Transforming the Labour Market with a Job Guarantee Program

The Structural Servitude of the Labour Market

Since the days of the Industrial Revolution, when formerly independent crafts
workers and landless agricultural workers became dispossessed and had to sell
their labour power to make a living, unemployment has been a frightening prospect.
To survive workers were forced to sell their labour power to employers willing to hire
them at wages set by those employers. Labour as a commodity for exchange
brought workers into an asymmetrical power relationship with their employers
whose interests stand opposed to theirs. Workers work for wages and private
employers for profits.

When economies grow, jobs are readily available and profitability rises. Both fall
when the economy retracts, revealing the opposing interests of workers and
employers. Inevitably this structurally embedded practice defines market
economies. It inspires resistance and opposition to the employer class by those
who own nothing but their ability to work, their labour power. They cede any value
created with their skills and abilities to their employers.

Hence for more than 250 years, long-lasting unemployment, precarious
employment as well as at or below subsistence level wages have been the bane in
shattering working people’s hopes and aspirations for a better life. The jobless and
working poor play a primary role in maintaining this situation. They are used to hold
down wages by diminishing the bargaining power of workers, disciplining them and
providing a pool of workers, waiting to be called when needed.

Since the war years, Canada’s unemployment rates, reflecting the ups and downs of
the economy, have crept up slowly but inevitably from 3.5% in the early 1950s to a
peak of 13.1% during the economic recession of the 1980s, then fluctuating
between 8% and 11% in the 1990s, and between 6% and 8% from 2000 to 2019.
With the onset of the COVID-19 pandemic, unemployment spiked in 2020 to 9.7%,
falling to 7.5% in 2021, and to 5.3% in 2022. High interest rates reversed this trend
in 2023. In November 2024, 6.5%, more than 1,428,000 people, were involuntarily
without a job.

Before the emergence of welfare states in the Western world after World War II,
being without a job had been undoubtedly a sure path into a cost- of- living crisis or
more often than not into poverty. Arguably Western welfare state programs,
particularly unemployment insurance, renamed in Canada employment insurance,
were meant to address the failure of market economies to generate enough jobs at
adequate wage levels and decent working conditions to provide those losing their
job with an adequate standard of living. While social insurance against job loss was
and still is a step in the right direction, reductions in both the adequacy of and
access to such benefits, meant it is a band-aid solution and not enough to address
the root causes of unemployment.

A Guaranteed Job Program

There is, however, a viable alternative available which goes beyond relieving the
consequences of spikes in unemployment. It is a federally sponsored jobs program.
In its simplest form, as explained by Professor Randell Wray from Bard University, a
Job Guarantee (referred to as JG in the rest of the paper) “is a situation in which all
who wish to work at a nominal wage fixed by the government will be provided with a
full-time human job” i. This would ensure that workers who cannot find employment
in the private sector would be given one in badly understaffed local areas at a wage
level allowing them to live in dignity ii.

A federally sponsored job guarantee program would be the foundation and the
anchor for a renewed commitment to full employment. This new solution to an old
persistent problem is based on four fundamental assumptions:
1) Everybody who wants to work should be able to do so.
2) There is no shortage of socially useful work that needs to be done.
3) As a society, we are seriously underutilizing the skills and abilities of many
people while failing to meet the basic needs of many others.
4) Unemployment and under -employment result in a variety of social,
economic and environmental costs that outweigh the costs of creating
socially useful jobs.

The program could be targeted initially at the most vulnerable workers in the low-
paid areas of the labour market, particularly those stuck in platform or gig jobs.
Over time, it would be extended to include a diverse mix of community-building
efforts focused on (including a mix of jobs), with a particular focus on the care
economy, supporting transitions to the green economy, and creating more
community resilience to climate risks and extreme weather events.

Unemployment is far from fair. It impacts people unequally. While in a segmented
labour market all employees are to a certain degree at risk some social groups, such
as people with disabilities, older as well as younger individuals, recent immigrants,
racialized minorities, ex-offenders, and other marginalized groups are the most
often affected. They are the first fired in a recession and the last rehired when the
economy picks up again.

