Job guarantee

The economics of securing the right to work

The draconian measures governments have been forced to take in order to address the health impact of the covid-19 pandemic are shattering national economies around the world. This economic collapse comes on the heels of years of subdued growth, following a massive financial crisis that was externalised into a long-term economic slump. In fact, the international economic order was already showing signs of severe strain before the financial crisis of 2008. Recession was lurking on the horizon before Covid-19 began to spread, and now all indicators are in the red. The failures of the current economic model reverberate in the world of economic thinking and policy, where increasingly unorthodox measures have been forced onto governments and central banks, measures that would have been anathema just a decade ago. In turn, the crisis reaches all the way into economic theory, where the consensus that held sway for many decades is now openly challenged. Economists advocating unorthodox theories are now speaking to policy-makers and politicians with real chances of exercising concrete power.

One of those alternative approaches that is garnering interest is Modern Monetary Theory (MMT), a key plank of which touches directly on the centrality of work, namely its Job Guarantee proposal.

A leading expert advocating a Job Guarantee program, is economist Pavlina Tcherneva (picture above).

Selected publications by Tcherneva as well as other proponents of MMT and the Job Guarantee are amongst the latest publications added to the repository.

To give an idea of what the Job Guarantee policy entails, we cite here passages from one of Tcherneva’s working papers, “The Job Guarantee: Design, Jobs and Implementation” (Levy Economy Institute, Working Paper no 902).

Tcherneva’s case for a Job Guarantee begins with a critique of mainstream economic thinking on unemployment. Involuntary unemployment is, she argues:

  • the consequence of economic dysfunction: it results from “business cycles dynamics and profit-seeking firms behavior, as well as the State’s inadequate management of the currency and the monetary system”.

  • a highly deleterious social issue: it is “a problem that is best understood as a silent epidemic: There is a distinct and discernable geographical pattern and propagation mechanism of unemployment, which mimics the behavior of a virus or mass contagion (Tcherneva 2017). Joblessness behaves like a disease and generates large social, health, and economic costs.”

  • contrary to mainstream economic thinking and political ideology, it is not just an irreducible variable of economic life: in fact, “it is “a problem that is already ‘paid for’: The costs of these social and economic ills— both in real and financial terms—are already ‘paid for’ by the economy and society at large.”

  • it signals a deliberate choice by policy makers, based on a flawed economic theory that refuses to consider the real costs of unemployment: it is “a problem created by concrete policy measures (targeting a non-accelerating rate of unemployment [NAIRU], austerity policies). The government has chosen an explicit policy of keeping a percentage of the population in involuntary unemployment (the NAIRU is a policy benchmark)”.

  • it is a “profound moral failure of the economic profession”, which accepts “the idea that some people will necessarily lose their jobs and livelihoods in the fight against other economic ills (…) as a ‘necessary evil’.”

  • equally, it is a “failure and responsibility of the public sector”.

In contrast, the objectives of the Job Guarantee are:

  • “To provide decent jobs at decent pay on demand to all individuals of legal working age who want to work, irrespective of labor market status, race, sex, color, or creed.

  • To guarantee a basic human right, as outlined in the United Nations Declaration of Human Rights and Franklin D. Roosevelt’s call for an Economic Bill of Rights.

  • To institute a public option for work, i.e., an employment safety net.

  • To create job opportunities in close proximity to the unemployed.

  • To create suitable work opportunities for people of varied skill levels.

  • To serve the public purpose.

  • To establish an effective minimum wage for the economy as a whole.

  • To serve as a preventative policy that inoculates against the vast economic, social and political costs of unemployment.

  • To be used as an institution vehicle for addressing other social ills—e.g., environmental concerns, care needs, urban blight, etc.

  • To put people and their needs at the forefront of public policy, in order to empower and support them.”

Readers wondering how the Job Guarantee would be concretely managed (it would be funded through national tax but managed in a decentered way via municipal administrations), and how it could realistically be introduced in current economies, should refer to the book Tcherneva published this year: The Case for a Job Guarantee (Wiley, 2020). They can also follow the thread of Tcherneva’s publications and other economists associated with her proposal in the repository.


La economista Pavlina Tcherneva (licence: Marta Jara ( / CC BY-SA 3.0 ES)