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Guaranteed Work or Training at Living Wage

By W. E. Smith, Editor, The Social Democrat

(1) The Current American System of Work Falls Short of Social Democratic Ideals

Unfortunately the system of working life under which American citizens currently live falls short of social democratic values on several fronts. In almost any period of history there are not enough jobs to go around, so that some must suffer unemployment and loss of income, which offends the values of justice, solidarity and inclusion. Many of the jobs that do exist are compensated at wages that do not afford a life considered dignified by the average person; this not only offends the values of justice, solidarity and inclusion, but also demonstrates a lack of humane concern for our fellow citizens. Many American states have made it difficult for unions to operate, which traduces the social democratic ideal that average workers should have a say in the conditions of their work lives. And due to circumstances of birth, some individuals have access to career opportunities not available to others: this violates the principles of both justice and solidarity.

 

(2) Low Wages and Marx’s “Reserve Army of the Unemployed”

Before we proceed to how to amend this state of affairs, let’s look closely at the two most problematic areas of American worklife from a social democratic perspective: unemployment and inadequate wages. As we will see, the two are related.

I believe that Marx was divorced from the realities of human nature when he suggested that human beings could function successfully under communism. He did, however, provide us with some useful concepts and analytic tools. Among the best of these, to my mind, is the idea of the “reserve army of the unemployed.” Marx understood that as long as there is a large pool of unemployed workers, desperate to make any income at all, already-employed workers at the low end of the skills scale will have little or no bargaining power over their wages. The employer will have scant incentive to respond to demands for higher pay if the worker can easily be replaced by others desperate enough to accept any wage offered. (Inversely, if labor is in short supply, employees have considerable bargaining power: the employer, threatened with the loss of an employee, with little prospect for replacing them, will have a great incentive to cede to demands for higher wages or better working conditions. During the recent pandemic we have seen exactly this mechanism in operation, as large American companies like McDonald’s, in the face of the pandemic-related labor shortage, raised wages significantly to attract workers.)

Extraordinary events aside, such as pandemics, at any given time there are typically several million individuals looking for work but unable to find jobs. This number can, during economic downturns such as the 2008 recession, balloon to ten percent or more of the entire labor force. This represents tens of millions of our fellow citizens who have lost the income they rely upon to pay rents and mortgages, feed their families and attend to the other necessities of living. Unemployment insurance seldom comes even close to replacing the lost income.

When we operate under a system in which the only way to obtain the necessities of life is through a job, and where there are typically fewer jobs than individuals who need them—a number which at times can rise into the tens of millions—we are participating in a cruel game of musical chairs: cruel because this is not a game, but people’s lives, families, health and futures which are at stake.

Those on the conservative side of the political spectrum are not overly troubled by this state of affairs. They will tell you, first of all, that those who are unemployed could find a job if they really tried. This, I concede, is sometimes true: there are those who game the unemployment system. But there are many more who don’t. Especially during economic downturns, or when a factory which employs half of a small town’s workers relocates overseas, the jobs simply are not there. Not even the most committed conservative, I imagine, would have the nerve to say that during the massive recession of 2008-2009, when the number of unemployed shot up from five to ten percent, that the millions of additional unemployment claimants were merely faking it; or that during the Great Depression, when nearly one third of the American workforce was out of work, that these struggling citizens, who had worked their entire lives, had suddenly decided to pretend they couldn’t find a job.

So most conservatives will, then, likely concede that there are times when there simply are not enough jobs to go around (in reality, this is “most of the time”). But in the “law of the jungle” mental universe in which today’s rightists operate, this problem comes under the heading of “tough luck.” The laissez-faire, unrestrained free-market philosophy of most Republican politicians today posits that when there are fewer jobs than workers, the strong will survive and the weak will be thrown under the bus where, if they are not crushed, they will somehow straggle along in a further weakened state.

In any case (a right-winger will further argue) even if persistent unemployment is cruel and unfair, anything that we might do to prevent or solve the problem will only make matters worse. If we offer generous unemployment insurance, workers will have no incentive to seek jobs, thereby creating labor shortages, bottlenecks in the economy, inflation and diminished output. And if the government were to get involved in guaranteeing employment, this would lead to “socialism” and an intrusion of the inefficient public sector into the “efficient” private sector, thus dooming us all to a lower standard of living. Put differently, we would be interfering with the unhindered operation of the marketplace, which for the hardcore conservative is the best and fairest possible regulator of society.

