The New Deal. Impact of a Jobs Guarantee.

Posted by David Siminoff on 12/16/18 10:01 AM
David Siminoff
The Dangerous Fantasy of a Jobs GuaranteeRobots. Driverless cars. The ineluctable modality of human motivation (any Finnegans Wake fans out there?).
 
We stand on the edge of an odd time in human history. The standardization of parts and process, along with the globalization of labor forces, have allowed the makers of hardware to produce...stuff...at incredibly low prices. For examples, check out Wish or the "Todays Deals" on Amazon. 
 
You get like 40 pair of underwear for $100. You get 7 frying pans for $40. You get a GMAIL account for...free-ish. 
 
impact of a jobs guaranteeSupply. Demand. You remember the curves. The demand for the low skilled labor to do a ton of the tasks it used to be needed to do...is soon to be evaporating. There are over 3 million fast food worker jobs in North America. Most pundits believe that by 2024 we'll see the displacement of a couple hundred thousand jobs with more to vanish soon
 
"The McFlipper"—a robotic fast food processor and server—is just the tip of the iceberg. Add in the driverless truck, the driverless boat, the end of snail mail as we know it, drone deliveries, and the burgeoning build of fully robotically automated factories producing Tesla cars, Apple microchips and...dinner forks...and you have a world looking bleak for the average worker. 
 
What is "average"? 
 
Well, when surveyed, most Americans believe that 2 out of 3 people graduate college. And that 9 out 10 people graduate high school. In fact, only a little over 1 out of 3 people graduate college. And closer 8 in 10 people graduate high school. So can we say that "average" is...someone who just graduated high school and maybe went 1 year to community college and...that's it? That has to be close to average. 
 
So what "went wrong" then? 
 
Did they not graduate college because they were afflicted by some rare disease? A few people may have had that problem, but we should consider them outliers. The gist here is that "average" is likely a lovely person—aren't we all lovely in America? Ask a politician—they'll confirm it. That lovely person likely wasn't motivated to work hard and grind out the study hours to do well enough to make school worth it. Maybe they had some circumstances preventing them from finishing school. Or maybe they simply weren't smart or disciplined enough to pass. Is that criminal to write? When asked, "do you believe you are above or below average in academic aptitude?," we believe 93.234% of the country will answer "above." Yet the right answer should hover around 50%, right?
 
So...being not smart or undisciplined and not motivated at this time in history is a lot of a dangerous thing. Why? Jobs are going away.
 
This very long lead-in begs the question, "What do we do with the bottom third?" Multiply aptitude by hard-work, add a dash for geography and the family/culture in which you were reared, angle the game board to reflect economic and tech cycles, and you get a grim picture for the bottom third of society. What do we do with the un-smart, the un-motivated, the-happy-to-just-'be', people? 
 
They used to clean tables, take tolls at bridges, drive trucks at night, build cars, dig ditches, and all of their jobs are simply going away. Or at least declining by dramatic measure in the next decade and change. 
 
job automation
 
What do we...do? 
 
In comes the notion of "UBI" or Universal Basic Income— essentially a pilot light for minimum amounts of money given to the bottom third in return for not getting fed up with their caste lot in life. No more deciding to knock off a few 7-11s for some extra cash. They will soon be manned by machines as they convert to being giant 4,000 SKU vending machines anyhow.
 
UBI essentially sets a kind of floor wage that everyone gets. They can choose to do nothing with their lives as long as they can live on the 1800 bucks and change they get from UBI as life support dough. They can always supplement that income by driving for Uber. Until it too goes driverless. See the pattern here?
 
The alternatives are grim. Should there be job guarantee? That option feels like the worst in a long line of potential balms to keep the bottom third from doing the whole "Can You Hear The People Sing" thing. A "job guarantee" then, most likely, just makes up jobs regardless of the value that job brings. "Dig a hole; then fill it up" becomes the most popular job posting on Indeed. And it's costing taxpayers (presumably the top 2/3) $50,000 a year instead of the 12 x $1,800 a year "option" of a UBI system. 
 
Remember The New Deal? The country was unemployed en masse, to the tune of somewhere around 25% for a while. Roosevelt "bought growth" in the form of large government debt taken out to hire and/or create jobs for workers to in fact, dig holes and fill them up. (We had a lot of roads we needed back then.) The cost? Well, we're still paying for it. The New Deal kickstarted A New Economy—but it also set as a precursor The New Debt—a world in which we now live where the interest payments on our obligations are arguably our largest expense as a society
 
Lots of attitudes on this topic, ranging from a return to Soylent Green and Logan's Run (if you haven't seen the films, you should)... to Animal Farm (if you haven't read the book, you should—we can help). 
 
Regardless, nobody other than Flat-Earth Society members believe that there will always be a Bottom Third. And that soon, its financial usefulness to society will begin to evaporate. 
 
So...what's it gonna be? What to we do? 

Topics: Finance, US History

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