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THE MANY BENEFITS OF A GUARANTEED JOB PROGRAM (WITH MAX KASY AND LUKAS LEHNER)

Posted on January 31, 2023
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https://pitchforkeconomics.nickhanauer.com/episode-player/3899/the-many-benefits-of-a-guaranteed-job-program-with-max-kasy-and-lukas-lehner.mp3?updated=1675114384

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Oxford economists are currently running the world’s first Universal Job
Guarantee program in Austria, and so far the results are very promising. When
unemployed people have guaranteed access to training and/or a job, those people
feel more in control of their lives and become more financially secure…and
happier, too. The study’s co-authors join us to explain why they believe a
guaranteed jobs program like this could work in other countries—including the
United States.

Maximilian Kasy is a Professor of Economics at the University of Oxford

Lukas Lehner is an Economist at the Institute for New Economic Thinking at the
Oxford Martin School (INET Oxford) and the Department of Social Policy and
Intervention, University of Oxford

Twitter: @maxkasy, @LukasLehner_

World’s first universal job guarantee boosts wellbeing and eliminates long-term
unemployment
https://www.inet.ox.ac.uk/news/worlds-first-universal-job-guarantee-boosts-wellbeing-and-eliminates-long-term-unemployment

Does the future of work include a Federal Jobs Guarantee?
https://pitchforkeconomics.nickhanauer.com/episode/does-the-future-of-work-include-a-federal-jobs-guarantee-with-pavlina-tcherneva-and-representative-ro-khanna

Website: https://pitchforkeconomics.nickhanauer.com

Twitter: @PitchforkEcon

Instagram: @pitchforkeconomics

Nick’s twitter: @NickHanauer

 

Nick Hanauer:

Some economists at Oxford University have found their way to designing a pilot
program for a universal job guarantee, actually the world’s first.

David Goldstein:

This idea seemed kind of fanciful a few years ago, and now, not so much.

Lukas Lehner:

What the program does is to offer people a job, but also to support them and
make people better off through that guaranteed job.

Speaker 4:

From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork
Economics with Nick Hanauer, the best place to get the truth about who gets
what, and why.

Nick Hanauer:

I’m Nick Hanauer, founder of Civic Ventures.

David Goldstein:

I’m David Goldstein, senior fellow at Civic Ventures.

Nick Hanauer:

So, Goldy, a long time ago, couple of years ago I think, at least, we started
kicking around the idea of a federal jobs guarantee. Basically, a way of
reforming or transforming our social safety net in ways that was effectively
more focused on giving people jobs than just giving them money if they were
unemployed. And it-

David Goldstein:

And this was pre-COVID, when we were back in the before times when-

Nick Hanauer:

In the before time.Yeah.

David Goldstein:

… we first discussed it on this podcast. And it’s interesting because the COVID
experience was one of massively ramping up unemployment insurance, both
increasing benefits, and extending it during COVID, to keep people from falling
into destitution as, what, oh, 20% of the workforce found itself out of a job,
whatever it was? The largest spike in unemployment claims, like off the scale.
It’s like the doping in baseball. You’ll always have to have an asterisk for
these years.

But that’s not what they did throughout the world. In some places, they actually
subsidized employers to keep people employed. And they didn’t have this massive
disruption where people were in a job, then you’re out of a job. And now, we’re
still recovering. We have a labor shortage now. It’s been so expensive for
employers to rehire after having laid off. And you see this, this year, still
happening with the airlines where you have all these flights being canceled
because they don’t have enough pilots, because they gave so many of them early
retirement. And they stopped their training programs, et cetera. This idea of a
federal jobs guarantee, or a guaranteed job, seemed kind of fanciful a few years
ago, when you think about where we were in American politics. And now, not so
much.

Nick Hanauer:

Yeah, absolutely. And what’s super interesting is, some economists at Oxford
University have found their way to designing a pilot program for a universal job
guarantee, actually the world’s first, in Austria. And the experiment, started
in 2020, is still running, and the early results are really positive and
encouraging, and couldn’t be more excited to talk to these guys.

