The idea of a federal jobs guarantee is that anyone who wants a job gets a job and the job pays enough to support a family. Per Bernie Sanders, that would be a full-time public-sector job paying at least $15 an hour with healthcare and other benefits. No skills, no problem: the idea is to fit the job to the worker and not the other way around.

Would a jobs guarantee program work? By “work” I mean would recipients be better off in the long run than if they had not had a guaranteed job? The track record of similar programs is not encouraging.

In What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations, economists David Card, Jochen Kluve and Andrea Weber reviewed the evidence from 207 studies. Their conclusions:

  • Public sector employment programs have negligible or even negative program impacts at all time horizons. Meaning the beneficiaries did not benefit in the long-run.

  • Programs that combined training with private sector jobs benefited the long-term unemployed. Meaning the skills and references improved their employment and earnings prospects.

  • Programs provided greater benefit during recessions and periods of high unemployment. Meaning there’s more to gain and less to lose when the alternative is unemployment.

So what’s wrong with public sector jobs programs? For the most part, they don’t provide useful skills. They tend to consist of “make-work” jobs that have no counterpart in the private sector. The time spent employed in these jobs could have been time spent acquiring skills and experience to move up the economic ladder. In other words, these public sector jobs often come with heavy opportunity costs.

But wait! What about those great New Deal jobs programs like the Civilian Conservation Corps? I agree these programs did a lot of good. But they were temporary measures to address an economic crisis, in a time when lots of unskilled labor could be very useful on large infrastructure and conservation projects. There is a place for similar programs these days, such as the Job Corps, which combines job search counseling, academic instruction, vocational training, and work experience in a bunch of fields, including advanced manufacturing, construction trades and forest conservation. But the Job Corps is about preparing young adults (ages 16-24) for life outside the Job Corps. It’s not a jobs guarantee program.

For the record, I ran a federally-funded job placement program in my younger days. We placed hundreds of young adults with government and business employers, doing whatever to gain work experience. The program paid a wage-equivalent. To avoid conflict with labor organizations, we had to make sure our charges did not take jobs away from “real workers”. Which is another way of saying that they couldn’t learn hard skills on the job, just soft skills like showing up on time and staying the whole shift. And how to operate a copier. Was this time well spent?

Probably not.

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Next: What would be the ripple effects of a guaranteed jobs program? Would the economy be robust enough to produce sufficient tax revenue to support the program? How would it affect the private sector?

Reference:

David Card, Jochen Kluve, Andrea Weber; What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations, Journal of the European Economic Association, Volume 16, Issue 3, 1 June 2018, Pages 894–931, https://doi.org/10.1093/jeea/jvx028