It probably need not be stated that I, a social democrat, reject these conservative arguments. First, I believe that we can protect citizens from the hazards associated with unemployment without diminishing output and prosperity (I am convinced, in fact, and will develop further below, that we will increase prosperity if the average worker is better taken care of). But more fundamentally, even if an unfettered laissez-faire system could deliver marginally more production—which I deny—flowing in out-sized proportions to a wealthy minority, this could serve as no justification for a cruel and inhumane system. We can make calculations about many things and do cost-benefit analyses, but you cannot cost-benefit moral choices. We do not decide whether to murder someone, or cheat on our spouse, with cost-benefit analyses (at least most of us would agree that we shouldn’t). We make a moral decision, and we would not murder someone no matter how low the cost (“you’ll never get caught”) or high the reward (“you’ll inherit the one hundred million”). To leave some segment of our fellow citizens in the lurch, with no means to support themselves and their families, is morally wrong. Such a system should, therefore, not even be on the table, no more than should be murdering your brother to get the inheritance—even if you knew you could get away with it.

The question then remains as to how we solve the related problems of low wages and unemployment. But before getting to concrete proposals, allow me one further digression: into the children’s story of the Little Red Hen. I bring this story in now, because it forms a backdrop to many of my ideas about work in a functioning social democracy.

 

(3) The Little Red Hen

The story of the Little Red Hen, a Russian folk tale which I read, or had read to me as a toddler in the late 1950s, is quite simple. In one version, the Little Red Hen decides to make a cake, and she invites all of the other barnyard animals to participate. Each of the critters steps up to take on an assignment, whether it be sowing the wheat, harvesting it, threshing or milling it into flour, mixing the batter or making the icing. But there is one rebel, the grasshopper, who declines to get involved. He would rather, he says, enjoy himself leaping around in the sun-splashed fields than take on any tedious labor. No objection is made at the time, but when the tasty cake is finally completed and the grasshopper reappears, asking for a slice, the Little Red Hen announces her timeless dictum: those who do not help make the cake shall not help eat the cake.

Even as a child I perceived the essential rightness of the Little Red Hen’s position. None of us appreciate the housemate who shirks chores, or the friend who always seems to be broke when the check comes at the restaurant. That is, we expect everyone to be willing to work toward a shared outcome if they expect to participate in the benefits on offer. This answers to what I believe is an innate sense of fairness, developed over eons of living together in social groups, in homo sapiens sapiens. From a social democratic point of view, the idea that those who wish to share in the products of labor should be willing to contribute to its creation answers to the ideal of justice.

This view places me squarely at odds with those on the left who advocate for universal incomes, or those who complain about work mandates under Temporary Assistance for Needy Families (TANF), the federal program which replaced Aid for Families with Dependant Children (AFDC) during the Clinton administration. Even Marxists believe that the fruits of labor should be enjoyed by those who contribute that labor: this is why they excoriate capitalists who, in their view, coopt the fruits of labor provided by workers. And it is not only the social democratic ideal of justice that is threatened when some live off the labor of others. The social democratic ideal of radical inclusion requires that all citizens have the opportunity to be involved, to the extent possible, in the social, cultural, political and economic life of our communities and nation. And it is by working at a job (self-employed or otherwise) that citizens participate in our economy. Working-age adults who do not work suffer marginalization, on many levels, as well as loss of social standing and self-esteem. Welfare recipients who were required to take jobs with the changeover from AFDC to TANF in the late 90s reported increased psychological well-being, greater self-esteem and a new sense of pride, particularly in their relations with their children.[1] Another social democratic ideal, solidarity, is also compromised when some are given free money while others must work for it. Those working will resent those who are receiving benefits for nothing, and these resentful voters will not support the social safety net which is vital to social democracy. Studies show that a solid majority of the American public will support benefit programs targeted to those they deem to be truly in need of support: the elderly and the handicapped, for example. But most would agree that if they need to work to make money, able-bodied others should, too.[2]

 

(4) A System for Willing Workers in a Social Democratic Future

I began this article with the assertion that the American system of work suffers from two primary problems in regard to our social democratic ideals: (1) in any typical period, our economy does not generate a number of jobs equal to those seeking work, depriving millions of our fellow citizens of the means of survival, and (2) the resulting “reserve army of the unemployed” deprives workers at the low end of the skills scale of any power to bargain for higher wages or better working conditions. I have further posited that this situation being a moral wrong, we have no choice, if we wish to inhabit a just society, but to correct it.

The solution I proffer to these inter-related problems includes, first, a living wage. The second element of the solution is a form of employment guarantee: but unlike many other such proposals, it does not rely on government to supply jobs to make up shortfalls in the private labor market.

