Are these the advantages of the Job Guarantee?

In response to a recent report form the RSA that everyone under 55 should receive £5,000 per year for two years “as compensation for the way jobs were changing.” A government spokesman referred to it as a Universal Basic Income [UBI], which led Steven Hail, who lectures in economics at the University of Adelaide, to suggest that the Job Guarantee [JG] was a much better alternative option.

As this has been a long standing point of interest for me (and I hope others on ProgressivePulse!) I have, with permission, first copied his objections to UBI verbatim:

The problems with a UBI are:

1) It will be too low to alleviate poverty, or too high to not be inflationary without tax rises people will not vote for.

2) It is a subsidy to low wage employers and underemployment.

3) It neglects the non-pecuniary benefits of employment.

4) It has no counter-cyclical element and no inflation anchor.

I’d suggest in relation to objection number 1 that many people (if not indeed most) would be happy to vote for a UBI, even if that meant some higher taxes – especially if these taxes were progressive.

As for it being a subsidy to low wage employers as stated in point 2, it is, of course, the same subsidy to high wage employers, so I’m not sure the disadvantage is obvious. On underemployment he may have a point. But with UBI people are able to choose to have jobs where they are underemployed, and I imagine most of these would be people opting for part-time employment or ‘light’ self employment and therefore would become only problematic if there was a distinct labour shortage, which is something that does not seem overly likely in the current environment.

Number 3 is back to the Protestant work ethic again, together with ‘being a part of society’ aka social inclusion. There is, however, no evidence that people prefer to do nothing all day. Indeed the number of people who choose voluntary work suggests precisely the opposite.

Point four is the strongest point, I suggest. Although there are other methods of counter-cyclical and inflation control, they would be likely to be less immediately impactful than a well-organised Job Guarantee.

The pluses for the Job Guarantee, Dr Hail outlines as follows (my paragraph numbers added):

I. It would be better to have a Job Guarantee with a much higher guaranteed income, backed up with a low basic income/welfare for those who chose not to contribute their efforts to the JG.

II.The retired should be paid as though participating in a JG.

III.Carers should be paid as part of a JG.

IV.Those genuinely unable to engage in employment should be paid as part of a JG.

Point I does clear up what has previously bothered me, which is that a Job Guarantee is not a Job Guarantee without coercion. It is, he is suggesting, more properly described, in fact, as a Job Offer.

Points II and III are really no different from a UBI – it is simply a matter of the level of pay and, combined with point IV, an effort to deny that, unless in very special circumstances, you get something for nothing. I think the something for nothing problem disappears when absolutely everyone gets it!

His article then concludes:

Basic income for all – yes. Abolish involuntary poverty – yes. Build social inclusion – yes.

I just don’t believe a UBI can do any of these things sustainably.

I am always willing to be persuaded, but so far I have seen nothing to persuade me.

The attraction of a UBI to politicians is that it involves them in nothing but signing a few cheques.

Really dealing with inequality, cohesion, and building a better world means they will have to take more responsibility for the kind of societies they want to create.

A JG is harder to plan, but would be more effective.

Just as similar – large-scale, but not quite JG – programs were successful in Argentina in 2002-5 and are relatively successful in India today.

These are general aims we could all agree on, but the real objection seems to be that UBI is too easy for politicians. If that is the case, I find that rather more of an advantage than not!  That JG requires more planning is certainly true.

But on what grounds is the JG more effective? The only advantage over UBI is that we are told (point I above) that the JG would result in a higher guaranteed income, presumably because the JG recipients are forced to be ‘economically active’ – there certainly seems no other good reason. This may be significant though I’m not sure we know. By far the strongest argument in favour of the JG is, for me (summarised in the anti UBI point 4 above), that it is a counter-cyclical tool.

Although I believe Steven Hail’s fellow Modern Monetary Theorist Bill Mitchell has called the UBI serfdom without the work”, I’d call that no serfdom at all.  But when he continues “The [UBI] segments the work[force] into those who remain in the workplace and those who are prohibited by the lack of jobs,”  he has a point.  I agree, too, when he quotes Professor Diane Coyle, who argues that “Simply paying people will not help if the fabric of a thriving economy is lacking”. Although this seems to suggest that no other economic investment will be made, it has to be said that this is effectively the case in many parts of the UK now. If a JG were in place then it could be argued that the government’s hand would be forced. In effect this is a variation of the argument that it is a counter cyclical tool, but it suggests an automatic element that is attractive and theoretically at least, quick acting.

Gradually, I’m coming round to the view that we are probably going to have to construct a hybrid scheme encompassing some Universal Basic Services and some element of a Job Offer together with a core of UBI, which really must be renamed Universal Basic Capital.

Even if the basic part of Universal Basic Capital is still very basic, its great advantage is that it says to the recipient “We never forget you have a choice.”




  1. Graham -

    Yes, some sort of hybrid system sounds feasible. But I can’t help thinking that we’re talking about draught-stripping the front door, not having noticed that the roof’s blown off.

    1. Peter May -

      Not really with you. You think the whole system will never work?

  2. Graham -

    Sorry, what I meant was that the other problems, such as the dismantling of the welfare state, privatisation, financialisation and all the other neoliberal changes which have given so much to so few are so immeasurably greater.

    An interesting comment I came across from David Harvey in his book on Marx on UBI – (I paraphrase) that it plays into the hands of the neoliberals who foresee greater opportunities for rent extraction. He says it’s little wonder it’s a popular idea with silicon valley whose tech advances are destroying jobs.

