Federal Jobs Guarantee and Universal Basic Income

1 Economics Introduction Despite a significant reduction in the rate of unemployment, over 6.5 million workers who are unemployed and over 5 million have part-time jobs although they would like to secure full-time employment. An analysis of these figures reveals that unemployment and under-employment affect workers unequally. There is a relatively higher rate of unemployment in some social groups. For example, black workers, despite their academic qualification, are more likely to face unemployment than white workers. Unemployment causes a rise in poverty, inequality, crime, lack of economic progress and social segregation.

This paper proposes two government programs which may be used to address the issues of unemployment and poverty; federal jobs guarantee and universal basic income. It compares their similarities and differences and evaluates which between the two programs has the most significant welfare benefits.

Federal Jobs Guarantee A federal jobs guarantee is a government program that ensures that anyone who is willing and able to work has access to employment that provides decent working conditions and adequate wages and benefits. This program helps to utilize human potential, reduce the rate of unemployment and poverty levels, facilitate the creation of an inclusive economy and also helps to build stronger empowered communities.

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2 The policies of the federal jobs guarantee are; firstly, to reduce the rate of unemployment by providing jobs to anyone who wants a job (Paul et al. 2018). Secondly, the jobs should support workers’ rights and provide a good standard of living. Thirdly, there should be an equitable approach in the distribution of the jobs; any resident should be able to access opportunities regardless of their race, religion, ethnicity, and gender. Fourthly, communities that have been left behind and marginalized should be prioritized in this program. Fifthly, federal job guarantee facilitates the creation of a stable economy, therefore, offering protection against economic recession.

Universal Basic Income Universal basic income (UBI) is a government-sponsored poverty-alleviation program that provides a certain amount of money to all the citizens at regular intervals. It is distributed equally to all citizens regardless of their financial status. There are two types of universal basic income; full and partial. Full UBI is enough to cover an individual’s basic needs while partial UBI is lower and cannot adequately meet an individual’s basic needs. As unemployment increases as a result of the increase in automation, UBI might prove to be an effective response to the loss of jobs. UBI allows people who would otherwise be impoverished by poverty to purchase food and access healthcare and education.

Universal basic income is especially beneficial in economies where there is a wide income and opportunity gap and a high rate of poverty due to low levels of education and unemployment (Forget, 2011). If used appropriately, this fund should help reduce poor people’s struggle for survival and give them a chance to pursue opportunities that will enrich their lives. The policies of universal basic income are; firstly, to provide economic security to a population and give them an opportunity for meaningful employment. Secondly, recipients

3 of UBI are allowed to spend it on anything that they may wish; unlike other forms of government support, there is no restriction on what it should be spent on. Thirdly, UBI is a communistic principle that seeks to reduce exploitation of workers and raise people’s standard of living. Additionally, UBI provides a basic income to everyone regardless of their financial status and therefore reduces social-class shaming.

Similarities and Differences between Federal Jobs Guarantee and Universal Basic Income Federal Jobs Guarantee (FJG) and Universal Basic Income are both social welfare programs. They are both used to address poverty, inequality, and unemployment.

However, they differ significantly in their approach towards the achievement of these objectives. FJG provides job opportunities to anyone who requires a job while UBI provides a regular basic income to everyone in the community regardless of their financial status.

A job guarantee is more economically realistic because it provides assistance to people who are in need and remunerates individuals for work performed. As a result, there is an increase in productivity and an improvement in job skills. The rise in productivity reduces inflation. Universal basic income, on the other hand, results in a significant increase in money to the economy without a subsequent increase in production; this creates a risk of economic inflation.

UBI might be detrimental to the economy because if it is significant enough, people would not need to work and some may opt to stop working. This would lead to a reduction in production and an increase in demand which ultimately leads to high prices.

FJG ensures that anyone who is willing to work has access to good quality jobs with stable work-tenure. It helps workers to maximize their potential and sharpen their skills in the

4 process. UBI provides an income to the population regardless of their employment or financial status (Van Parijs, 1992). If the money offered is enough to cater for their needs, it might reduce people’s interest in securing good jobs. This leads to deterioration of skills and economic stagnation.

Which has the Greatest Welfare Effects?

Federal job guarantee has greater welfare effects than Universal basic income and should, therefore, be the priority of economists. One of the main reasons why it should be the preferable option is its lower cost. Federal job guarantee only targets people who are involuntarily unemployed whereas universal basic income targets every adult regardless of their social or financial status (Sheahen, 2016). UBI is therefore not only more expensive but also wasteful since it provides aid to individuals who are not in need of it.

Secondly, UBI causes a significant increase in the circulation of money in the economy without an increase in productivity which is harmful to the well-being of the economy because it implies a rise in the level of demand and low production capacity. This causes the prices of commodities to increase as output declines, causing hyperinflation.

A job guarantee program benefits the economy by addressing the underlying issues behind unemployment such as poverty, marginalization, lack of permanent employment opportunities and lack of good-quality jobs. Basic income, in contrast, only provides income to all members of society and fails to address the causal issues. Due to this inadequacy and also the fact that it increases the risk of hyperinflation, universal basic income is not a sustainable economic program.

Conclusion

5 UBI and FJG provide a solution to several economic ills such as depression, wealth disparity, and unemployment. Each has its merits and demerits. However, UBI poses more significant challenges to the economy because it consumes a substantial proportion of public resources and does not replenish it. To successfully better people’s lives, the government should implement a job guarantee program to ensure that anyone who is willing to work has access to an employment opportunity and also create policies that will enhance the quality of people's lives such as good affordable housing, affordable healthcare, and education, free internet and transportation.

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References Forget, E. (2011). The Town With No Poverty. 1 - 24. doi: 10.4000/oeconomia.1807 Paul, M,, Darity, W. & Hamilton, D. (2018). The Federal Job Guarantee. Intereconomics, 53(3), pp.179-180.

Sheahen, A. (2016). Basic income guarantee. [Place of publication not identified]: Palgrave Macmillan.

Van Parijs, P. (1992). Competing Justifications of Basic Income. Retrieved from https://cdn.uclouvain.be/public/Exports%20reddot/etes/documents/1992.Verso__Intro__Competing_.final.pdf