 

(5) Living Wage

First, all jobs in our social democratic future will be required to pay a “living wage.” The idea of the living wage is guided by our social democratic ideal of justice: It is not just to expect people to work all week, providing services necessary to the functioning of our economy, and not have enough money at the end of the month to decently maintain themselves. A living wage is also required to satisfy the social democratic ideals of solidarity and inclusion. Poverty not only brings material hardships of various kinds, it also results in social marginalization. Those in poverty often feel shame and exclusion, since the conditions under which they live are considered unacceptable by the majority of their fellow citizens. Their lack of resources precludes participation in cultural and social activities which foster connection to community, isolating them. Children living in impoverished homes may not feel comfortable inviting friends over; they do not have access to the same clothing, games, electronics and other developmental and social-bond-forming experiences as their better-off peers. These factors result in exclusion rather than inclusion and diminish feelings of solidarity both for the impoverished family and those who look upon them as “other.” They lead to depression and other psychological ailments in adults, and for children they leave lasting scars of low self-esteem, impede the development of their potentials and reduce their capacity to contribute as adults.

But how would a “living wage” be calculated, you might ask? Without going into great detail here, the living wage, importantly, will be calculated for each zip code, based on cost factors for that locality. Housing typically constitutes a family or individual’s greatest monthly expense, and housing costs vary wildly among zip codes: it requires a considerably higher income to stay afloat in the San Francisco Bay area than in rural Mississippi.

Taking into account these local factors (chiefly housing costs), the principle behind the calculation of the living wage would be that no worker should have to live in conditions that the average American would consider unacceptable or undignified. More specifically, the living wage would be set so that a single person working a full-time job could rent a one-bedroom apartment which is clean, healthy, with the usual utilities, and maintained to a level of curb appeal that the average American would consider acceptable. (For couples living together, two of these wages would, obviously, command considerably more buying power.) Beyond rent, the living wage would take into account costs of food, healthcare, transportation and other necessities. Consideration would also be given to such social needs as cultural events and leisure, as such experiences foster solidarity and inclusion. Additional costs associated with children living in the home would be addressed with targeted subsidies for such necessities as school supplies and clothing, as well as cultural and social inclusion.[3]

Such considerations may seem extraordinary to the average American not grappling with poverty wages, as many of us have become inured to the shabby treatment of our fellow citizens. But it must be stressed, lest this seem a form of welfare, that we are discussing an appropriate wage for those who are working, not benefits given for nothing: thus the Little Red Hen principle is satisfied. If the Little Red Hen decreed that those who did not help make the cake would not help eat the cake, she also made it clear that all those who participated in making the cake would share in eating it! Beyond the moral necessity of treating all people decently, material benefits will accrue to all of us when social solidarity and inclusion are increased. Children—the adults of tomorrow— will grow up in homes where their needs are being addressed and potentials developed, thus fostering within them feelings of solidarity and inclusion, leading to a desire to give back to the communities that have nurtured them.

 

(6) Guaranteed Employment or Training

A living wage will resolve the problem of too low wages for those who are working. But what about the unemployed, who receive no wage? One solution would be to key unemployment benefits to our living wage and make their duration indefinite. This solution, however, would create other problems. First, if unemployment benefits were keyed to a living wage and of indefinite duration, many people would never look for a job again but would jump at the chance of a life of guaranteed leisure. Many who are working would quit their jobs to acquire such a life, and those already jobless would have little material incentive to seek work. Those who were still working would, like the Little Red Hen, justifiably resent this situation (solidarity would be compromised) and would quickly use their votes to end such a program.

So how to maintain the unemployed at a decent level while not incurring the downsides just mentioned? And how best end their marginalization and exclusion, and get them back into participation in the economic life of community and nation? The solution I propose for this is built around federally supported Employment Hubs, with a guarantee of either (1) a job at a living wage, or (2) training or upskilling, also paid at a living wage. First, in each community (this could be a county, a part of a county, a city or ward of a city) there will be located a branch of this joint federal-state employment agency. Second, all employers will be required to post all openings to the agency’s national database, so the Employment Hub will be aware of all openings, both within their region and beyond (employers will not be required, however, to hire any given applicant sent from the Hub). The Hub will serve the multiple purposes of employment agency and training coordinator. An individual who is involuntarily unemployed (those who leave a job voluntarily would not be eligible for the system) and unable to find work on their own will come into their local Hub. The job seeker will be enrolled, and if they agree to the program’s conditions will immediately begin to receive benefits at a living wage. A Hub counselor will do a thorough evaluation of the job seeker’s skill set and education level. Aware of all openings in the area, the counselor will then help the job seeker find openings consonant with their qualifications and help arrange interviews. If, after a set period of time—month, for example—no employment offers materialize, the counselor will guide the job seeker toward a full-time (minimum 30 hours per week) training or upskilling program consistent with their capacities (and, if possible, interests) and one for which prospects for employment are high. For example, if a region is experiencing a dearth of welders, or of dental technicians, the counselor will steer the applicant in these directions. The client’s desires will be considered, but final determination of a particular training program will require sign-off by the counselor. These Employment Hubs will be located at or near community colleges, where they can conveniently integrate their job insertion function into a growing trend of vocational education, closely coordinated with regional employers, already taking place in America’s two-year colleges. The job seeker will continue to be available for possible employment during the training program and must take any available job on offer for which they are qualified. Training programs will be organized around short-term modules, and in such cases job seekers will be allowed to finish a current module before going back to work.