Maximilian Kasi is a professor of economics at the University of Oxford, and
Lukas Lehner is an economist at the Institute for New Economic Thinking at
Oxford, works for my writing partner, Eric Beinhocker. Yeah, so let’s talk to
them about their experiment. Super cool.

Maximilian Kasi:

My name is Max Kasi. I’m currently a professor of Economics at Oxford.

Lukas Lehner:

I’m Lukas Lehner. I’m an economist at the University of Oxford. We’re working on
the evaluation of labor market policies.

Nick Hanauer:

Guys, we’re so happy to have you with us today to talk about this really
interesting program you’re working on. I guess it’s the world’s first universal
job guarantee, isn’t it?

Lukas Lehner:

So, there have been some historical examples of guaranteed employment projects,
but there is none that is designed as a pilot that is evaluated in a field
experiment as ours, which is really able to create a rigorous evidence of the
effects of it.

So, for a long time in labor market policy, it was really thought that
retraining is the answer for job seekers to find employment. And for many job
seekers, it has turned out that retraining programs can be beneficial, but it
hasn’t been the answer for everyone. And there have been many job seekers, also,
who have gone through iterations of retraining programs, summarized as active
labor market policy, and job search assistance. But they have actually been
unable to find jobs, regardless of how effective the training was that they went
through, and that’s what led us to start this project to actually guarantee a
job through the program itself, in collaboration with the Public Employment
Service Agency.

There have been somewhat related programs in developing countries, such as
India’s National Rural Employment Guarantee Scheme. There have been large
programs for public employment creation in Argentina in the past. There was
obviously a very famous program under the New Deal in the US. But in high-income
countries nowadays, it’s become really rare.

And there are some related programs now in France, and very recently one started
in Belgium, but the one that we’ve started in os Austria is really the one that
we’ve designed as a pilot field experiment that can actually create rigorous
evidence on the causal effects of the program.

Nick Hanauer:

That’s cool.

David Goldstein:

And this is unusual in economics, to actually design an experiment, as opposed
to just looking what’s just happening out there in the real world?

Maximilian Kasi:

Well, it’s been happening more and more in recent years [inaudible 00:06:44].
But maybe at this point, I would like to also talk about background of this
whole project a little bit and how it came to that. I think there are some math
and stuff are really interesting.

And the one thing I would like to emphasize there is something that’s really
close my heart, is the idea of outed options. That’s one of the core ideas in
economics, right? So, this idea that when you’re bargaining with someone,
whether it’s your employer, or maybe also some bureaucrat, or romantic partner,
that kind of default option that you have really matters for you. And so,
something like a job guarantee program can play a really important role, I
think, as such an outed option. But basically, it sets a lower floor or a bar,
in terms of how bad working conditions can get, how bad wages can get. Because
nobody has to accept anything worse than the guaranteed job if that exists. And
so, that’s something that I think is really interesting about that program, and
that motivated me to work on this.

And the other part of the story that I want to emphasize is why the experiment
is happening, where it’s happening, which is this location in Marienthal in
[inaudible 00:07:47] in Austria. And that’s kind of a famous location, at least
among German-speaking social scientists, because it was the location of a famous
study in the 1930s, in the Great Depression. And what happened back then is that
this town was a factory town, so there was one factory where pretty much
everybody was employed. And then as the Great Depression hit, the factory shut
down, and literally everybody lost their job in this town. And so, what happened
then is that a bunch of sociologists, social psychologists, went into the town,
kind of study about the consequences are of unemployment, and really, really
understand what it does to society.

And so, they did this huge project where they did all kinds of things, and
recorded data, read the students cool essays, did a lot of long interviews with
people, counted how fast people are walking on the street, did all kinds of
things, and documented all the detrimental effects that unemployment has on the
unemployed.

And in particular, they found that it matters in more ways than just the income
they lose. The people lose their time structure, they lose their social
connections, their networks, they lose their sense of purpose and belonging in
society, and there is other things.

And so, in a way, what we are studying here is kind of the reverse of this
historical incident. Back then everybody lost their job, and some researchers
studied what happens then, and we are looking at what happens if everybody in
the town gets a job, so all the long-term unemployed people that current need a
job.