    1. Peter May -

      I’ve seen people say that, too. I think it applies to the US particularly, but with the UKs just about with us welfare state it is less applicable.It also suggests people will not work if they have a UB and for which there is no evidence!

  3. Andrew (Andy) Crow -

    “As for it being a subsidy to low wage employers as stated in point 2, it is, of course, the same subsidy to high wage employers,”

    Well no, it isn’t. Well literally it is, but we don’t regard wages in absolute terms we are accustomed to thinking in percentage terms. So relatively the UBI doesn’t look worth having to the well paid.

    Percentages are an insidious device. Very useful, but cunningly deceptive. We are accustomed to ramping percentages to make taxation progressive, but don’t apply a similar logic to the effect on remuneration.

    A life changing £5.000 to someone at the bottom of the economic scale is a derisory sum to a person a the top.

  4. Andrew (Andy) Crow -

    “2) [UBI] is a subsidy to low wage employers and underemployment.”

    No, I don’t think it is. I don’t think that’s how it works. I suspect you would get the contrary effect, that employers would not be able to pay pittance wages because people would be able to chose not to take ‘shite’ jobs.

    UBI would create a radically different relationship between ‘work’ and money. If you wanted people to clean sewers you would have to pay them in proportion to the unpleasantness of the task.

    Currently the ‘best’ jobs attract the greatest rewards. We pay millions for football team managers and ‘celebrities’ and a pittance to refuse collectors. This is barking madness.

    ‘Free’ market enthusiasts do not accept that Labour is a market commodity and is emphatically not ‘free’. The much vaunted principle of market clearing price mechanism is not allowed to apply to labour.

    Freedom in a market economy comes at the price of coercion of labour.

  5. Andrew (Andy) Crow -

    “1) It will be too low to alleviate poverty, or too high to not be inflationary without tax rises people will not vote for.”

    I agree that is likely to be the case, but it is not a given. In fact if it is set too low it will be, by definition not a basic income. So the argument is silly.

    The UBI level must be set at a realistic subsistence level or the point is lost and it is doomed to failure.

    Implementation will of course have to be gradual because the disruption would otherwise be massively disruptive. The market will only adapt gradually. The market is a very slow and clumsy creature.

  6. Andrew (Andy) Crow -

    “The attraction of a UBI to politicians is that it involves them in nothing but signing a few cheques.”

    Absolutely !

    Excessive interference and prescription by government would kill a job guarantee programme. All the political instincts would be to make it coercive.

    The JG has to respond through market response to demand for goods and services. Government’s role would be to provide the social infrastructure in which supply and demand can be matched.

  7. Peter May -

    Thanks a lot for the thought provoking replies, Andy.
    It is a fair point about the percentages in that if the UBI is 75% of your remuneration it has much more significance than if it is, say, 1%. But in which case, as you suggest, where it is 75% you might be doing your dream job whereas if it’s 1% you probably hate every minute of it.
    As you correctly point out “UBI would create a radically different relationship between ‘work’ and money”, which is what I was trying to suggest when I said UBI/UBC says “We never forget you have a choice.”
    I tend to agree that “all the political insticts would be to make the [JG] coercive.” Because as you hint, a government might feel they HAVE to introduce it if?when unemployment went through the roof, and they were too narrow minded to introduce any form of UBI/UBC.
    I don’t however think that the JG will have much to do with supply and demand in the usual sense as I cannot really see it working except for social care or infrastructure jobs. Other areas are likely to be much more difficult as I suggested a while ago – unless you have some sort of well directed state paid employment on a widescale basis in the private sector, but I don’t think that is properly scaleable if numbers get large because Tesco would be complaining that Sainsbury’s had 200 more of those than they did etc…

    In the end I see the advantage of the JG is that it is always counter-cyclical and of UBI/UBC is that it always improves choice/freedom. What I think follows is that we should all be working less!

  8. Andrew (Andy) Crow -

    “….but I don’t think that is properly scaleable if numbers get large because Tesco would be complaining that Sainsbury’s had 200 more of those than they did etc…”

    ..But shouldn’t that lead to Tesco asking why people want to work for Sainsbury rather than Tesco ? And then doing something about it in the terms and conditions of their (semi voluntary) employees to redress the balance ?

    The biggest obstacle I anticipate in implementation of either UBI or JG (and without UBI, or some sort of welfare payment underpinning ‘safety net’ JG doesn’t make sense to me) ) I can’t see how we get over the ‘immigration problem’.

    Natives may be persuadable that this sort of financial security is OK for ‘us’, but very dubious about extending the largesse to foreign incomers. This is a major bone of contention even under our current inadequate system.

    I can’t claim to have read all the thinking on this yet (by a long chalk), but I haven’t seen this issue satisfactorily addressed.

  9. Peter May -

    If the JG ended up as effective state paid employment in the private sector I think we’d have to presume that Sainsbury had more stores in areas where that was a high demand for JG than Tesco, rather than that they were better employers. And also if there were lots of them are they actually stealing jobs that would need to be done at the proper rate. I don’t think the private model is scaleable.
    As you say, JG has to have a welfare payment as a fall back.
    Immigration would have to be controlled – with rules properly enforced, as they are not at the moment… and there would need to be no JG or UBI/UBC unless you are are UK citizen. If staying in the EU we’d have to take advantage of all those rules, so far studiously ignored, about being unable to claim benefits unless already having been employed as a start. If in the EU and we were first with UBI/UBC see no reason why the EU would not grant us an ‘experimental exception’ to confine it to UK citizens, EU citizens would just stick with the old system.

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