They are also hurt the most by higher interest rates, having to face rising costs of
living, particularly for food and housing. Offering them the dignity of a decent job
would undoubtedly improve their personal wellbeing and advance their status in
society. Less fear of job loss and discrimination of job seekers would reduce
competition in the labour market and encourage thus greater social harmony.
A Jobs Guarantee is not a workfare program. Participation is voluntary and is for
example not meant for those unable, unwilling, or not ready to enter the labour
market.

It has to be expected that some people currently on provincial/territorial
income support programs will want to continue for a variety of reasons. This may be
due to caregiving roles or health related employment limitations for example. JG does
not involve testing or screening. Workers laid off, furloughed, workplace closures or
stuck in jobs paying less than the government guaranteed minimum wage would move
without a waiting period in the guaranteed job market. They can move back into private
sector jobs when employment conditions improve there. To lure JG workers back into
the private labour market, the businesses would need to offer competitive wages and
working conditions, thus re-balancing labour market relations and improving working
conditions.

A Job Guarantee would drastically change the Employment Insurance system; the
unemployed would be offered a job instead of a cash payment. Fewer people would
be relying on employment benefits, particularly those whose benefits would be well
below the average. While difficult to estimate precisely, the savings from a
reduction of even 150,000 in EI claims would be significant. If another 150,000
people were to leave social assistance and re-enter the workforce in this way,
further significant savings will occur.

Also, as Wray points out, with a Job Guarantee program in place government would
no longer have to rely on unemployment to stabilize prices. Instead, the wage level
offered to those in the JG program would be the primary price stabilizeriii. While
varying by industry and job classification, JG wage levels would set a realistic wage
floor, above the minimum wage and closer to a livable wage in most instances, andwould also include benefits to avoid profit motivated precarious employment
situations.

The role of the federal government is crucial in this respect. Only it has the financial
capacity to fund hiring people in non-profit making but socially desirable job
sectors. Offering jobs at a livable wage with benefits seems to be a promising
approach to raise the living standards of the economically marginalized and those
who have been made redundant for reasons over which they have no control.

The Need for a Job Guarantee Program Now

Unemployment is always a political choice generally based on economic principles.
During the years of Covid -10 pandemic the federal government injected a lot of
money in the economy, subsidizing businesses to keep them afloat and to maintain
consumer spending power. But as production and services were restarting, and
workers hired, or re-hired, inflation reached an unexpected 40-year high of 8.1 per
cent. The magnitude of the rise prompted the Bank of Canada to announce its first
of altogether 10 consecutive aggressive interest rate hikes on March 2, 2022. At the
time, unemployment stood at 5.3 per cent which Tiff Macklem, its Governor,
considered unsustainably low and a primary factor for the increasing inflation rate,
though there was little evidence to support his contention. iv

With the aim of cooling the economy, bringing down inflation and stabilizing prices,
Macklem opted for the economic orthodoxy of interest hikes, making the borrowing
of money more expensive to reduce spending but also causing the loss of jobs, and
limiting wage increases, inflicting thus considerable upheaval and pain on Canadian
households and businesses. He ignored that economists today are far from
unanimous in their belief that controlling inflation in this way is still a legitimate
policy tool.

There are different opinions on whether the severity and duration of Canada’s high
interest rates actually contributed to extending and exacerbating inflation rather
than bringing it down more quickly. In the absence of convincing evidence of the
latter, it seems inflicting the brutality of unemployment and price increases on the
economically and socially most vulnerable to bring down inflation from rising seems
both cruel and unnecessary.

How a Localized Job Guarantee Program might work

Workers on Job Guarantee projects would be matched with specific jobs designed
to meet the identified needs, demands and characteristics of local communities or regions. Socially needed jobs would be concentrated in areas that have been either
ignored or greatly underserved by businesses, notably in the green economy,
education, health care, elder care, childcare, construction, and others.
Unions, nonprofits, community organizations and social agencies could play a
crucial role by being invited to submit employment projects specifically for the
benefit of individuals and families in their communities.

Decentralizing the public job creation program would be a crucial feature in enhancing the role of citizen input and deliberative decision-making related to community generated projects. Job Guarantees represent a categorical rejection of fighting inflation with involuntary unemployment and opposes business practices to lay off workers to reduce
production costs in order to maximize profits. The practice is particularly reprehensible in the case of profitable private companies, putting the interests of shareholders over those of workers.