And indeed, it’s kind of really striking in terms of our findings. We find the
exact opposite of what we found back then. So, kind of there’s an increased
sense of purpose and meaning, improved time structuring, increased social
connections, and so on.

Nick Hanauer:

Yeah, that’s really, really fascinating. And I think that there are just a
couple of things that are worth emphasizing from what you just shared. The first
is, what you call fallback option, but what we like to call power.

Maximilian Kasi:

Yeah, exactly, sort of. Right.

Nick Hanauer:

So, one of the signature parts of the advance of neoliberal economic ideas in
the West, certainly in the United States, was the disappearance of power from
discussions of economics. It just sort of got assumed away. And as a
consequence, it concentrated in very few hands.

Maximilian Kasi:

Yes and no, although I’d want to push back a little bit on that, at least as far
as academic economic discourse is concerned. So, nowadays, a lot of labor
economics is concerned with this idea of market power of employers and how that
impacts the labor market. And that’s exactly the kind of context we are thinking
about something like out adoptions and job currencies has very interesting
implications.

Nick Hanauer:

I agree that now they’re talking about it, but they’re 40 years late, right?

Maximilian Kasi:

I mean, fair enough.

Nick Hanauer:

Okay. Power existed, always, and to just sort of forget about it is… I mean,
congratulations to the folks who are now working on it, but it would be
dishonest to not acknowledge that it was academic malpractice to not notice for
40 or 50 years.

David Goldstein:

Particularly a problem, Nick, in the Anglo-American world.

Nick Hanauer:

Yeah, correct.

David Goldstein:

Maybe not as-

Nick Hanauer:

Much less a problem in Germany, and some other places in Austria like that.

David Goldstein:

And Austria. Yeah.

Nick Hanauer:

Yeah. We have been the victims of that amnesia in a way that not that many
countries are. But the other thing that I think is really worth emphasizing, and
I’d love for you to expand on, is again, sort of the conventional economic way
of looking at these things is to only think about the money that the job
represents. Only cash. But as you pointed out, it really doesn’t. A job has so
much more to do with how someone integrates into a society, what their
self-image and self-worth is, and how they relate to other people in their
community, and so on and so forth. And so, can you speak a little bit more to
that? Because I just think it’s so important.

Maximilian Kasi:

Exactly. So, I think that’s super interesting, although, about our study, at
least interesting to me, that the psychologist have been empathizing for a long
time that work means all kinds of things to people beyond just an income and an
annoying chore that they have to do.

But I think it all points to some very potentially ambivalent role that job
guarantee programs can have, depending on how they’re designed. I mean, we live
in the society where we define people’s worth based on their wage labor. And so,
that people have internalized the bend of, in order to be a valuable member of
society, you have to have a paid job.

And so, it’s kind of dangerous if we bake that into how we design welfare
programs, like retro Reagan and co-tradition of welfare-to-workfare, replacing
welfare benefits by just what might effectively amount to forced labor. And so,
I think in that context it’s very important to be careful how we design
something like job currency.

And so, this was something that was important to us when we negotiated also this
employment agency in Austria, is that the program has to be voluntary. Nobody
should be sanctioned for not accepting such a guaranteed job. Because otherwise,
we’re just back to valorizing work in the way where we think, “Oh, you don’t
deserve anything if you don’t have a job,” and effectively might be making
people’s lives worse.

But what we kind of strikingly find is that actually everybody did accept the
job pretty much, despite it being voluntary. And so, the other thing I guess
what’s important there is also how the jobs are designed. So, there shouldn’t
just be any random occupational therapy or degrading jobs. So, there was really
an emphasis in the design of this program that the employment should be
meaningful, and the participants were actually involved in the design of this
job, that something that has purpose in the community, and that something where
the participants feel this is actually contributing in a way that, again, is not
just some kind of degrading sanction or something like that.

Nick Hanauer:

Can you guys explain to us how this program works in practice? Who pays for
what, and did private companies pay for some of… Do they provide wages,
government… How does it all fit together?

Lukas Lehner:

Yeah. The program really started by the initiative of who I would call a policy
entrepreneur, Sven Hergovich, who is heading the public employment agency in
lower Austria, who realized that what Max has been alluding to in your earlier
question was about, that there has been a long tradition of evidence of the
pro-social functions of employment, but mainly from psychology and sociology.
And much of it has been correlational, but not really tested in a pilot program
with modern economic methods to get to the causal evidence, to the causal
effects, of such a program.

