What is the MMT-designed job guarantee? (with sources)

This post contains a summary of the MMT-designed job guarantee (MMT-JG or JG) with academic sources to learn more.

Note: This post is a work in progress…

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These resources were created by Activist #MMT, the podcast (Twitter, Facebook, web, please consider becoming a monthly patron). This post was last updated September 1, 2020.

Disclaimer: I am a layperson who has studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for MMT. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.

First: academic sources to learn more about the MMT-designed job guarantee.

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Our current system stabilizes prices only for some.

In our current in neoliberal era, the United States government stabilizes prices for the advantaged only. It does this by forcing involuntary unemployment and underemployment onto the disadvantaged, which results in mass suffering and death. For further details (with sources), see this post: Our current system: Guaranteed involuntary unemployment (which MMT eliminates).

The MMT-designed job guarantee replaces the reserve army (bufferstock) of the unemployed with a reserve army of the employed. Along with ZIRP and a flexible exchange rate, the job guarantee is one of the three recommended policies of MMT. It is not an optional add-on of the MMT project but a core element.

The MMT-designed job guarantee stabilizes prices for all.

It boils down to this: There are only two choices (Mitchell 2011): you can stabilize prices and wages for all, or only for some. You can provide a job for all (who want and are able), or only for some. MMT chooses – a civilized society requires – the latter (Davidson 2016). The MMT-designed job guarantee stabilizes prices in the only humane way possible: by eliminating involuntary unemployment and underemployment – for all.

The question cannot be, “How can we employ (or provide healthcare to) all?” It must be “How can we not try?” Because otherwise, we must choose who will live and who will die – and we all know who gets to choose and who gets chosen. This – not academics, not maths and models – is the justification for a job guarantee. The matter is not “who should suffer and who should not suffer?”, but rather “how can we employ all as best as we can?”

As it turns out, quite well.

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The MMT-designed job guarantee

The MMT-designed job guarantee (MMT-JG or just “JG”) is a guaranteed opportunity for a job in your local community at a living wage-benefit.

The word guarantee is used in the sense of the public library or school systems: all are allowed to enter and take advantage of its services, as long as rules are followed and performance is acceptable. If these conditions are not met, that person may face discipline. If the negative behavior persists, they may be temporarily ejected and, in extreme cases, permanently ejected. Just as with a troubled child in your own family, you do the best you can to make it work. You provide help and guidance, training, therapy, and other accommodations. You don’t just kick them to the street. In the context of the job guarantee, in extreme cases, opportunities may be provided to, for example, work in isolation or remotely (Wray 1997, pg. 15, item 4).

A primary goal of job guarantee jobs is caring (Tcherneva JG-FAQ, questions 8 and 8a): caring for people in your community, caring for the community as a whole, and caring for the environment. These jobs are valuable but not profitable. Among other reasons, this is why JG jobs do not conflict with any existing job in the private (for-profit) or public (government) sectors.

The MMT-JG proposal “favors a fixed living wage with basic benefits, as opposed to tiered wages” (Tcherneva 2020, p. 89), currently proposed to be $15 an hour (plus benefits including healthcare, on-the-job training, and childcare). This means the MMT-JG wage is an unchanging “minimum wage floor” (ibid). Regardless how long they have been in the program, every JG worker in the nation is paid the same rate – there are no raises. Private sector businesses can, and are encouraged to, offer a marginally-higher wage in order to attract workers out of the JG program. This is another way in which the JG does not compete with existing jobs in the private or public sectors.

(The wage floor is also why it is not possible for the MMT-JG to cause a wage-price spiral, which is a form of cost-push inflation. In addition, because the federal government funds job-guarantee wages only for those who are currently employed in the JG program*, and only until that worker [chooses!] to leave the program, the MMT-JG program is perfectly funded by definition. Because of this, it is also not possible for the MMT-JG to cause demand-pull inflation. Further, since the funding is non-discretionary, it is not vulnerable to elimination or reduction from periodic political bickering, such as related to the budget or debt ceiling. Although there can still be inflation in the economy, it is not possible for it to be caused by the MMT-JG.)

(*Plus a small markup for administration purposes.)

A critical difference between the job guarantee and our current system (one with no JG) is that when workers lose their job, they often have no choice but to go home and do nothing. Among its other horrific effects, extended unemployment causes skills and experience to wane and wither, social connections to decay, and options overall to become more and more limited. Since your bills (and the for-profit companies they’re owed to!) don’t care if you have a job or not, it also means that your savings will decrease and credit card balances increase. In addition, for-profit businesses prefer to hire workers with skills and experience over those without. So, those who end up unemployed often become a permanent member of the reserve army of the unemployed. Those who still have a job fear themselves falling into that terrible position, and are therefore less likely to demand better wages or working conditions.

The MMT-JG program prevents this situation by serving as a “transition job.” It gives the unemployed somewhere to go. Once settled into a JG job, workers can maintain their skills and experience (and pay their bills!) until they are ready to return to the private sector, or the private sector is ready to offer them a more attractive position.

…more to come…

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