In a preface to his book Capitalism and Freedom, the American economist Milton Friedman famously observed that a crisis can propel once-fringe ideas into the political mainstream.“Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around,” he wrote.
The job of intellectuals, thinktanks and economists, he argued, is to refine the quality of these ambient ideas, so that good ones are ready when disaster strikes.A chorus of influential voices is now predicting that AI may trigger crises of vast magnitude. Bill Gates has declared that AI will advance so rapidly that within a decade, humans will not be needed “for most things”.
Anthropic CEO Dario Amodei has warned that the technology could cause widespread unemployment within one to five years, eliminating many positions in law, tech, finance and other white-collar professions. Even if these predictions are wrong, investors who bet heavily on the technology may conclude that AI is a bubble, and this in itself could cause a recession and widespread job loss.Whether a crisis of mass AI-related job loss turns out to be actual or perceived, one policy idea that is attracting growing attention and support could directly mitigate this problem: a job guarantee.In its most ambitious form, such a program would ensure that anyone who wants work is guaranteed a meaningful, decently paid job.
By creating a public option for employment, its supporters argue, a job guarantee could protect millions of people from the financial and psychological damage of joblessness and mobilize a vast labor force to tackle urgent societal problems, from infrastructure and climate adaptation to elder care and childcare.The concept of a job guarantee has a long history, both as an ideal and an actual policy. Article 23 of the 1948 Universal Declaration of Human Rights states: “Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.” During the Great Depression in the 1930s, Franklin D Roosevelt established the Works Progress Administration (WPA), which employed millions of Americans in ambitious public works projects that constructed roads, bridges, sewers, playing fields and much more.
More recently, France, India and Argentina are among the countries that have launched versions of a job guarantee.Though a job guarantee and universal basic income (UBI) are often grouped together, a recent global survey found greater support for job guarantees than UBIs. Polling of Americans by the Democratic strategist David Shor also shows the same pattern, with greater support for the creation of well-paid jobs than for direct income support.
This makes sense, the venture capitalist and civic activist Nick Hanauer said, because “jobs represent so much more than income in human societies. They represent connection and dignity and enfranchisement and participation.”Algernon Austin, director for race and economic justice at the Center for Economic and Policy Research, agreed: “A job guarantee is significantly preferable to UBI because work is more than just income.
When you have a job, you gain work experience and you gain skills and you gain a network.”Calculating the cost of a job guarantee depends on a holistic assessment of its impacts. During a US Senate hearing on affordability in June, John Kennedy, a Republican senator for Louisiana, suggested that a job guarantee would cost trillions of dollars and was impossible.
When Dr Julie Margetta Morgan, president of the public policy thinktank the Century Foundation, told Kennedy that she supported a federal job guarantee, he replied: “Do you believe in the Easter bunny?”Economists who study job guarantees see the calculation of costs and benefits differently. Max Kasy, a professor of economics at Oxford who has studied a recent job guarantee experiment in Austria, said that while the wages a job guarantee pays participants comprise a cost, such programs also save money in multiple ways.“The cost saving comes from the fact that you don’t have to pay unemployment benefits, or maybe disability benefits or early retirement benefits.
Then people who are working pay taxes and make social insurance contributions, so that’s additional revenue for the state. And then they hopefully do something that’s actually useful for society,” he said.Participants in the job guarantee experiment in Austria also experienced social and psychological benefits.
While the monetary value of greater wellbeing may be hard to quantify, such intangibles are crucial, according to Pavlina Tcherneva, a professor of economics at Bard College.“Providing a good job to a person is absolutely transformative,” she said. Factoring in the costs of health problems that come from precarious unemployment and long-term unemployment, she added, makes the policy even more attractive, saying: “It’s not only affordable, it’s an investment.”In September, the US representative Ayanna Pressley, a Democrat from Massachusetts, reintroduced a congressional resolution calling for the creation of a federal job guarantee, something she first proposed in 2021.
Her proposal would create a federally funded but locally administered job guarantee that pays participants at least $25 an hour, with regular adjustments to reflect the rising cost of living. The jobs would include a range of sectors, such as emergency preparedness, relief and recovery after natural disasters, care for children and seniors, and public art projects modelled on the WPA’s popular Federal Art Project.Another recent proposal would directly tax AI companies to fund a federal job guarantee.
The plan, which is supported by Democratic US representatives Greg Casar of Texas, Valerie Foushee of North Carolina and Sara Jacobs of California, would tax large AI companies on whatever was higher: the value of their “tokens” – units of data used in AI models – or their revenue from AI products.If the unemployment rate rose, the tax rate would increase. “AI CEOs are openly predicting their technology could put millions of Americans out of work, and our government is doing nothing to save jobs and protect working people,” Casar said in a written statement.In Cleveland, Ohio, a non-profit called Universal Basic Employment (UBE) is launching a small pilot study with a cohort of five workers who drive vans at a transportation company. Rather than create new jobs from scratch, the program subsidizes the wages of existing private-sector jobs in a way that benefits both workers and employers, according to Devin Cotten, founder and CEO of UBE.Cotten and his team wanted workers to make what they call an autonomous wage – the pay level at which people are no longer eligible for most social safety net benefits.
In Cleveland, that was just over $27 per hour. At a cost of almost half a million dollars for one year, UBE’s pilot will split that $27 figure with employers.
The drivers currently make about $15 an hour, so the employer will save money, and the workers will get a sizable raise.The program is not meant to replace other forms of assistance such as housing vouchers, Cotten said. But workers receiving more money as wages, rather than as a siloed benefit, can build their credit, perhaps qualify for a mortgage and also keep dollars circulating in the local economy, helping to revitalize poor neighborhoods.Such a model may even attract a broader base of political support. “Work is a shared value across political lines,” Cotten said. “I think crafting a solution based on work allows us to be a bipartisan solution.”