Job guarantee program could bolster economy more than basic income, says author

While an all-party committee on poverty is reviewing what a basic income guarantee could look like on P.E.I., a suggestion by a Charlottetown social justice group is going one step further with a job guarantee program.

A member of the MacKillop Centre for Social Justice pitched members of P.E.I.'s special committee on poverty on the idea that a job guarantee program would do more than a basic income guarantee to combat the root causes of poverty.

Pavlina Tcherneva is an associate professor of economics at Bard College in New York, who recently published a book titled, The Case for a Job Guarantee.

She says a job guarantee program is essentially an employment safety net — a federal employment program administered locally that provides basic job opportunities, with wages and benefits, to those seeking a job — that would be more beneficial than basic income.

"In my view, the job guarantee is better, but it certainly coexists with some basic income for people who cannot work for one reason or another — but income alone doesn't create the job opportunities that are already missing," she said.

"We really need a transitional program, we need some sort of guarantee that folks that are searching for work can find it. And while basic income may be temporary assistance, folks who receive basic income report that they still need work, they are looking for work and they just cannot find it. So the job guarantee is that mechanism."

People who are out of work, for whatever reason, have a "terrible time" finding employment, Tcherneva said — and have a harder time finding work than someone already employed.

The economy goes through these cycles, ups and downs, and usually the collateral damage are people.— Pavlina Tcherneva, economist

"In fact, firms do not like to hire the unemployed, and then they slip into long-term unemployment, and they suffer enormous social and economic costs. So by comparison, the job guarantee will provide first employment opportunity, also the on-the-job training, as well as all of the other support services that unemployment offices provide," she said.

"By comparison with being faced by mass unemployment, having a job is actually really better from the point of view of the employer, but also the program itself will help with placement."

'Automatic stabilizer'

A federally-funded job program also serves to stabilize the economy, Tcherneva argued, ensuring people are able to continue to earn money and, therefore, spend money.

"As we are acutely aware, the economy goes through these cycles, ups and downs, and usually the collateral damage are people — they lose their jobs," she said.

We have found occasions in our historical past where we know the government can guarantee employment.— Pavlina Tcherneva, economist

"It's that very expenditure that will provide the stimulus to the economy to kick-start private sector activity and employment. As that recovers, then people transition back into private sector jobs, and the public role shrinks, so it is an automatic stabilizer."

Tcherneva said there is often opposition to a job guarantee program, which she believes stems from an ideological bias, but some of the scrutiny that kind of proposal would face may be minimized, given the economic realities created by the COVID-19 pandemic.

"I think also there is this tacit assumption that somehow unemployment is unavoidable and that perhaps unemployment is even necessary to stabilize the economy … I think that we really need to question these very deeply," she said.

"We have found occasions in our historical past where we know the government can guarantee employment. Unfortunately, that has happened during wartime — but we certainly can do this for civilian purposes. I think it's just the shift of perspective and just realizing that the costs are there and we just can spend our resources in much more fruitful ways."

Meanwhile, P.E.I.'s special committee on poverty has asked for a five-month extension until November to decide whether to recommend a basic income guarantee for the province. 

More from CBC P.E.I.