Is a job guarantee the solution to mass AI unemployment?

In the introduction to his book Capitalism and Freedom, the American economist Milton Friedman made a famous point: a crisis can turn ideas that once seemed unusual into ideas that politicians take seriously.

Friedman wrote that big changes happen only when people believe there is a crisis, whether the crisis is real or not. When that happens, leaders choose what to do based on ideas that already exist. He believed that thinkers, research groups and economists should work on improving these ideas so that good solutions are ready when a disaster happens.

Today, many influential people are warning that AI could cause enormous problems. Bill Gates has said that AI will improve so quickly that, within 10 years, people will no longer be needed for most tasks. Dario Amodei, the CEO of AI company Anthropic, has warned that AI could cause many people to lose their jobs within one to five years. He believes it could replace many jobs in law, technology, finance and other office-based professions. Even if these predictions turn out to be wrong, there could still be trouble. Investors who have put large amounts of money into AI might decide that the technology was overhyped and worth less than they expected. That alone could cause an economic downturn and widespread job losses.

Whether AI really causes millions of people to lose their jobs, or people simply fear that it will, one idea is getting more attention and support. It is called a job guarantee, and it could directly help with this problem.

In its most ambitious form, a job guarantee would mean that anyone who wants to work could get a useful job that pays a decent wage. Supporters say the government could provide jobs for people who cannot find work elsewhere. This could protect millions of people from the money problems and emotional harm that come with unemployment. It could also bring large numbers of workers together to solve important problems, such as improving roads and public buildings, preparing communities for climate change, and caring for older people and children.

The idea of guaranteeing jobs has existed for a long time, both as a goal and as a real government policy. Article 23 of the Universal Declaration of Human Rights, adopted in 1948, says that everyone has the right to work, choose their job freely, have fair and good working conditions, and be protected against unemployment. During the Great Depression of the 1930s, US president Franklin D Roosevelt created the Works Progress Administration (WPA). This program gave jobs to millions of Americans, who built roads, bridges, sewer systems, sports fields and many other public projects. More recently, France, India and Argentina have been among the countries that introduced their own versions of job guarantee programs.

Job guarantees are often discussed alongside universal basic income (UBI). UBI is a system in which people receive regular money payments without needing to work. But a recent worldwide survey found that more people supported job guarantees than UBI. Surveys of Americans by Democratic political strategist David Shor found something similar: people were more supportive of creating well-paid jobs than simply giving people money. Nick Hanauer, an investor who supports community causes, said this makes sense because jobs provide much more than money. They help people connect with others, feel respected, have a voice in society and take part in their communities.

Algernon Austin, who leads work on racial and economic fairness at the Center for Economic and Policy Research, agreed. He said a job guarantee is much better than UBI because having a job is about more than earning money. Working also helps people gain experience, learn skills and meet people who may help them in the future.

Working out how much a job guarantee would cost means looking at all the ways it could affect society, not just the money spent on wages. At a US Senate hearing about the cost of living in June, John Kennedy, a Republican senator from Louisiana, said a job guarantee would cost trillions of dollars and could not realistically be done. When Dr Julie Margetta Morgan, president of the public policy research group the Century Foundation, told Kennedy she supported a nationwide job guarantee, he responded by asking whether she believed in the Easter bunny. His comment suggested that he thought the idea was unrealistic.

Economists who study job guarantees say the costs and benefits should be calculated differently. Max Kasy, an economics professor at Oxford University who studied a recent job guarantee experiment in Austria, said that paying workers does cost money. But these programs can also save governments money in several ways.

Kasy explained that when people have jobs, governments may no longer need to pay them unemployment benefits, disability benefits or money for early retirement. People who work also pay taxes and contribute to government-run insurance programs, bringing in more money for the government. On top of that, the work they do can hopefully provide something useful to society.

People who took part in the Austrian job guarantee experiment also experienced social and emotional benefits. It can be difficult to put a dollar value on feeling happier or healthier, but these benefits are extremely important, according to Pavlina Tcherneva, an economics professor at Bard College.

Tcherneva said giving someone a good job can completely change their life. She added that unemployment, especially when it lasts a long time or when work is uncertain, can cause health problems that also cost society money. When those costs are included, she believes a job guarantee becomes even more appealing. She said the program is not just something society can afford, but also an investment that brings benefits in return.

In September, Ayanna Pressley, a Democratic member of the US House of Representatives from Massachusetts, introduced a congressional proposal calling for a nationwide job guarantee. She had first suggested the idea in 2021. Under her plan, the federal government would pay for the program, but local governments would manage it. Workers would earn at least $25 an hour, and their pay would be adjusted regularly as living costs increased. The jobs would cover many kinds of work, including preparing for emergencies, helping communities during and after natural disasters, caring for children and older people, and creating public art. The art projects would be based on the popular Federal Art Project that was part of the WPA.

Another recent proposal suggests making AI companies pay a special tax to fund a nationwide job guarantee. The plan is supported by three Democratic members of the US House of Representatives: Greg Casar of Texas, Valerie Foushee of North Carolina and Sara Jacobs of California. Under the plan, large AI companies would be taxed based on whichever was greater: the value of the tokens they use, which are units of data processed by AI models, or the money they earn from AI products.

If more people became unemployed, the tax rate would go up. In a written statement, Casar said that AI company leaders are openly predicting that their technology could leave millions of Americans without jobs, while the government is doing nothing to save those jobs or protect workers.

In Cleveland, Ohio, a nonprofit organization called Universal Basic Employment (UBE) is starting a small test program involving five workers who drive vans for a transportation company. Instead of creating completely new jobs, the program helps pay the wages of people who already work for private businesses. Devin Cotten, UBE's founder and CEO, said this approach can help both workers and employers.

Cotten and his team wanted workers to earn what they call an autonomous wage. This means earning enough money that they no longer qualify for most government assistance programs. In Cleveland, they calculated that amount to be a little more than $27 an hour. UBE's one-year test program will cost almost $500,000. UBE and the employers will share the cost of paying workers at that $27-an-hour level. The van drivers currently earn about $15 an hour. Under the program, the employers will spend less on wages, while the workers will receive a large pay increase.

Cotten said the program is not supposed to replace other kinds of help, such as housing vouchers that help people pay for a place to live. But receiving more money through wages, rather than through separate assistance programs, can help workers build a better credit history and perhaps qualify for a home loan. Workers may also spend more money at local businesses, keeping money moving through the community and helping improve poorer neighborhoods.

Cotten believes this kind of program could also win support from people with different political beliefs. He said people across political parties generally agree that work is important. Because the plan is built around helping people work, he believes it could be supported by both Democrats and Republicans.