And so, what this program was about was to start a pilot program that guarantees
a job to every long-term unemployed, that means every person who’s been
unemployed for a year or longer, but embedded in an evidence-based evaluation
where we really come in with a randomized design to determine when people are
being offered that job, and also evaluate possible spillovers on the labor
market.

And how the program is designed is that every person who’s been unemployed for a
year longer receives, at the beginning, an invitation to a training course for
eight weeks, that turned out to be very important, which is followed by a
guaranteed job offer. And the job can be both a newly created job in a social
enterprise directly created for the participant, or it can be with an existing
enterprise that receives a large hiring subsidy to actually hire a long-term
unemployed that they, in many cases, would not have hired otherwise.

But the program itself, then, also contains training elements and assistance to
search for jobs in the wider labor market, though without the pressure to
actually accept jobs. That’s how it differs from other conventional job search
assistance programs.

Nick Hanauer:

So, Lukas, in the case that someone is going to go to work for a commercial
enterprise, some portion, and do you actually know what portion of the wage that
enterprise would be paying is subsidized?

Lukas Lehner:

Right. It’s actually a fairly larger wage subsidy at the beginning. It starts
with 100% of the labor cost in the first three months, but then goes down to
two-thirds of the labor costs for the subsequent nine months. And after a year
of employment, it totally dissipates.

David Goldstein:

Do employers have any obligation after that first year to maintain employment,
or can they lay off the work for one-yearers?

Maximilian Kasi:

Yes and no. So, they have no legal obligation, but there’s kind of the informal
sanction that the labor market service agency can provide by not sending them
any other employees if they need to hire somebody in the future. And they kind
of expect it, but there’s kind an indirect pressure to keep people on, to not
look like they’re just skimming the subsidy and then kicking people out again.

David Goldstein:

Right.

Lukas Lehner:

What was really surprising was that despite this very large wage subsidy at the
beginning, less than half of all job seekers employed through the program so far
have found a job with a private enterprise. So, that also shed light to the
fact, how we would say in economic jargon, supply-side constrained some of these
workers are. But that means how, in what kind of precarious personal situation
they are, or that there are just no jobs available for them in the labor market,
even if you subsidize them.

And that we should not forget that, for instance, one-third of long-term
unemployed have some sort of medical condition that prevents them from carrying
out every type of job. Half have not more than minimum education. Half are over
50 years of age, when it gets really hard to find employment.

So, for these type of workers, it turned out that many of the conventional
active labor market policies are really not very effective in bringing them back
into employment, but are rather perceived as a hassle, hassle to continue
receiving their unemployment benefits. So, for these type of workers, such a
direct employment program can really help to improve their personal social
situation, and health as well.

David Goldstein:

So, what type of jobs are, for example, were these direct-employment jobs? What
did they look like?

Lukas Lehner:

Yeah. So, the jobs are highly diverse because they were also created depending
on the people’s skills, and even interests. Some of the jobs were created in a
newly carpentry workshop, also in a workshop that carries out renovation works,
and foster sustainability in the municipality. Some are doing public gardening,
some are supporting elderly in their municipality with daily activities. And
some of the jobs were even invented by participants themselves during the
preceding training phase. So, these include, for instance, the planning of a
bike trail, the renovation of a museum, a book project, and a digitalization
project on the history of the town.

David Goldstein:

All things that sound like needed to be done, but weren’t being done in the
traditional labor market.

Maximilian Kasi:

Exactly. And so, maybe we… One of the things we started, we didn’t just look at
the effect of the program on the participants themselves, and those effects were
very positive as we mentioned before, but also looked at what happened in the
municipality overall, and we were very interested in the question of crowd out,
which is critiqued that I think sometimes even generously made the [inaudible
00:20:32] program to just take away other jobs. And really we don’t find it at
all.

