The Corner

Economy & Business

A Job Guarantee: Yes, the Price Tag Is a Big Problem

Greg Ip, writing in the Wall Street Journal, is skeptical of a federal guarantee of a well-paying job. He fears — justifiably — that it would cause the private sector to shrink. But he’s not concerned about the price tag.

Yes, a job guarantee would cost a fortune, but ignoring the obvious political impediments, the price tag isn’t the catastrophe some critics claim. To hire all the official and unofficial unemployed and half the involuntary part timers at $15 an hour plus $3 an hour for benefits would cost around $450 billion, or 2.3% of gross domestic product. The actual cost could be much lower: Many of the unemployed won’t take up the federal offer because they expect to get something better, don’t like what’s being offered, or face some sort of obstacle (family, disability, etc.).

But that’s not a full accounting of the cost. If you’re guaranteeing jobs at $18 in compensation per hour, you’re also going to have to hire a lot of people who are making less than that. What’s weird is that Ip understands this. Just a few paragraphs after this passage, he writes,

According to the Economic Policy Institute, 39% of the workforce, some 54 million people, now earn $15 an hour or less. All would have an incentive to quit and join the federal program.

Of course, most wouldn’t because their employers would, grudgingly, raise pay to keep them, then pass the cost on to customers, a de facto inflation tax. Indeed, advocates say the job guarantee accomplishes the same thing as a $15 minimum wage without the job loss.

Nonetheless, potentially millions of workers would end up on the federal payroll instead of in the private sector.

Right. That’s why the cost estimate earlier in the article is extremely optimistic.

Ramesh Ponnuru — Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg View, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.

Most Popular


Americans Are Royally Confused about Monarchy

Conventional wisdom regarding America’s relationship with royalty goes something like this: Americans have no time for monarchy as a political concept but can’t get enough of the British royal family. The American media’s round-the-clock coverage of the recent royal wedding certainly seems ample evidence of ... Read More

The Trump Rationale

Why exactly did nearly half the country vote for Donald Trump? Why also did the arguments of Never Trump Republicans and conservatives have marginal effect on voters? Despite vehement denunciations of the Trump candidacy from many pundits on the right and in the media, Trump nonetheless got about the same ... Read More
Politics & Policy

The Collapse of the Collusion Narrative

It is now clear that Russian attempts at interference in the 2016 election, though somewhat outrageous, were ineffectual, unconnected with any particular party, a small effort given what a country of Russia’s resources and taste for political skullduggery and chicanery is capable of, and minor compared with the ... Read More