The Bank of Canada’s fixation with raising interest rates when the job market becomes tight, reducing the demand for labour to control inflation is equally faulty. Businesses and the Bank of Canada, engaging in these tactics, must be held accountable for depriving people of their livelihood, and increasing living costs. In short, they ought to be made to feel ashamed. To prevent the damage, governments should be expected to intervene and protect the living standards and employment prospects of people by constraining the excess profits of those who exploit temporary supply shortages. It is to be feared
that dismissing people as of no further use in the profit market of production and
services, might lead to the notion of a superfluous under class as noted by Yuval
Harari here.

Employment as a Human Right

“The only basic answer to unemployment is employment,” wrote Leonard Marsh in
1943, “not any kind of task it is true, but employment carrying reasonable level of
remuneration and reasonably satisfactory working conditions”v. He went on to argue
for the availability of work rather than subsistence maintenance in his ground-breaking plan on the reconstruction of the Canadian economy in the post-war world. Similarly, the International Labour Organization (ILO) endorses in the Declaration of Philadelphia, May 10, 1944, full employment, and the raising of living standards a fundamental principle to avert massive job losses which had fueled the causes of political extremism in the 1930s in Europe.

While unemployment is by no means the sole contributor to social and economic unrest, numerous studies in different locations and times have been able to demonstrate a clear connection. Employment as a right is endorsed in Article 23 of the 1948 Universal Declaration of Human Rights. It endorses the social value and importance of work, upholding the “right to work, free choice of employment, just and favourable conditions of work and protection against unemployment.” Equally important is the UN’s Covenant on
Economic, Social and Cultural Rights which establishes in articles 9 and 11 the right to social security and the right to a minimum standard of living. These rights for workers are more than just empty proclamations but represent employment an expression of respect for their labour power intrinsically linked to the recognition of their human dignity.

Canada is a signatory of both the Declaration and the Covenant; yet the right to
work, to contribute to national output, has not prevailed for all. Minimum standards
of living were met only at the lowest benefit levels to survive. Neoliberal economic
thinking, the latest version of the 19th century perception that only markets and not
governments create jobs continues to prevail against all evidence to the contrary. Its
mantra, eagerly propagated by fiscally conservative economists, was accepted by
the mainstream media, and sold to a receptive public, despite overwhelming
evidence that markets, serving the self-serving profit motives of the business sector,
are at the root of the unemployment problem.

A Job Guarantee would be an excellent fit for the existing cultural framework
supporting the value and dignity of work. A Job as a place in the economy means
more than having access to resources. It is a defining feature in people’s lives.
Amartya Sen considered employment a fundamental prerequisite for social justice.
He deemed it essential for people to ‘live a valued life’ in their eyes and those of
others to boost their self-esteem. Its lack has been associated with far-reaching
undesirable personal and social collateral damage of family breakups, addiction,
abuse, crimes, physical and mental health problems as well as a spate of other
tribulations that turn personal into social problems. vi

Existing Job Guarantee Projects Outside of Canada

So far in Canada, the idea of a government sponsored job program has had only
limited exposure in the academic literature, public policy discourse, government
circles, or the mainstream media. It is hardly surprising that as an unknown it has
not inspired support.

The experience is quite different in the United States. Shortly before his death in
1967, Martin Luther King demanded an economic bill of rights in the interest of
community cohesion and social wellbeing. He believed that the need for economic
security for socially marginalized groups would be met best with a government
sponsored Job Guarantee. His concern for the material needs of people unable to
work led him to advocate for a guaranteed basic income for them but insisted that a
nationwide Jobs program should be given priority.

Since then, the main theoretical proponents for a Jobs Guarantee have come in the
United States from think tanks, such as the Center on Budgets and Policy Priorities,
the Levy Economics Institute, and academic economists, supporters of Modern
Modernist Theory, particularly Randell Wray, whose thinking greatly influenced this
paper.

Within the European Union, at the practical level, France introduced a long-term
unemployment prevention program, similar to a jobs guarantee in 2017. Austria is engaged in the world’s first job guarantee pilot project known as MAGMA (Modell Project Arbeitsplatzgarantie Marienthal) which runs from 2020-2024. Participants who have been jobless for a year are guaranteed jobs within this time period. The take-up rate has been so successful that it almost wiped-out long-term unemployment in the municipality of Gramatneusidl in Lower Asustria. There also have been talks about a Europe wide uniform guaranteed job proposal, covering all 27 member states, but so far without results.