So, we find that pretty much, long-term unemployment was eliminated by the
program, and there very little or no crowd out of other jobs. It’s really an
overall reduction of unemployment that you observe as a consequence. And I mean
relatedly, that pretty much everybody who was offered a job, actually was
accepted those jobs, which is another striking finding, but which not everybody
might expect.

Nick Hanauer:

Yeah. I think one of the obvious points here is that, I don’t care how good a
training program is, nothing substitutes for just doing the real job. Right?
Just getting people back into the workforce, in terms of making them productive,
right?

Maximilian Kasi:

So, such things should be part of the cocktail of things we do, right? I’m not
sure if this is the right thing for everyone. On the one hand, some people, I
don’t know, cannot work at all for various reasons, and they need to have
safety. And I think this is not going to be the solution of unemployment for
everybody because many people are going to find other jobs that are better
suited for them than solution entry program.

And so, I would think of this really as part of a cocktail of things that we
should do, that might also include things like a universal basic income, provide
material safety to everyone, no questions asked, and provide people a route into
having a meaningful, socially included activity that’s remunerated, and that’s
the baseline for the labor market, and that it’s got to be especially helpful
for people who have very specific issues. While they have no genius who the
people are who are long-term unemployed, but most of them have had something
happen in their lives which made things hard for them, one way or another. So, a
lot of them are not going to find jobs in the regular labor market. And for
them, that is an extremely useful route.

Nick Hanauer:

Absolutely. So, do you think this program is extensible to the United States or
other countries? What should the next steps be?

Lukas Lehner:

What’s really key about this program is that it’s actually complimentary with
existing social programs, and with existing welfare state institutions. So,
providing a job guarantee can actually function as an additional social safety
net that supports those people who are unable to find jobs otherwise.

But that is not in contrast with other welfare state institutions and policies
that we have. It’s neither in contrast with proposals for minimum or basic
income schemes. But it can actually be complementary, and they could exist in
parallel, and even support and reinforce each other in its effectiveness.

And I think that’s an interesting avenue for policy and for research, also in
the future, to look at the complementarities between these type of innovative
social policies. And I will definitely be in favor of implementing it, and it’ll
of course be great to implement it also in phases, in different contexts,
different countries, different cities, and continue evaluating what is the best
design of it.

David Goldstein:

How long is the study plan to go on for? Are you going to be following the
participants out into the future to see what type of outcomes they have, even
beyond the life of the program?

Lukas Lehner:

So, we’ve started in 2020 with the program, and in 2021 everyone was already
employed, and we’ve been evaluating the people’s individual outcomes, but also
the outcomes on the municipality since, continuously. The program is currently
planned until 2024, and we expect the decision until the end of the year whether
the program will be continued or not, whether the public employment agency will
continue funding the program or not.

And what we are really hoping for is that, based on the promising results of the
current evaluation, the public employment agency will actually decide to expand
the program and scale it up to look at the effects at scale. And we will, of
course, be continuing to evaluate the outcomes regardless of whether the program
is continued or not.

Of course, a question we often face is, how would the people do if the program
suddenly stops, and they’re unemployed again? Would they even be worse off
because they’ve got the job, they’ve lost it again? And of course that’s
something we will be evaluating as well, in case it happens.

What is very important there is that everyone got the job, the guaranteed job as
an additional outside option to all the existing benefits that’s kept being in
place, and voluntarily accepted to do it; and the other important feature here
is that the program is really intended to guarantee a job continuously, and make
people better off through that guaranteed job, which is in contrast, again, to
other active labor market policies that usually intend to bring people into
employment after program participation.

Nick Hanauer:

Can I ask one other practical question? If you look at the pool of long-term
unemployed people, at least in this small town, some long-term unemployed people
simply cannot work for some reason. Maybe they were injured, or whatever it is.
Of the long-term unemployed, how appropriate is this program? What percent of
long-term unemployed people is this program attractive to and appropriate for?

Lukas Lehner:

That’s an important question, Nick, because actually, it turns out a third of
the eligible population of long-term unemployed have some sort of medical
condition in the first place that prevents them from carrying out a certain type
of jobs, often the jobs they’ve been in in the past.