The job seeker, once in a full-time training (or upskilling) program, will be required to attend consistently. If the job seeker fails to attend, or fails to apply themselves, they will be warned, sanctioned and, if they do not improve their participation, washed out of the program.

Counselors will have access to resources for special cases: for example, to help with transporation either to training programs, job interviews or a job itself. (Such measures, by the way, are not unusual in mature social democracies. I watched a story on the French news a few years ago about a young graduate who was seeking work in the area of her major—hotels and hospitality. Unable to find a job in her field, she had recourse to the local branch of France’s national employment agency, the Poêle Emploi. The agency counselor found a suitable position, but it was in another town, some hours away. At this point Poêle Emploi intervened to help the job seeker with costs to attend an interview, and she was offered the job. Poêle Emploi then helped with relocation costs, including two months rent on an apartment, so that the job seeker could begin her career!)

For many Americans this may all seem just too, well, nice. And indeed, such a system does support the creation of a society which is humane, a key social democratic value. It also increases solidarity and inclusion, which benefit all of us: the more citizens feel committed to their society, and part of it, the more they are likely to follow its laws, pay their taxes properly, engage in volunteer work and otherwise help build strong and happy communities.

In addition to these intangible but priceless benefits, a system which is proactively working to insert job seekers into the economy—and to provide those who need it with training and upskilling—is an economy that will be running on all cylinders. Economists have been telling us, for several decades, that the pace of technological change we are undergoing requires workers who are lifelong learners. They also tell us that those societies with the most highly trained work forces are the ones that will enjoy the greatest prosperity. This all goes to a critical aspect of our social democratic future: the development of human capital. A vibrant, successful society is one which sees its greatest resource in its people. Such a society does not stint in making sure all citizens are able to develop and work up to their full potentials, enabling them to most fully contribute to our communities. A successful society will strive to maximize its human capital with measures to ensure its citizens’ health and safety, attend to the education of the young and, as here, accompany workers in their quest to perform their most useful function in our economic life. America could become the human capital champion of the world. The supply of constantly upskilling workers would result in more efficient businesses, greater innovation and happier citizens. And when a foreign manufacturer, for example, is looking to locate a new plant where they can expect a prepared workforce, they would need look no further than the U.S.A.

 

(7) The Unwilling

I have proposed a system whereby all willing workers will be guaranteed either a job at a living wage or, if one cannot be found, a training or upskilling program compensated at that same living wage. But what is to be done, if anything, for those who are unwilling to participate, due either to real obstacles or simple aversion to work? And what about those whose participation is so half-hearted and insincere that the participant is neither contributing on the job nor effectuating any real upskilling? In other words, what is to be done about, first, those who refuse to participate at all and, second, about shirkers and malingerers?

For those who are truly able-bodied and able-minded but refuse to honestly participate (those who try to “game the system”) my proposed program has little sympathy. Under the Little Red Hen principle, we have no desire to coddle and enable individuals whose goal is to live from the productive efforts of others while making no contribution themselves. Such would-be users, if they are lucky, will find honest workers who, for whatever reason, are willing to share. As citizens, these non-participants will be entitled to basic social insurance benefits common to all, such as healthcare. They will also have access to sex-segregated homeless dormitories, safe and clean but otherwise Spartan, staffed with counselors whose role will be to attempt to steer occupants into either constructive effort or, where appropriate, facilities for the psychologically ill and/or substance addicted. All who wish to have cash wages, however, must be willing to make an honest effort at performing a job, if available, or if not at upskilling.[4]

But what of those whose family exigencies or personal difficulties would complicate participation in our guaranteed work-or-training system? Let’s first consider single parents with dependent children. This is a group that we might say has a legitimate reason why they would be reluctant to either take a job or participate in a full-time upskilling program. We will solve this problem by providing childcare, both at Employment Hubs and at training and upskilling locations. Once placed in a job, the worker will benefit from a universal system of subsidized childcare, such as that proposed in President Biden’s “Build Back Better” plan of 2021. For those with elderly parents to care for, or other disabled, the expansion of our social safety net to include at-home care will be key.

