One of the fundamental problems in Job Design is understanding and dealing with the difference between Labour Hours and Labour Services.
Labour Hours are the raw material that is bought from an employee. This is the actual underlying exchange of an employment contract — you give up a number of hours in return for payment that can, ultimately, be exchanged for goods and services elsewhere in the economy.
The problem is that isn’t what an employer wants. What they want are Labour services — a desired output generated by combining the employee, their efforts and other inputs.
There are multi-factor tensions across this relationship, with the organisation trying to get more intensity of output from the money they have spent, on the employee and other elements, and the employee resisting change that they see as damaging. This leads to an area of agreement that results in Labour services arising.
Keeping these relationships in balance is a joint function of market and regulation. The labour market is segmented into multiple areas — some of which are buyers markets and some of which are sellers markets.
In a buyers market for labour, the employee is unable to resist employer changes. So you get increasing encroachment onto the rest of the employee’s life. If they are without a job, then they become subject to zero-hours contracts and the ‘gig’ economy all of which ration out paid work interspersed with unemployment. They are forced to travel further, are on-call 24/7, required to answer emails on a device, working from home is not an option, or are simply kept at the office by peer pressure outside their contracted hours. The result is a reduction in the effective hourly wage received, right down to zero in the case of interns.
An employer may be able to retain cheaper labour, but it’s not all plain sailing. There is the rise of the parasite economy that uses cheap labour to undermine firms that want to pay and treat their staff properly. The reduction in labour costs drives down the capital/labour ratio so that capital is always ‘too expensive’ even if it being practically given away. You get a savings glut with nothing worth investing in, and a drain in productivity improvements. The chase to the bottom has two sides.
What does this mean for the Job Guarantee?
The Job Guarantee is based upon the principal perhaps best expressed by the late, great Muhammad Ali
Service to others is the rent you pay for your room here on earth.
And that leads to the following concepts:
- Service to others means actively giving up some of your time. So there has to be a way for you to sell your labour hours and show that you have given up those hours.
- You must use that time in the service of others to the best of your ability. If you do, you should receive at least enough goods and services in return to live a decent life free from concern. So there has to be active support to allow you to be your best.
- Others have to know that you have served them and that you have served them the best way you can. So there has to be an active dissemination and promotion of what people are doing and how others have enjoyed the output from those activities.
The Job Guarantee is a:
- clearing house for labour hours at the living wage.
- provision of capital equipment and organisational structures to allow people to serve others by giving up hours.
- public relations and promotion operation for the output from the scheme and the wider public sector.
You need all three of these to keep a Job Guarantee in place in a nation over the long term. Social Security is a political project. You need substantial public support to get it implemented in the first place, you need to maintain that public support in the system over the long term. Too many Social Security ideas fail because all the effort is put into the former, and insufficient in the latter.
Why an active process?
There are some who believe that the income should just be paid and everything will then sort itself out because “Each individual know best how to contribute themselves to society”.
But that’s the “just start your own business” argument dressed up in different marketing blurb.
Under the “just start your own business” story:
- you start creating output because you ‘know best how to contribute to society’ — even though you have no capital and no ability to get it because you have no income and no collateral.
- people flock to your door for your wonderful output — even though you have spent no time, no effort and certainly no capital promoting yourself and your output. Your shining personality is all that is required.
- people give you money in return for your output — because your output is obviously wonderful and they understand implicitly they will get it back anyway via your purchases in the economy.
The “receive an income” story is just the same myth except that people now give you goods and services up front because they obviously realise how awesome your output is going to be when it turns up. And of course it will turn up because we’re all natural Givers really.
It’s the “just start your own business” line for the Kickstarter/Patreon generation.
80 to 90% of business start ups fail, mostly due to lack of demand for their product. 2/3rds of proposals to Kickstarter never get a cent — and that’s for a one-off project not a lifetime income. There are millions of unemployed who would not be there if the self-starting myth had any basis in fact whatsoever.
People are often very bad at determining what they are good at. Their friends and collegues are even worse at revealing the truth. Every year we have hundreds, if not thousands, of people queuing up for X-Factor auditions, so that Simon Cowell can be the first person they’ve ever met to point out that they can’t sing, can’t act and look awful.
This is why the Job Guarantee approach has to have an active process for producing sufficient jobs. Stuff to do that people want to do and that others are happy to see them do has to be actively created. It will not arise spontaneously in any manner that is socially sustainable.
Why unemployment occurs
The unemployed arise because ‘laissez faire’ is unable to ensure full employment at stable prices. The economy ends up with a list of vacancies and a list of unemployed where nothing matches. In a working economy with a functional minimum wage, none of the unemployed are capable of fulfilling any of the vacancies and few individuals, if any, can be transformed by training even if it was commercially viable. You have a structural matching problem that will persist, however long the beatings continue.
