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Don’t Like the Left’s ‘Jobs Guarantee’ Idea? Well, the Right Is Cooking Up One of Its Own
In a Wall Street Journal op-ed, researcher Max Gulker offers a harsh critique of a “federal jobs guarantee.” Example: “Temporarily unemployed workers, along with millions of low-paid workers, would be diverted into a complex bureaucracy with no mechanism or incentive to put the workers’ skills and time to their best use.”
Oh, the idea has problems, such as the possibility of these permanent government gigs possibly crowding out existing jobs. (That and many other problematic issues are discussed in an excellent blog post by economist Timothy Taylor.) Still, some folks on the right are cooking up their own idea of a jobs guarantee. In the new book “The Once and Future Worker: A Vision for the Renewal of Work in America,” former Mitt Romney policy adviser Oren Cass argues for what he calls the “worker hypothesis.” This is the idea, Cass writes, that an American labor market “in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy.”
That’s not the way I would frame things. I think public policy should focus first and foremost on making sure American workers become ever-more productive since that is the key to higher incomes and higher living standards. Labor productivity is the central determinant of a nation’s long-term prosperity. And if there is a mismatch between market outcomes and societal expectations, government has a role there in providing safety net programs such as the earned income tax credit, which promotes work and lifts people out of poverty.
But what Cass presents is actually a “jobs hypothesis,” one that laments American-style capitalism and the disruptive employment churn that comes with its supposed pell-mell pursuit of higher GDP. Too much creative destruction, gang. Not worth the price. What has the globalist “open agenda” of higher immigration, free trade, and offshoring provided other than decades of stagnant wages, the exodus of men from the labor force, unstable families, crumbling communities? In other words, an economy of cheap flat-screen TVs, and massive opioid addiction. Cass: “Yet how does the open agenda, which has already characterized the past generation of American policy, address the critical challenges facing the nation? It does not.” If only policymakers had focused on making sure all those good jobs didn’t leave overseas or go to the wrong people. Washington should have better protected them — “guaranteed” them, if you will — perhaps even if it meant slower economic growth.
Yet a true “worker hypothesis” would focus more on the worker rather than the job. Which makes sense. Since the average person will change jobs many times in a lifetime, policy should focus on their skills and the safety net for when they are between gigs. As Taylor puts it, “We want people to move to continually acquire new skills, which can mostly happen within existing jobs, but sometimes needs to happen between jobs. We want some people to move to new areas, either across their metro area or sometimes to a new state.”
This is also the philosophy behind Denmark’s famous flexicurity system which allows liberal hiring and firing of employees but also offers lots of unemployment income and retraining benefits. Protecting jobs rather than workers, on the other hand, risks a more stagnant economy, such as in France where it is notoriously difficult to fire someone. That nation has an unemployment rate of over 9 percent — Denmark’s is under 4% like America’s — and Nobel laureate economist Jean Tirole has written that the French economy needs economic reform “focused on protecting people, not jobs.”
Indeed, the anti-disruption attitude in continental Europe may well play into why their technology sector so badly trails America’s. This protectionist attitude is also seen in the US where activists have, for instance, attacked Walmart and Amazon for disrupting traditional retailers and their workers. Then there’s President Trump, who famously attacked Carrier for trying to shift some jobs to Mexico. Of course, you are not really protecting jobs over the longer term if the result is a less productive and competitive company (and economy) that eventually sheds workers or doesn’t expand as much as it would have otherwise.
Moreover, it doesn’t take much imagination to consider what might happen when the “jobs first” attitude eventually confronts disruption from automation. Cass argues automation is different from the “openness agenda,” yet he inadvertently outlines just how the philosophical attack on technological progress might proceed.
Published in Economics
Simple recipe for an effective jobs program on the right:
I have two observations about wages. One is that in 1960 the minimum wage was $1 an hour. Since then, it has gone up to $7 or 8 or something. Meanwhile, the cost of just about everything from cars, to houses to washing machines and refrigerators to canned goods has gone up about twenty times. Minimum wage is a sham but people do measure their wages against it. Generally, a worker is making 1/3 in purchasing power of what he would have made in 1960.
The other thing is that a median family seems to require two workers per family now. And even with two parents working that still only adds up to 2/3rds of what one person made back then.
What good is an unemployment number when a worker only counts as one-half of a head of household?
I assume that your term “public policy” refers in this case to economic interventionism? Interventionism can be defined as “some degree of central planning short of pure socialism.”
If so, then one problem with both Gulker’s idea and yours is that your public policy-makers can never obtain the information required to efficiently plan allocate productive resources to production processes.
Only free-market prices can carry the information needed by producers to efficiently allocate scarce productive resources to production processes.
Central planning is the core of socialism, and to put the above rule more simply:
Socialism simply doesn’t work.
