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Ro Khanna Has an Ambitious Plan to Put the Unemployed to Work. Just Don’t Call It a Job Guarantee.

July 27, 2018
In The News

Rep. Ro Khanna, a Democrat from Silicon Valley, has introduced an ambitious new bill that would offer work to virtually any American struggling with a long spate of unemployment—but whatever you do, don’t call his plan a job guarantee.

After all, despite some of the headlines about it, Khanna himself doesn’t. The federal job guarantee, as you may have heard, is the breakout lefty policy idea of 2018. The notion is simple and radical: Its advocates want to make unemployment a thing of the past by having the government provide a job to anybody who wants one for as long as they need it. In theory, fans say, it would wipe out involuntary joblessness (recessions would never be as bad) and force companies to treat employees better by giving every worker the option to walk and get a job from Uncle Sam. After long languishing in academic obscurity, the concept broke into the Democratic mainstream this year, and has been embraced by potential presidential contenders such as Kirsten Gillibrand, Cory Booker, and Bernie Sanders—even as some liberals havecriticized the various proposals that have emerged as undercooked or unrealistic.

Khanna, a first-term congressman who has quickly established himself as one of the more progressive voices in the House, has jumped into the conversation around the job guarantee with a related idea that’s fundamentally narrower in its goals and easier to imagine one day being implemented. He prefers to call his legislation, which he first previewed in May, a “job opportunity” bill. “It would be overpromising to say this is going to make sure everybody is going to have a job,” Khanna told me. “I don’t want this to be represented as more than it is and then have people say it’s not delivering.”

What it does promise is a doorway back into the workforce for those who’ve been locked out of it. Under Khanna’s plan, the government would pay employers to hire Americans who have spent at least 90 days without a job or whose earnings during the last half a year left them under the poverty line. The positions would be temporary, lasting up to 18 months, long enough for people to gain new experience and a foothold in the labor market (many workers, such as those who lack a college degree, would be eligible for an extra one-year extension). People could be fired for performance issues, and would be allowed only three stints in the program per decade. It’s not a plan to revolutionize the entire economy. Rather, it’s a program to help people with the most trouble finding or holding a job. Khanna told me he envisions it helping up to 1.5 million people initially, which is about how many Americans are currently stuck in long-term unemployment.

Where would people go to work? Potentially anywhere. Khanna’s legislation would try to place participants in jobs at businesses, nonprofits, and in the public sector. This is another big difference between his proposal and the most popular job guarantee plans that have floated around, which envision putting participants to work either directly for the government or at nonprofit community groups. But Khanna argues that giving people a chance to find jobs in the private sector will make the program more popular, since some people simply don’t like the government and don’t want to work for it. He also suggests his approach would be more in keeping with Franklin Roosevelt’s New Deal vision that all Americans should have the right to “useful and remunerative” work, which jobs guarantee advocates regularly cite as inspiration.

“When [FDR] talked about a right to work, it was a right to work in the public sector, but it was also a right to work in industry and in farms and in small businesses,“ Khanna says. “What I am all about is giving people choice.”

One obvious disadvantage of Khanna’s proposal is that it lacks the job guarantee’s elegant messaging and exciting sweep (You need a job? You’ve got one!). An advantage is that, unlike the job guarantee, we have a pretty good idea of what it might actually look like in practice. After all, no modern, developed economy has really tried to outright eradicate unemployment. Job guarantee fans tend to cite precedents like Roosevelt’s Works Progress Administration or Civilian Conservation Corps, which employed millions during the Great Depression. They also bring up the Jefes y Jefas plan, a straightforward workfare program that Argentina used to aid families during its early 2000s financial crisis, or India’s rural job guarantee, which promises up to 100 days of paid work per year to families. None of those, however, really tells us much about what would happen to America’s economy if the federal government offered employment to every single adult in 2018, and none answers basic, unresolved questions like what jobs people would actually do. As progressive economists Dean Baker and Jared Bernstein have noted, one version of the job guarantee would likely require expanding the federal workforce by a factor of at least 10, which makes lots of critics worry that millions of adults would just get shunted into menial make-work jobs, a problem Tucker Carlson would no doubt rant about nightly on Fox News.

In contrast, giving workers a hand by subsidizing regular jobs in industry and government is already common practice in Europe. As Matt Bruenig of the People’s Policy Project points out, Khanna’s plan looks quite similar to Denmark’s program for helping the long-term unemployed. The United States also has some experience with jobs subsidy experiments, most recently the TANF Emergency Fund, a piece of President Obama’s stimulus bill that gave states money to fund jobs for low-income families, and which served as a partial inspiration for Khanna’s bill. The program quickly placed about 262,000 individuals into jobs at a cost of $1.3 billion. (Just over half were summer jobs for youths, while the other half were year-round positions for adults.) State workforce agencies managed to match beneficiaries with all sorts of employers, from pharmacies to construction companies to call centers to government agencies—even a nonprofit that was creating a digital library. Khanna’s plan would operate similarly, sending grants to state and local governments that would run the program on the ground while also shouldering a portion of the cost. (The local part is important, since, as the saga over Obamacare’s Medicaid proves, some conservatives states might turn down the funding.) Indivar Dutta-Gupta, the co-executive director of Georgetown University’s Center on Poverty and Inequality, whose work provided a template for Khanna’s bill, put it to me simply: “We know how to do this. We know how to do this well. ”

Could Khanna’s proposal have its own unintended consequences? Of course. Some businesses might be tempted to abuse it, for instance. To incentivize hiring and cover their overhead, the bill would pay employers up to 120 percent of workers’ wages (unionized employers would get as much as 150 percent). In other words, it would provide companies with cheap or even free labor, meaning some would obviously be tempted to hire a short-term, subsidized worker instead of a regular employee. That may not have been much of a problem when companies couldn’t afford to hire during the Great Recession, but it almost certainly will be now that workers are harder to come by and business owners are complaining that they can’t find help at the price they want to pay. Khanna’s bill includes a number of safeguards designed to prevent that kind of misuse, but some employers would almost surely try to skirt them.

Still, that issue seems relatively small compared with the good a bill like Khanna’s could do for the chronically unemployed, or the open questions still circling around a job guarantee. It doesn’t hurt that its price tag is relatively modest—probably a few tens of billions per year instead of the hundreds a full job guarantee would cost—which makes it less likely to scare off more moderate Democrats, many of whom are still skeptical of the party’s rising democratic socialist wing. And while some important job guarantee backers have written it off as a watered down cop-out, others, such as Pavlina Tcherneva of Bard College’s Levy Institute, have suggested that they’re open to Khanna’s approach in the near-term, so long as it isn’t treated as a long-term substitute for their favored policy. The left could be wooed by the fact that his plan also provides money for a handful of cities to pilot full-fledged job guarantee programs, similar to a bill Cory Booker introduced in the Senate. “I think this is one proposal that can unify both wings of the party.” Khanna told me. “I think this can get Sanders Democrats, Obama Democrats, and Hillary Democrats on board.”

Of course, that also is not quite a guarantee.