It seems that we are in an auspicious moment to consider a nationwide government
Job Guarantee for Canada. Bill C-50, the Canadian Sustainable Job Act points already
in the right direction. The Act represents the federal government’s commitment to a
green economy, explicitly committing itself in its preamble to: “…fostering the creation
of sustainable jobs and implementing measures to assist workers in the shift to a net-
zero economy.” The transition to a green economy is expected to create hundreds if
not thousands of new jobs. The Act could be used to lay the foundational groundwork
for a national Jobs program.

Estimating The Costs of a Job Guarantee Program

The cost of implementing a job guarantee program in Canada could vary significantly depending on the size and scope of the initiative, the wage levels offered, and the overall design of the initiative. Here are some key points based on these considerations:

• Eligible Population: Canada has a population of about 40 million. The program would need to account for those eligible for jobs, potentially focusing on both unemployed and under-employed individuals. Based on fluctuations in the numbers of people seeking EI in Canada since 2017, the numbers attracted to such a program might range from 150,000 to 300,000. In addition, at least a third of those on social assistance might opt for inclusion.

• Wage Levels: Does the program design offer primarily minimum wage jobs, or a mix of jobs offering wages ranging from $18 or $20 per hour up to a living wage, or market-based wages for a broad mix of job roles? These decisions will significantly impact program costs. For example, a program paying $20 per hour, scaled to include 150,000 participants, and where each job is full- time and designed to last a year, would result in annual costs of around $6 billion. A program offering both a mix of job rates that collectively average $25
per hour and scaled to include 300,000 participants would cost closer to $15 billion.

A public investment of up to $15 billion to create 300,000 jobs may sound like a lot of money but it is important to look at the cost offsets as well as the local benefits associated with such an investment. Fewer people would be relying on employment benefits and social assistance benefits. Further, jobs created could help grow the care economy, strengthen sustainability efforts, enhance climate resiliency, and develop much needed activities or supports in neighbourhoods and local communities.

While these are difficult to precisely quantify and may not fully offset the costs of the program, they should not be underestimated.

• Reduced Social Assistance Costs: Fewer people would be relying on
welfare benefits, and the savings of moving 150,000 individuals from welfare
to a guaranteed job could be substantial, offsetting the costs of the jobs
created.

• Increased Tax Revenues: Those employed under the JG Program will also be
paying income taxes and payroll deductions like EI and CPP. This contributes
to government revenues.

• Increased Productivity and Economic Growth: If more people are employed
and paid a livable wage, they will buy more goods and support the local economy. Overall productivity could rise, leading to economic growth that can both increase government revenue and reduce the need for other forms of social support.

• Reduced Economic Inequality: By providing decent jobs and reducing poverty, a Job Guarantee can help address economic inequality, which can lead to lower crime rates, reduced hunger and deprivation, improved health outcomes, and more stable and sustainable economic growth.

Designing the Job Guarantee Program for Maximum Impact

To be most successful, a Job Guarantee program should serve as a foundation in
supporting a number of inter-related public policy goals moving society in the
direction of a green, resilient and net-zero carbon future: the care economy,
resilient communities, and efforts to deepen democracy.

The implementation should be centred on locally generated community-building
and sustainability efforts that meet locally identified community needs in ways that
give local groups a strong voice in articulating their needs and designing solutions.
Such an approach could offer several benefits that might reduce costs and mitigate
risks in each of these areas. Here’s how such a focus could impact different aspects:

Cost Savings and Mitigation of Risks

Healthcare and Social Services:

• Improved Care: By focusing on the care economy, the program could address shortages in caregiving roles such as childcare, eldercare, and support for individuals with disabilities. This could reduce the burden on existing healthcare systems and social services, potentially leading to cost savings.
• Preventive Care: Increased attention to care roles might improve preventive care
  and overall health outcomes, which could lower long-term healthcare costs related
  to chronic conditions and emergency interventions.