Transferring economic decision-making power from private citizens investing their own money to public policy makers spending other people’s money does not create wealth.
It destroys it.
Your and Gulker’s belief is an old familiar one: maybe since a medium amount of socialism (Stalinism, Mao’s Cultural Revolution and Great Leap Forward, eg.) creates mass starvation, surely a limited amount of increased socialism will make us all better off.
The good thing is that the amount of damage done by a little bit of socialism is less than the amount of more of it. So it is as if you were arguing for continually hitting ourselves in the head with a hammer, but more slowly and softly than the other guy, so we only bleed, and we don’t go into a coma.
The 1950’s and 1960’s were a fluke. The USA will never be the sole manufacturer to world desperate to buy things after 20 years of depression and war. Get over it.
Going forward, we need to fix the education system. It is been designed by people with PhDs in education for people like themselves. But only 20% of kids are able to complete the college prep to college into career. That means it fails 80% of kids. It is a generational crime. It needs to be designed to give people a solid base and then marketable skills.
We are on the road to serfdom. We are on a path to being a society of billionaires, bureaucrats, and dropouts. The billionaires and bureaucrats are happy with that.
Why were poor people in the 1960 skinny and why are poor people the 2010s fat? If they are poorer in 2010 how could they buy more food?
I don’t know why we can’t learn that the government can’t do these kinds of things, nor can it fix prices and wages without doing great harm, nor tax work, savings and investment without getting less of each. It seems some competent businessmen and managers like Romney have as much difficulty learning this as the Marxists we call Democrats. Training of course and education are crucial and every sentient human and their parents know this and governments might even subsidize them, but it must do so without any controlling input. Let business decide how much they will pay skilled workers, how much they will pay workers, if anything, who must be trained from zero, and let individuals and their parents decide what to study where. Markets will sort it all out. Indeed we import so much and run such a huge current account deficit because we have not allowed our own market to sort it all out with a lower deficit, fewer imports and more exports.
If we have to get government involved, wouldn’t it be better to provide incentives to businesses for skill training in the skills they need?
If the business begins booming, working with community colleges to offer classes?
A better use of government Grant’s would be to offer scholarships for people entering these fields than gender/racial studies.
I just “liked” a James Pethokoukis post. What next, flying pigs?
Make Mike Rowe secretary of Labor.
And secretary of Education.
Also, shut down 70% of four-year colleges and turn them into trade schools.
That sounds like the federal government going beyond its constitutional powers.
Of course, the same could be said about the student loan program.
I understand your point, that you simply cannot be fat if you didn’t have the money for the food to eat, so in 1960 for example, people didn’t have enough money on balance to be fat. I’m not sure it’s that simple, though. Maybe it’s because having a job and working (or just thinking) burns more calories. Maybe it’s a matter of individual allocation, which involves choices and psychology.
By the physics its simple: more Calories consumed means more storable Calories. But that’s not all of it. The difference between skinny and 20 pounds of extra fat, is about, off the top of my head, about 8 or 10 thousand kilocalories per lifetime. One can overeat that much in a single Christmas dinner. Put on slowly over a lifetime, that 10,000 Calories is less than half a Calorie per day and is not very rich at all. It’s a matter of very, very small daily additions.
And that also depends on choices: at what income range do you stop habitually worrying so much about your next meal, that you do not think to stuff yourself now? And frankly, from what I see, it seems that a little money is far more fattening than a lot of money.
And then there’s allocation of resources. Maybe in the sixties, people were more interested in other things than where there next meal was coming from. Maybe working toward that new range or car or toaster.
And then of course there’s government subsidized payment for food which has nothing at all to do with wages and good bit to do with inflation, and a lot to do with the ability to gain weight. Again a little money is more fattening than a lot of money.
Other than that, I just don’t know why people were skinnier in 1960.
And the amount of hard physical labor involved in jobs is much less now. “Do you want to grow up to be a ditch digger?” or “You’ll never get out of the cotton patch.” were popular taunts in my parents’ families involving no longer viable career paths (guys with shovels and folks picking cotton have been replaced by many fewer, higher paid people operating machines.)
And not to let it pass, the only thing you can reliably say about poor people is that they lack money, i.e., “working poor” is a thing. Also vows of poverty, for that matter. (h/t Milton Friedman.)
I get my take from my great Commie State of California that despite being the world wide center of both High Tech and Entertainment, as well as home to one of the most productive agricultural areas in the world, still manages to have the highest rate of poverty and nearly one third of all welfare recipients in the nation. That’s right one third! (With one eighth the population.)
I believe there are lessons to be learned from my great Commie State.
California manages this dubious feat by employing incredibly dubious and almost certifiably insane but oh so fashionably Progressive social, economic, planning, forestry and infrastructure policies. And it appears these Progressive California policies are purposely designed to foster dependency while forcing the working class and poor into greater poverty, homelessness and despair.
