Forget Universal Income: The Economy Needs a Federal Job Guarantee

“A job guarantee is really a public option for jobs. It’s a basic job that’s provided regardless of the state of the economy,” Pavlina Tcherneva, an economics professor at Bard College who wrote a book on the benefits of UBE, told Business Insider.

In fact, now might be the perfect time to do so. The latest jobs report for July came in well below expectations, with the unemployment rate rising to 4.3%. While that number is still low by historical standards, it could signal weakness in a labor market that has been very strong in recent years. A job guarantee would provide a safety cushion, just in case the economy takes a turn for the worse from here on out.

“Even if you are not sick, you need health insurance. It is a safety net,” Tcherneva explained.

“We can implement it now, when the economy is in a relatively calm state, and then be ready when business conditions slow down and people are laid off,” she added.

Countries like India, Argentina, and Austria have tested guaranteed jobs programs on a small scale. The program has yet to catch on in the United States, despite the push by progressive lawmakers like Sen. Bernie Sanders and Rep. Ayanna Pressley to implement it at the federal level. But the first U.S. pilot program is set to launch in Cleveland, and its founder, Devin Cotten, believes that guaranteeing jobs for Americans can win cross-partisan support.

“We see UBE as a bipartisan solution that can go across the country and reach both sides,” Cotten, who has made a career leading community development task forces in Cleveland, told BI. In a “work-centric” society, “being able to subsidize people through work allows us to speak to both sides and get real collective buy-in.”

Cleveland’s Job Guarantee

For Cotten, providing jobs for all Americans who need them is a no-brainer. The government funds roads and development; “Why don’t we subsidize individual action and prosperity for the nearly 40 million Americans who live in poverty?”

With the help of Cleveland experts and local policymakers, Cotten created a UBE pilot project that is expected to begin in 2026. How it works: 100 participants selected from a pool of applicants will be guaranteed jobs paying $50,000 a year for three years. According to Federal Reserve calculations, a worker earning that much in Cleveland would not need additional government assistance.

The program will partner with public and private employers in the area and subsidize participants’ wages. Cotten said the goal is to ensure the jobs are community-based and help support the local economy (think small businesses, nonprofits and child care centers) so participants are more likely to get satisfaction from their work.

“Not only will this stabilize your workforce, but you will also have less turnover and less absences due to transportation, child care, elder care,” Cotten said., adding that an engaged and well-paid workforce is also a more stable and efficient workforce.

This is just a start, Cotten said, and he hopes the idea will gain traction across the country. Lawmakers have been pushing the idea for decades, dating back to when former President Franklin Delano Roosevelt pushed in 1944 to establish “the right to useful and gainful employment in the industries, shops, farms or mines of the country.”

Since then, a number of Democrats have pushed for a federal jobs guarantee, including Sanders during his 2016 presidential campaign. Pressley reintroduced a resolution in February calling for a program that would guarantee high-quality jobs paying $25 an hour or more. But the UBE has yet to have an Andrew Yang — a staunch advocate who is focused solely on rallying support for the idea.

The biggest obstacle to a guaranteed jobs program is unanswered questions about how much it will cost, leaving Democrats and Republicans undecided. Democratic Rep. Gerald Connolly of Virginia told the Washington Post in 2018 that his party had to be careful about the cost or Republicans would quickly reject the idea. “We have to be the party of fiscal responsibility,” he said.

According to Tcherneva, the logistics of UBE are more complicated than simply handing out checks to people through basic income programs, but the benefits would include combating inflation by establishing a living wage without raising prices elsewhere and preventing labor shortages by providing a willing and ready workforce.

She believes that the UBE is comparable to social security as a means of consolidating economic stability and that pilot programs are unnecessary.

“We haven’t really done any public education pilots to determine whether we want it or not,” Tcherneva said.

Universal basic employment worldwide

The world’s first experiment with a universal job guarantee began in 2020 in the Austrian town of Marienthal.

Throughout the three-year program, any resident who had been unemployed for at least nine months could choose to participate and receive guaranteed paid work of at least $1,800 per month. Participating employers received subsidies to help pay participants.

By the end of 2023, the program had created and filled 112 new jobs. The majority of participants joined the public service sector, working in areas such as gardening, community catering and museums.

Lukas Lehner, an economist at the University of Oxford and co-author of a study measuring the program’s outcomes, told BI that the program aims to create meaningful jobs for workers and the community.

“One of the principles of the whole program was not to dig holes and fill them in,” Lehner said, adding that researchers observed positive social outcomes in addition to the financial benefits, including an increased sense of inclusion, trust and stability.

The pilot program has shown promising results: Unemployment in Marienthal has been “massively reduced,” Lehner said, with participants’ incomes increasing by about 30 percent. In addition to significant improvements in financial security, participants have also reported improvements in their mental health and their role in their community, thanks to knowing they have meaningful, stable employment.

Other countries have experimented with job guarantees over the years, including India, Argentina and South Africa. While these measures didn’t last long (South Africa’s program, for example, was a response to the pandemic), Tcherneva said they all showed that the policy could help stabilize the local economy. It’s like stopping a chain reaction before it starts, Tcherneva said.

“Unemployment seems to be at the heart of many other social problems. If you create jobs, you may be able to solve them,” she said.

These programs also provide a model for similar initiatives in the future.

“It is clear that these countries are not as wealthy as the United States,” Tcherneva said. “They are able to provide jobs, and administrative constraints or other common problems do not seem to prevent them from providing the jobs that are needed.”

Universal Basic Income vs. Universal Basic Income

Looking at the results of the Austrian pilot program and its impact on Marienthal, Maximilian Kasy, a professor at the University of Oxford and co-author of the study on the program, told BI that it is clear that income alone is not enough to improve people’s lives.

“All of these benefits that people have in terms of time structure and social inclusion, meaning and purpose in life, are not just about having more income. They’re really about having meaningful activity within the community that they’re engaged in,” Kasy said.

While many cities are testing basic income programs, they are not universal and instead target specific groups in need like artists, new parents, low-income families or the homeless. Tcherneva noted that the government’s stimulus checks during the pandemic were “the closest real-world experiment” to basic income, in which the financial aid was needed but didn’t last long.

Tcherneva calls the EBE an automatic stabilizer, or a program that smooths out sudden economic hardship — a bit like going on unemployment when you’re laid off.

Another key element of universal basic income is its ability to garner bipartisan support over universal basic income, advocates say. Republican lawmakers have introduced bills to ban basic income programs in their states, with some arguing that handing out checks without strings attached would discourage work and raise taxes.

The UBE could counter these criticisms by requiring participants to work for their wages – which are taxed as ordinary income – rather than simply receiving money each month. The benefits of such a measure would be long-term, helping not only participants but also their families and employers.

Globally, EBE is gaining momentum in some countries. The European Commission announced €23 million in funding for guaranteed employment proposals in the European Union in April, and France is running an ongoing experiment, which began in 2011 and was extended to Parliament in 2021, to establish permanent jobs for those who need them.

As this movement gains momentum in other countries, it is up to American policymakers to secure jobs at the federal level.

“What we’re trying to do is move government investments from reactionary responses to proactive solutions,” Cotten said. “And if we can do that by demonstrating why valuing historically low-paying jobs, which are very, very critical to our community, can solve this poverty problem, and also give people dignity in the process.”