So, they are really not that available for the labor market. And for some of
them, actually, it turns out that some sort of invalidity benefits and some sort
of other social program would be the better option. And what the program does is
to offer people a job, but also to support them to get the right type of
benefits that are actually appropriate for them. And for some, it really isn’t
employment. Now, everyone who’s been offered the job after the eight weeks of
training phase has surprisingly accepted it. But there have been, of course,
people dropping out since we’ve been tracking the population, with some ending
in precarious situations.

Nick Hanauer:

Yeah. I mean guess my question is oriented around… I think one of the things
I’ve learned in this conversation is that you think of this program as part of a
portfolio of services that we can offer people.

Maximilian Kasi:

Exactly. I mean, it’s involved with a bunch of other evaluations and
experiments, too, in particular several basic income experiments. They’re just
for the job currency for the basic income there. There’s also always the fine
print that we really need to look at.

But then, yeah, I’m also excited about the method side of things, because one of
my other hobby horse is being all this AI and machine-learning stuff, and
there’s all this machinery that that’s been developed in machine learning to
essentially maximize profits through selling ads, right? When you go any search
engine, or social network, with all this targeting and learning what ads you’re
going to click on, and setting prices to maximize profit.

But, in a way, what I’m trying to do there, and to bring into this experiment is
also to import some of these ideas, and how we can market and quickly learn from
data, but use that for more of a social good, and incorporate that into how we
did design experiments and labor market policies, and so on, to very quickly
learn policies that maximize welfare, defined in some way or other. So, that’s
something I’m very excited about, going forward.

Nick Hanauer:

Yeah. Well, just word of caution, I invented a lot of that targeting technology.
And we thought it was all going to be awesome in the beginning, and it turned
out to have some really nefarious applications.

Maximilian Kasi:

Oh yeah, absolutely. [inaudible 00:29:06]. But, I’m not interested in targeting
part so much here, but yeah. Anyway.

David Goldstein:

Just so you know, when the AI singularity happens, Nick is partially to blame.

Nick Hanauer:

Yeah, exactly.

David Goldstein:

Thanks for funding it, Nick.

Nick Hanauer:

Yeah, exactly.

David Goldstein:

When the AI takes over the world.

Lukas Lehner:

I guess that’s such a compliment with Max’s research, actually, on how to
repurpose much of AI for the public good and the social good.

David Goldstein:

Exactly.

Maximilian Kasi:

And how to get democratic control over the objective that we’re maximizing
there.

Nick Hanauer:

Yeah. No, it’s a worthy project. Well, listen, this has been absolutely
fantastic, and it’s just such an interesting and important experiment, and we’ll
be watching it from afar and rooting for you guys. But one final question. Max,
you first. Why do you do this work?

Maximilian Kasi:

Because I think it’s really important that we need to create institutions that
create changes and inclusions for everyone, and that provide a minimum of a
dignified life in our society. And I think of that as contributing to that, and
to the extent that I can contribute to something to this debate, based on my
background, economic and political methods, and I’m happy to be part of the
public discussion and democratic process, ultimately.

Nick Hanauer:

How about you, Lukas?

Lukas Lehner:

I think evidence has a powerful role in making the world a better place. And my
thinking has been that most people, in principle, can agree on fairly abstract
goals on what decent life means, what decent work means. For instance, no
poverty in the world, no poverty even in high-income countries.

But what politics often does not agree on is how to get there, what policies to
put in place. And I think that’s where research has a really powerful role to
play in actually showing what works and what does not, and what are the
trade-offs and what are the complementarities. And that’s where I think simply
by creating the evidence, it has a powerful role in contributing to making that
world a better place.

Nick Hanauer:

Love it. Well, thank you guys for joining us, and best of luck on this
experiment.

Maximilian Kasi:

Thanks for having us.

David Goldstein:

So, Nick, I think the most important takeaway I had from this conversation was
that we’re looking at more than just money here. We’re looking at outcomes
broadly, in terms of how it improves people’s lives. That the participants of
the program found much greater satisfaction. They were happier, more secure,
better connected to their communities.