I’m sure you have all heard by now that California has the highest regulatory burden in America, regulating anything to death that might make money, (effectively one hell of a tax on productive endeavors) while also employing the highest Income, Sales and Gas taxes in America, not to mention some of the highest city business taxes anywhere.
If this regulatory burden and these taxes were not destructive enough, the real Progressive Coup de Grace are California’s “smart growth” infrastructure and planning policies.
Once upon a time – like at the beginning Jerry Brown’s first term in ’75- California was both a job producing powerhouse and a place of affordable housing with perhaps America’s highest standard of living( I know hard to believe!), but Jerry’s “Era of Limits” policies slowly eroded all that and brought us to the dreary state we are in today.
Back then California was very effectively building freeways, roads and other infrastructure that not only allowed California’s rapid growth but encouraged it. At that point in time, the LA Metropolitan area had doubled in population every ten years for ninety straight years with hardly any of the growth pains comparable to today. Freeways were built quickly to the periphery of urban areas so huge tracts of new affordable housing could be built there and new industrial areas had room to develop. As a result jobs were plentiful as were affordable housing with a style of living found hardly anywhere else.
Jerry and his successors ended all that. Since that time, hardly any new freeways have been built, while the population again doubled, with the consequence that gridlock looms nearly everyday, and the idea of commuting from periphery has become a nightmare. Adding insult to injury, Housing and Land Development regulations have made building large new tracts of affordable housing almost impossible, while the State’s regulatory policies have sent the State once diverse and booming industry packing to other locales. Our new “smart growth” policies limit new housing to building in the urban core which is about 2 1/2 times as expensive, effectively freezing out the working and middle classes out of the new housing market.
continued
Continued.
Policies that encourage only growth in the urban core fail to realize that the only jobs generated to any degree in this new urban core growth scheme are white collar professional jobs, with the exception of a relatively few low paying service jobs. Your traditional working class and middle class jobs that will pay for the American Dream will not be created in this “smart growth” environment.
These “smart growth” policies effectively mean that there will be hardly any new working class industrial jobs and almost no new housing for anyone other than the wealthy. New Industrial jobs and affordable housing have effectively been banned.
Greatly increasing poverty and homelessness is really the only possible outcome, which is why California is in such a sorry state. The rest of America take heed and do not follow California’s example.
A little bit nonsensical. How about, poor people have to worry more about paying bills than rich people do. Or, “Sometimes I have to cook my own dinner because going to the restaurant is so much more expensive”. Or how about, “Sorry, this car’s nice but I can’t buy it without a loan; what’s your interest rate on a guy with a credit score of 580?”
Or, as Forrest Gump said: “I got a call from him saying we don’t have to worry about money no more, and I said, ‘That’s good. One less thing.'”
I read Oren’s essays (the ones he referenced on Twitter) with great interest. I’ll not be so bold as to summarize his thesis. But in my own words what he seems to be saying is that a focus on the top line numbers tells a distorted picture of life in contemporary America. If things are so good, why are they so bad?
I think he makes some very good points. What I see posted above is the bland assumption that growth will solve all our problems. And if it doesn’t, well there’s always government programs. As if a government program wasn’t the closest thing on earth to eternal life. (thanks President Reagan)
This is a conversation we need to have and throwing brickbats will get us nowhere. I’d like to see an old style debate between Jim and Oren, like the ones Buckley used to feature on TV. Bring your facts, bring your figures and bring your policy suggestions. The American public deserves this and Twitter or the internet is not the place for it.
It’s the same tactic Dubya used to fight off the Democrats’ prescription drug benefit plan.
He did win that election, barely.
But, everything you could buy in the 60s is a far worse version of what it is now. People had far less stuff and the things they had were less good. How does this purchasing power calculation work then? Anyone today can have a 1960s quality life on just 30k I bet.
Good points. As I’ve written here before, I have a Scubapro face mask from 1974 and the rubber is still as supple and strong as when I first bought it. I am still using USB speaker from 20 years ago that have been around the world, but I have gone through 3 or 4 pairs purchased subsequently. My favorite stove is more than 20 years old. I am still using things from 20 years ago that still work as good as new, but I have virtually nothing more than a year old and less than 5 years ago. Nothing lasts anymore, and yet the prices in simple dollars are more than the older ones were twenty or thirty years ago. Even high-end carbon steel kitchen knives have nowhere near the fit, finish and function that older and especially pre-WWII ones have. But I do not include the diminished quality of things in my calculations.