Classical economics gives this state a name, the NAIRU, and then tries to brand it as ‘full employment’. It isn’t — the clue being in the ‘RU’ bit of NAIRU which stands for ‘Rate of Unemployment’. And the rate is about 1 in 20 people. For every 20 dogs, there can only ever be 19 bones.
Those forced to be without work have no possibility of getting any. It is structurally impossible. So they are forced to accept support, but however you structure the support it ends up with them getting paid twice in real terms — once in terms of the goods and services they can purchase, and once in terms of the (forced) self-consumption of their own labour hours. As sure as the Victorian poor forced to steal chickens for a living this ends up being seen as a form of larceny. The majority in work then move to end the support as punishment.
How we solve these issues
The Job Guarantee is designed with these real world concerns in mind.
- As well as creating tasks and matching people to them where it can, the Job Guarantee takes people and creates tasks matched to them. This is an active process that solves the matching problem — allowing genuine full employment with stable prices. Everybody that wants a job can have one and will receive the living wage.
- The Job Guarantee provides the capital, structure and encouragement to allow people to undertake the tasks provided to them. Labour hours that are given up are converted to labour services that are valued by the general public. Being seen to be doing something useful diffuses tensions in the working population.
- The Job Guarantee actively promotes the value of Job Guarantee output to the general public. Private operations take every opportunity to let people know what a great operation they are. Nobody ever stands up in shareholder meetings and suggests private PR is a waste of shareholder money. A public relations function is vital to the long term viability of a Job Guarantee. A public sector that fails to promote its good works and keep them at the forefront of the public’s imagination is a public sector that will suffer cuts.
Being the best you can
The Job Guarantee operates as a mediation scheme between those without work and the rest of the productive economy. It recognises that there are social limits on individual rights and creates the mechanism by which those social limits are resolved. It is a tool for creating compromise and consensus at the edges of the job market.
And it does this in an interesting way — by being both a market mechanism and a non-market mechanism at the same time.
To the main job market, the Job Guarantee is both a credible threat and a valuable supply. To get any labour your job offer has to be more attractive than the one provided by the Job Guarantee. As a capitalist you are forced to compete in the labour market — meaning that you may decide to invest in machinery instead, or research better ways of getting more done with less. The capitalist is encouraged to deploy capital and that drives the virtuous circle of investment and productivity.
But the Job Guarantee is also a valuable supply. The people on the Job Guarantee are a credible threat to existing employees. They are working and showing their worth. The Job Guarantee public relations shows what they can do. That means somebody on the Job Guarantee could possibly do your job and that helps keep wage demands under control.
That’s the market effect. The non-market part is what to do with all those labour hours the Job Guarantee buys.
What output should be produced from the Job Guarantee and why? What are the labour services we require from those labour hours. What is the transformation objective?
The first thing to realise is that you are unable to use any of the usual methods of evaluation. The Job Guarantee works in a different way to a normal employer. For it to dismiss an employee it has to get them hired by somebody else. Once somebody on the Job Guarantee starts producing a market based surplus they will likely get hired away by a capitalist. And that is a good thing. The Job Guarantee is happy to see staff go, and for staff to stay. Therefore the ‘market’ way of measuring the output of an employee cannot be applied to Job Guarantee participants. Almost by definition the majority of people on the Job Guarantee have no market value.
This is proof, if any further were needed, that the market can never be the final arbiter of value. There are other ways of looking at what people do for each other.
To see what mechanism is required, you have to go back to first principles and remember that you have to be of service to others if you want anything back in return. On the Job Guarantee that cannot be a market exchange at market value. That is the job of the private sector.
Instead it is a social exchange at social value. If you join the Job Guarantee and do your very best for others, then others will grant you a living existence. Your very best takes into account your limitations. It is an expression of intent and desire rather than ability or price, and it is very familiar in other settings.
At my local junior school, there was a young girl who was unable to breath on her own. She had breathing apparatus, wheelchairs and two full time nurses with her at school every day. And with that support she was able to take full part in the lessons and (within reason) other school activities. Sadly her disabilities got the better of her and she passed away.
Nobody suggested the additional support was a waste of time, or that she should just stop at home in bed, or that the capital was somehow ‘misallocated’. No, she was assisted with all that society could muster to be the best that she could be on any given day. Everybody knew she was likely to die, but we did it anyway. Because it brightened her life and she brightened the lives of others.
Yet when we get to adults in the job market all that goes out of the window. We forget that many need a lot of assistance to be the best that they can on any given day. We forget those that are damaged, those that are ill or disabled and those that are just not very clever, not very motivated or ‘team players’. They probably don’t have ‘great communication skills’, but they are all people too and deserve a chance to show what they can do. That then brightens their life as they brighten the lives of others.
The Job Guarantee actively assists people to be the best they can and produce the best they can for others. And by producing that social value, by announcing it loudly from the rooftops, wider society will see that the social ledger is settled and be content to offer, and provide, a living existence to all.
In memory of Issa. Rest easy little one.