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December 17th, 2018

Insight

Bernie Sanders wants you to have a good job. But there's a catch

Megan McArdle

By Megan McArdle Bloomberg View

Published April 26,2018

Bernie Sanders wants you to have a good job. But there's a catch
Sen. Bernie Sanders, I-Vt., wants you to have a good job. He wants everyone to have a good job. In fact, he wants to guarantee it, and he's joined Sens. Kirsten Gillibrand of New York and Cory Booker of New Jersey, two other potential Democratic presidential hopefuls, in proposing some sort of program to provide a highly paid job with the federal government to every American who wants one.


Unlike other ideas gaining vogue on the left, this actually seems vaguely centrist in its premise, despite its venerable socialist history. Democrats, after all, are the party of big entitlement spending, and Republicans are the party that says "Get a job!" If you smash those two things together, you get something that sounds kind of . . . moderate. At least until you get into the details.


Those details, unfortunately, are a devil.


Sanders wants the government to provide guaranteed jobs at $15 an hour, plus benefits. His office did not, a representative demurely told Washington Post reporter Jeff Stein, yet have cost estimates for this proposal.


Perhaps we can help the senator out. With two weeks of paid vacation, each worker would make roughly $31,000 a year. Add, conservatively, about $10,000 for benefits, and the total cost would be about $40,000.


The United States has between 25 million and 50 million workers making less than this total compensation package. Millions more are unemployed or fully out of the labor force. Assuming most of them did the rational thing and signed on, that would make for a $1 trillion to $2 trillion annual program - rivaling or exceeding our total expenditure on Social Security, with maybe Medicaid thrown in for good measure.


Of course, Walmart won't just shut its doors; it will raise wages to compensate, keeping many of those workers in the private economy. In fact, that's what advocates of a guaranteed job program really want: an attractive alternative that forces private employers to pay more.


Unfortunately, we can't assume all employers can just raise wages at will, especially in poor rural areas, where $15 is often within striking distance of the median wage for all workers. In those areas, at the very least, the Sanders plan would gut local businesses, forcing even more workers into the guaranteed job program and depriving communities of the services they provide. Though at least the owners of those businesses would have the comfort of knowing that a $15-an-hour job awaited them, too.


Which brings us to the other question: What would all these people do?


Advocates seem to be imagining something like the New Deal's Works Progress Administration or Civilian Conservation Corps. But those programs existed in a very different country. For one thing, in that country, the unemployment rate hovered between 15 and 25 percent, so hiring a few million workers had little impact on private labor markets. For another, those labor markets were also very different.


In 1940, only one-quarter of adults had completed high school, and only 5 percent had a college degree. Work tended to be physical, involving skills that workers either already had or could quickly learn. In that market, it's pretty easy to announce that you're going to build a road and hand a shovel to whoever shows up.


But modern Americans generally have different sorts of skills. And modern roads aren't built by armies of men wielding shovels, but with expensive heavy machinery you must be trained, expensively, to use. There are infrastructure tasks that virtually anyone can do, such as painting schools. But they aren't what we most need done - and, also, someone's already being paid pretty well to do them.

The government doesn't much use many of the skills that low-wage workers have, such as bartending or short-order cooking. And it doesn't have much presence in areas that employ a lot of low-skilled, undifferentiated labor: retail, fast food, call centers. Even in categories where the government does have needs, those needs are limited. The federal government might well be able to use more home health-care aides, day-care workers and clerks. It probably cannot use 25 million of them.


Guaranteed jobs reverse the normal logic of the labor market: start with something we want done, then find workers capable of doing it. Instead, you have to start with whatever number and kind of workers show up, wherever they happen to be living, and then figure out something they can usefully do. Then you must find the money to buy complementary assets - paint, filing cabinets, day-care space - so they can do it.


This would, of course, create even more government jobs, at a special agency for making make-work. But this is no way to run an economy. In the long run, such bureaucracies make us all a lot poorer, as the communists found out.


The impulse behind this idea is noble, and correct: that all Americans should be able to earn a decent living for themselves. But nobility can't take a backseat to practicality. This old socialist standby deserves to stay exactly where we left it - on the ash heap of history.

Megan McArdle is a Washington Post columnist who writes on economics, business and public policy. She is the author of "The Up Side of Down." McArdle previously wrote for Newsweek-the Daily Beast, Bloomberg View,the Atlantic and the Economist.

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