A more difficult question is what to do about those who participate but do so at an inadequate level of dedication. We can easily envision individuals who will sign up for an upskilling program but fail to attend regularly or carry out assignments. There will also be those who gain employment through the Employment Hubs but then miss work or fail to perform to an appropriate level on the job. It should be recalled, here, that employers will be under no obligation to either hire applicants sent to them from Employment Hubs or maintain them on their payrolls if they do not perform at the required level. Employment counselors, with input from trainers and employers, will determine whether the participant’s inadequate performance is due to unwillingness to make an effort or is due to such more acceptable reasons as a mismatch between skills and job function or some physical, mental or psychological incapacity. If it is determined that the job “seeker” is simply not willing to put out an effort, they will be washed out of the system. As a further backstop to prevent “free riders” from gaming the system, we will limit both the length and number of times a citizen can employ the Hub, with this threshold adjustable to account for fluctuations in the unemployment level.

As a basic rule, job seekers will be required to take any available job for which they possess the capacity and skills: and remember that all jobs will be paid, at a minimum, at a “living wage” as defined by a system such as that employed by the Economic Policy

Institute. We could soften this rule by allowing job seekers to pass on the first two or three offers or, once or twice per lifetime, to stay within the Employment Hub for a period of up to, say, one year in upskilling while attempting to secure a job in their chosen field. During his first term in office, President Macron of France proposed such a system of “social accounts,” whereby workers would earn credits for quarters worked (as in Social Security in the U.S.); once a sufficient number of credits are earned, the worker would be entitled to leave work and enroll in a paid training program for a limited amount of time. This would facilitate mid-life career changes as well as job-skill enhancements. We could employ a similar strategy, basing workers’ right to training at a living wage upon credits earned in employment.

In addition to those who are able-bodied and able-minded there are those who must work with handicaps, whether physical, mental or psychological. Naturally, special accommodations must be made for such individuals. Under the social democratic ideal of inclusion, the collective, acting through the state, wishes to be proactive in making sure that every individual who wants to participate can participate. Employment Hubs and training centers will assess clients’ capacities, identify appropriate accommodations, and work with employers to help them benefit from the potentials of citizens whose abilities are different, but not necessary any less valuable, than those of others. As to those unable to function in any work setting, whether due to physical, mental or psychological causes, social insurance programs for the disabled will ensure that they live in a dignified manner.

 

(8) Standard Right-Wing Objections

Before concluding I’d like to address what will no doubt be a standard set of right-wing objections. Firstly, the rightist will begin, such a program is not needed because “anyone who really wants a job can find one.” This, as I hope I have demonstrated, is not true: during any given time period it is rare that there are enough jobs for everyone who would like to have one. And if we look at particular places, this statement is often wildly untrue: those places where the employment offer has been gutted by the flight of factories or extractive activities like mining, to take two examples. “Even so,” the rightist will continue, “such a program as you suggest will quickly degenerate into a government bonanza for idlers and shirkers.” This objection is more credible, and it is true that we must apply stern measures to prevent people from gaming the system: I believe those I have outlined, if rigorously applied, will suffice. But behind the rightist objection to guaranteed work or training is a more fundamental objection, and it goes to an unspoken belief about the way the labor market should function. A system such as we now use, with a standing “reserve army of the unemployed” prepared to accept low wages and poor work conditions, causing all general-purpose workers (those without specialized, in-demand skills) to live in a sort of desperation bred of precarity, certainly keeps people on their toes. The fear of winding up in this class, or the desire to get out of it, no doubt spurs many to improve their skill base and to be willing to work harder and longer to earn their daily bread; as such, such a system may be one way of maintaining a high-producing economy. For many rightists, it would appear that this is the preferred way, or perhaps the only way thought possible. As the recent pandemic brought home to us all, however, we need general service workers: if everyone were an engineer, who would stock the warehouse shelves at Walmart or Amazon? Who would prepare your fast-food meal? And to ask an entire class of much-needed fellow citizens to live in precarity and desperation, though working full-time every week is, in my view, inhumane and immoral, and therefore not an option. What’s more, I am convinced that if we practice the social democratic values of justice, solidarity and inclusion, and build a human capital culture, we will outproduce any economy based on fear and deprivation.