As for the exponentially rising costs and slower wage growth, I just more or less remember the cost of the car my father first drove me in; the cost of a pound of fish; the cost of the house I was raised in; the cost of a can of tuna, and the cost of a can of Campbell’s soup and what the sale discount was in 1960 or 61; the cost of a pound of pasta; and the cost of a refrigerator, or a TV, or a sink, or a telephone. And I remember the unexpected increases in costs twenty or thirty years later, when purchasing them for myself. Just for one example I compare a 1955 Oldsmobile sedan to a 1975 Ford LTD and a 2000-something Toyota Camry or F-150 or a bottom-end BMW. Even the cost of a rib roast in 20016 had gone up 50% in 10 years and today 62% in the last dozen years. Amazing. Oxtails forty years ago were maybe $0.39 a pound; now I see them for $10 a pound (but I take this last one as an outlier.) And what I don’t remember, I look up.
And yes, pretty much, not exactly, but just about, everything has gone up 20 times in a little less than my lifetime. Except wages.
Added: Also a very good wage in 1960 was $5000 a year (or 2-1/2 times minimum wage) — buying a three bedroom full basement brick house on an acre of land cost then about $17,000. That was 3-1/2 times the median salary, actually a little less. Today the same house on the same land would cost about $350k, or a little less. So today’s purchasing power is still about 1/3rd of what is was in 1960. And yet in order to buy all the things above today, you’d need about $100k a year.
And one more thing: 2-1/2 times todays minimum wage is about
$42k. That’s above the median wage today, but also below the wage you would need to buy these kinds of things today. And what’s more, for those who say that since people are fatter today they must be comparatively richer, remember everyone is in debt, credit card debt, mortgage debt, automobile debt, and now even college debt is maxed out given people the impression that they are richer, or have more buying power, than they really are.And they are also indebted to the government for 20 trillion which is about $63,500 per man, woman, child and infant. And this will have to be paid, either in taxes or in creating more money, which in turn will create more inflation which will further erode purchasing power.
Added: I checked, and the annual minimum wage is more like $38.2k.
Thanks for your comment. It’s a good question.
Unfortunately, Government job training programs are a particularly good example of interventionist schemes (“soft socialism”) that pretty much always fail. In most cases, it is difficult to measure the failure of programs that give politicians and bureaucrats the power to spend the people’s money. But in the case of politician-controlled job-training programs, it is proven by the results, time after time.
We could ignore the laws of economics, and ignore the lessons learned from a long history of past attempts which failed, and try again.
But the results will be the same.
Nobody could afford to have a 60s type life now. We’d have to give up a lot of gadgets and toys in order to have those kinds of social relationship again.
I’ve never heard of a government jobs program that was a success at doing anything other than using government funds to employ people to run the program.
Miffed white male never mentioned government force. He suggested a good idea. Not a good idea that the government should do.
Private people can’t legally shut them down, either. They can refuse to spend their own money on them. But that is not the same as shutting them down.
I agree that he does, but I think that he also makes some really bad ones.
The good points, in my opinion:
In my view, the good points he makes are around the fact that our shift from a mostly free economy to a more and more interventionist one has not fulfilled the promises of the politicians.
They were going to make us all happier, but they did the opposite.
They were looking only at “that which is seen”, as Bastiat wrote. What happened was unintended consequences: the result of “that which is not seen”.
The bad points, in my opinion:
The really bad points he makes are his proposed solutions to the problems created by
If you disagree, could you give an example of a good point which I consider a bad point?
So even if the government is only offering tax deductions to companies calling the shots, still #fail.
That’s disheartening because I get the feeling companies looking for low-skill workers find it more profitable to outsource with the compounded issues of turn-over, minimum wage, and liability/overhead. A lot is there that I don’t see going away. I don’t see a decent number offering skill training without incentive.
On the other side, though, I know Harley Davidson and Wal Mart do actually provide technical schooling for motorcycle and general auto repairs (respectively), but they may be bigger than most businesses out there that need specialized technical work.
Auto-cad drafting is one example that is readily available in the right high school for high schoolers, but is out of reach financially for the 30-40 year old out of work who can’t swing tuition for a local vocational school.
It’s also a skill many small businesses highly value but can’t afford the risk of training.
Elegantly written.
Economics doesn’t measure what is most important. Concerning what it does:
About that photo… The reboot of The Village People is not working for me at all.
Exactly. It isn’t the particular details about how politicians try to take the people’s money. It’s the fact that no matter how they get it, they don’t spend it as well as the people they took it from.
When politicians use tax deductions to control peoples spending, it is the exact same thing as taxing them and having a bureaucrat write the check. They are just being sneakier about it.
Here’s why.
Suppose a politician wants to build a statue of himself. He campaigns on a promise to raise taxes by $50,000 and build the statue. He loses the election. The people want to decide how they spend their money. And they don’t want a statue of the politician.
Next election, he changes his idea. He proposes tax reductions that total $50,000. To qualify, all a company has to do is give money to a company that will build the statue of the politician.
Voila! A tax reduction! And the politician gets his statue.
But where will the 50,000 come from?
The answer is, the same people who said no the first time. Only this time, they can’t say no. They have to pay their taxes.