Community Building:

• Stronger Social Fabric: Investing in community-building activities can strengthen social ties, reduce crime, and improve overall quality of life. A more cohesive community often requires fewer resources for emergency responses and social interventions. • Increased Local Engagement: Engaged communities can lead to more effective
local problem-solving and support, reducing the need for external assistance and
fostering local resilience.

Local Sustainability Efforts:

• Environmental Benefits: Focusing on sustainability can lead to improvements in
  environmental quality, such as reduced pollution and better management of local natural resources. This can lower long-term costs associated with environmental degradation and its health impacts.
• Economic Savings: Sustainable practices often lead to cost savings through increased efficiency and reduced waste. For example, energy-saving initiatives can lower utility costs for communities and public facilities.
  

Broader Impacts

Economic Stability:

• Reduced Economic Disparities: By focusing on community development and local sustainability, the program can help address economic inequalities and support marginalized communities, leading to more stable and equitable economic growth.
• Job Quality: Jobs in the care economy and sustainability sectors can be designed to provide good working conditions and fair wages, which should improve job satisfaction and retention, reducing training and turnover costs.

Mitigation of Economic Risks:

• Resilience to Economic Shocks: Local sustainability efforts can make communities more resilient to economic and environmental shocks. For instance, local food production and energy sources can reduce dependence on external supply chains.
• Social Cohesion: Stronger community ties and support systems can act as buffers against economic downturns and social unrest, potentially reducing the costs associated with social instability.

Implementation Considerations

To maximize the potential benefits and cost savings, careful planning and execution are crucial. Three planning considerations are paramount:

Tailored to Community Needs: Customize the program to address specific local needs and opportunities within the care economy, community-building, and sustainability.

Training and Support to Enhance Success: Ensure that workers are adequately trained and supported to perform their roles effectively, which can enhance program efficiency and impact.

Monitoring and Evaluation Plan: Implement robust monitoring and evaluation
mechanisms to track the program’s impact, identify areas for improvement, and adjust strategies as needed as the program is expanded.

In summary, focusing a Job Guarantee program on the care economy, community building, and local sustainability efforts has the potential to yield significant benefits and cost savings. By addressing critical needs in these areas, the program can create a positive ripple effect that enhances overall social and economic well-being across Canada.

Conclusion

The present climate of uncertainty and concerns about the future of labour markets
and job creation efforts in the private sector can and should not be ignored. Growing
inequality, and the precarity of work raise deep concerns about the abandonment of
past commitments that raising basic living standards and improving working
conditions were the foundation of economic prosperity. Coupled with the risk of
technological advancements replacing human jobs with bots and algorithms, raises
serious challenges how to deal in a fair and equitable way with the age-old issues of
job loss, livable wages, paid and unpaid work, managing inflation and the
insecurities and dislocations that come with them.

Unemployment is one of the most devasting life changes for people. A Job
Guarantee therefore is a bold, courageous, innovative policy strategy to totally
transform the labour market, allowing workers with the involvement of government
to gain more influence and power. Putting more people to work and paying them
appropriately would improve Canada’s declining productivity which is increasingly
raising concern. A well-designed JG Program could also be a catalyst in furthering
aims related to strengthening the care economy, community resilience to climate change and giving local communities a say in job creation projects that improve community health and economic vitality.

At the same time, the continually widening income gaps between social groups would be narrowed and perhaps even reversed. Workers freed of their fear of becoming unemployed and falling into poverty might even gain the much-needed confidence and strength to demand that their working conditions and wage scales are recognized to be as important to sustained productivity as profits to their employers. There is no need to use the un- underemployed and working poor to boost an inequitable market system. The time has come to stop wasting the labour power of people willing and eager to contribute to the production of our national wealth. Their workforce inclusion would make Canada a better society and make Canadians a happier people.

End Notes:

i Understanding Modern Money: The Key to Full Employment and Price Stability, L. Randall Wray, Edward Elgar Publishing, 2003 pg. 14

ii Ibid. pg. 124

iii Ibid. pg. 177

iv See https://utppublishing.com/doi/full/10.3138/cpp.2022-068 and https://www150.statcan.gc.ca/n1/pub/36-28-0001/2024005/article/00005-eng.htm

v Report on Social Security for Canada, Leonard Charles Marsh, University of Toronto Press, 1975, pg. 76

vi Inequality Re-examined, Amartya Sen, Harvard University Press, 1995