And, in fact, the communities benefited, too. How we pointed out that only about
half of the jobs were in the private sector were subsidized in private sector
employment for that year. The other half were created in the community, created
by these participants in some cases. And there are things like providing aid to
the elderly, things that are certainly necessary, particularly in aging
countries, like most of the world right now, with populations aging. But also,
from reading the study, one of the particular examples was a community garden
where they gave a few acres to do a community garden where people can go and
pick for free. Just go and pick fresh herbs and vegetables.

And you can imagine, me as a gardener, you can imagine how satisfying that must
be, to instead of collecting unemployment benefits, to be able to create
something as beautiful and sustaining to the community as a community garden.

Nick Hanauer:

I agree.

David Goldstein:

You could see that how that’s a win-win for everybody. And again, one of the
examples they mentioned was somebody who was designing a pedestrian path, a
trail. And out here in the Pacific Northwest, we’ve got tons of trails. We’re
always building more trails. That’s something which is very valuable to the
community that wasn’t otherwise being done. So, it’s not make-work. We’re not
just having people dig holes and then filling them back in. These are people who
otherwise would be collecting benefits, who instead have voluntarily taken jobs
or created jobs where they’re giving something back to the community.

Nick Hanauer:

Yeah. And I think, again, I think just to emphasize the non-financial role a job
has in an individual’s life, and also the way in which that individual connects
with their broader community and family through that job, it’s just super
important, and in many ways may be of equal or even greater importance than the
actual financial income from it, which is a really important thing.

The other thing I think that’s really important that I took away from the
conversation is that it’s wrong to think about a jobs guarantee as the only
system, which I must admit was sort of what I had in my head.

David Goldstein:

Right. We’re replacing unemployment with the job guarantee.

Nick Hanauer:

It’s part of a portfolio of approaches that we should take to managing labor
markets, providing a safety net, and making sure that our economy and our
country is as effective and as productive as possible.

Nick Hanauer:

I’ll be really interested to see what the long-term results of this pilot will
be. It could be a really cool thing.

David Goldstein:

Also important to note, and I don’t think we got to it in our conversation, but
it was in their report, that this turned out to be no more expensive than the
traditional unemployment benefits. In fact, it was slightly cheaper. And you can
imagine that partially, because you’re subsidizing employment for half these
people, instead of paying the full wage. Private employers end up picking up
part of it.

But it strikes me how different this is from the American approach during the
neo-liberal era, when Bill Clinton declared that welfare as we know it is over,
and we started this welfare-to-work movement. And in many Republican states, and
red states, they have these work requirements to receive benefits.

Well, you know what? If you are working, and you are being paid a living wage,
you don’t need benefits. This is the exact opposite approach, where rather than
requiring that individuals find work in order to receive welfare benefits, oh,
instead, we’re going to require that the government provides you a job.

We’re going to find a job for you. We’re going to help you create a job. We’re
going to help not just train you, but either create a job for you, or find you
employment in the private sector. And that strikes me not just as a more humane
approach to long-term unemployment, it also strikes me as more rational.

Nick Hanauer:

Yeah, no, and just more productive. You and I have discussed at length the
difference between knowledge and knowhow, and what you get in a training program
is some knowledge. What you get in a job is knowhow, and that’s more important.

David Goldstein:

And to be clear, that’s the way the economy used to work. Employers used to
train you on the job. My first job out of college was in the tech industry, and
I was a history major who spent most of my time in the theater. And back then,
it was 1985, strong job market, it’s like, “Oh, smart kid from a good
university. Come on, we’ll pay you and teach you how to do your job.” And it was
like that in many industries. Certainly, you didn’t get a job in an auto
manufacturing plant knowing how to manufacture autos.

Nick Hanauer:

No. For sure not.

David Goldstein:

They had to teach you all those skills. You don’t get a job as a carpenter or as
a roofer without some sort of apprenticeship or training, and you don’t
generally go to school, get a degree in roofing. You learn that on the job, and
that’s something that, outside of some craft professions, is totally missing
these days.

Nick Hanauer:

Yeah, absolutely. Well, anyway, it was super cool that these guys managed to get
this experiment going, and it shall be very interesting to see how it evolves
over time.

Speaker 4:

Pitchfork Economics is produced by Civic Ventures. If you like the show, make
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@pitchforkeconomics. As always, from our team at Civic Ventures, thanks for
listening. See you next week.



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