vermont Independent Sen. Bernie Sanders. In addition, The Intercept recently reported that Massachusetts Democratic Sen. Elizabeth Warren “has begun looking closely at” the idea.
Those aren’t necessarily the only members of Congress who believe in job guarantees, but they do happen to all be often mentioned as 2020 Democratic presidential hopefuls.
Booker is the only one of these three with a fully fleshed-out-proposal out there. His plan, unveiled late in April, would create pilot job guarantee programs in 15 communities where unemployment is particularly high.
All of the jobs would give people paid family and sick leave, pay that eventually phases up to $15 an hour, and — according to Booker’s website — “health coverage like that enjoyed by Members of Congress.”
Democratic senators Kirsten Gillibrand, Kamala Harris, Jeff Merkley and Elizabeth Warren all co-sponsored that bill. (And like Gillibrand, Harris, Merkley and Warren likewise have hinted at possible 2020 campaigns.)
Bernie Sanders also has a proposal in the works. An outline provided to NPR shows the plan would be more sweeping than Booker’s pilot program, with Sanders planning on establishing 2,500 job centers nationwide.
Gillibrand’s office likewise tells NPR that she has a plan forthcoming, to be released in the next few weeks.
Economists have also proposed having the Labor Department invest in creating jobs in the fields of child care and building infrastructure, or such arrangements as “community job banks” where jobs that can be filled immediately would be posted.
A job for everyone sounds great. What could go wrong?
“Problem number one is you’re not just going to get people who have been unable to find work in the private sector for whatever reason,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the right-leaning American Action Forum. “You’re going to get a lot of people. And a lot of people means a lot of money, so the federal budget is going to explode.”
And with that could come another problem, Holtz-Eakin adds: An expensive program could mean tax hikes. And he fears those tax hikes could exacerbate the problems that a jobs guarantee is designed to help.
“You’re going to actually undermine the private economy that’s needed to pay those bills. So it doesn’t really add up,” he added.
But beyond the cost, there are other major potential problems. One is that businesses would have to substantially raise prices in order to compensate their employees competitively with the new government jobs.
It’s also possible that the federal government, in investing all this money into the labor market, would crowd out the private sector, competing with businesses for labor and stifling growth.
Proponents argue that the policy’s critics are overstating the potential dangers. For one, they say the program would at least partly pay for itself.
“I mean, if you look at all of these programs that are trying to make up for either no work or inadequate paying work as companies outsource their labor costs on us, the taxpayers,” Booker said. “Those programs alone are worth billions and billions of dollars.”
As far as higher prices, Darity believes that’s not a serious argument against a job guarantee.
“Insofar as we’re maintaining an environment in which prices are lower for products because people are poorly paid, I think that that’s a real ethical concern for any society,” he said.
And it may be possible to avoid the crowding-out phenomenon, economist Conor Sen recently argued (Sen, to be clear, isn’t a proponent of the plans — in fact, he says he feels “skepticism” about the idea). His idea is to make sure the program’s funding is “countercyclical” — that is, that it shrinks in good times and grows in bad.
This sounds… out of the ordinary as far as policies go.
It is. Even for Darity, who has been a fan of job guarantees for years, it’s strange to have the idea in the mainstream.
“It’s a little bit surreal, because for such a long period of time, there were some of us who were talking about this, and we were roundly dismissed or ignored, and now it looks like it’s something people are viewing as a credible policy option,” he said.
Wait. I keep hearing we’re near “full employment.” Why put this plan out there now?
“Full employment” doesn’t mean that everyone who wants a job has one. It’s a term economists use to describe, roughly speaking, the lowest the unemployment rate can be expected to go at any given time. Try to pull it even lower, the idea goes, and inflation would be the result.
The current unemployment rate of 3.9 percent means that’s the portion of people who are actively looking for work right now who can’t find a job.
But then, there are people working part-time who want full-time work, and there are “discouraged workers,” who have stopped looking for work because they haven’t been able to find it. Those people are not counted in the headline unemployment rate. But count all of them, and by its broadest definition, unemployment stands at around 7.8 percent.
On top of all that, in good times and bad, some people persistently just can’t find work.
“Here we are at 4 percent unemployment, and we still have lots of pockets of insufficient opportunity,” said Jared Bernstein, former chief economist to Vice President Joe Biden and a senior fellow at the left-leaning Center on Budget and Policy Priorities. “So we need a jobs program.”
That “insufficient opportunity” he talks about hits some groups particularly hard.
“The black unemployment rate is always twice that of the white rate,” he added. “And I gotta tell you tell you, that’s not written in the Good Book somewhere. That’s the outcome of a persistent market failure that’s very much leavened by racial discrimination.”
Doesn’t that make the term “full employment” misleading?
Yeah, probably. Even at “full employment,” some groups are persistently far more fully employed than others.
It’s not that the U.S. hasn’t done a major jobs program before. It has — Darity says his job guarantee plan is comparable to the employment programs of the Great Depression, like the Works Progress Administration. However, he adds that there are key distinctions.
“What’s different about the job guarantee is that it is universal and it’s permanent. So it’s an option that would exist not only in times of massive unemployment but it also would exist in times where the unemployment rate is lower,” Darity said. “But we still have large numbers of bad jobs. It’s not just an emergency.“
The point, proponents say, isn’t just to keep unemployment from skyrocketing during recessions; it’s to correct labor market problems that persist, even when unemployment is low. And even people opposed to the idea of job guarantees agree that those problems need fixing.
“The reason you don’t want to be dismissive of the intent of people who propose these things is there is a set of workers out there who aren’t getting jobs no matter how well the economy is performing,” said Holtz-Eakin.
So candidates are proposing this just because they think it’s the right thing to do?
Candidates don’t tend to put out sweeping proposals because of economics alone.
So why — politically — is this happening now? One explanation is that Democrats are trying to rebuild after a devastating election in 2016, which many emerged from thinking the party didn’t have a clear message for what it stood for.
If the party nominates a candidate in 2020 who embraces a job guarantee program, Medicare for all, and tuition-free or debt-free college, it will send a clear signal that the party has embraced a progressive platform well to the left of where it has been for decades.
“I do think it is farther to the left than what you’ve seen from Democratic politicians probably since the Obamacare debate,” said Adam Jentleson, who served as deputy chief of staff to former Senate Majority Leader Harry Reid. “But that represents where the party is headed and not just where the party is right now, but where Democrats think the party is likely to be in the heat of the 2020 campaign.”
A policy like a job guarantee could help win over the left wing of the party. But it’s also the kind of idea that may never be much more than a campaign promise.