Episode 228 – Full Employment with Pavlina Tcherneva

Macro N Cheese – Episode 228
Full Employment with Pavlina Tcherneva
June 10, 2023

[00:00:00] Pavlina Tcherneva [Intro/Music]: The Fed is explicitly stating that it has to reduce credit conditions, which means that it needs to slow down employment or decrease employment to fight inflation, even if inflation does not emerge from the labor market. And those who are criticizing this approach have not credibly offered an alternative. The only alternative is the job guarantee.

Every country, every government spends money on fighting poverty and unemployment, and these are unnecessary costs, and we simply can redirect our resources and do things better.

[00:01:35] Geoff Ginter [Intro/Music]: Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43] Steve Grumbine: All right. This is Steve with Macro N Cheese. Today I am gonna be speaking with an old friend, and when I say an old friend, I’m talking about go back to the early days and you’re gonna see several interviews with none other than my friend, Pavlina Tcherneva, and it’s been a while since we’ve had her on, so this is a big pleasure for me.

But just for those who don’t know who she is, Pavlina is an Associate Professor of Economics at Bard College, the director of OSUN’s Economic Democracy Initiative, and a Research Scholar at the Levy Economics Institute in New York. She specializes in monetary and fiscal policy coordination, and employment policy, and we’re gonna talk a little bit about that today.

So thank you so much for joining me. It’s been so long.

[00:02:29] Pavlina Tcherneva: It’s been a while. It’s good to be back. Hi everybody.

[00:02:34] Grumbine: So last time we spoke, we were talking about how we could nationalize payroll and it was during the pandemic and it was an extremely tense time as we were trying to work our way through probably the single most jarring event in my lifetime. Short of the collapse of the two towers on 9/11, few wars here and there and the great financial crisis.

This is right in that mix of, “that happened in my lifetime” moments, and it had a huge impact on the way we view employment, the way we view the economy. Uh, we learned an awful lot of things that I hope we don’t forget about that came out of the pandemic.

But one of the confusing things is the economics of employment in terms of how we rate and gauge what full employment is and how we understand the economy through the lens of evaluating employment levels and production. You’ve been working very hard on not only democratizing the workplace, but understanding these concepts that reflect about the current conditions of employment.

Help me understand. Are we at full employment? We’ve got inflation, we’ve got the Fed trying to get people to be laid off by jacking up interest rates using the old Volcker playbook. Where are we with employment?

[00:04:03] Tcherneva: Well, the short answer is no. We are not at full employment. Even though it seems that the consensus is that not only we’re at full employment, but we are at over full employment, whatever that may mean. I gotta say, I started working and studying economics – I’m gonna date myself – back in the nineties when everybody was talking about the Goldilocks economy, Clinton’s boom, low unemployment levels like we had never seen before in the postwar history.

And back then, I remember just as a young scholar just being so puzzled by this whole business, we had the rise of the precarious employment arrangement. Part-time workers were an increasing share of the labor force, and people were juggling a bunch of different jobs to make ends meet and economists were celebrating how, what a wonderful time that was.

And that was the time when I began working on the employer of last resort and the job guarantee. And it just feels eerily reminiscent of those days because today here we are on the heels of not just the pandemic, but multiple crises, as you said, multiple wars, and we’re once again celebrating the strength of the labor market.

And I have to say, I am relieved that we were able to get out of the pandemic as quickly as we did because the last time that you and I talked, we didn’t know what would unfold, what the next years might look like. And we were sounding the alarm that if we were to repeat the policy measures of the 2008 crisis, we would be looking at a decade or two of awful, awful jobless recovery. And we were able to turn things around very quickly.

So we need to pause to recognize that that happened. But then we also want to ask ourselves the question, what does it take to restore jobs quickly? In the next crisis, is it going to take another 26% of GDP government spending? Of large scale government spending to restore the economy? I think that the likelihood of that is very, very low.

Back then, we were talking about the essential worker. Are we protecting working people who are providing the vital services that we all depended on? Food service, healthcare workers, sanitation workers. The essential workers were the focus of our conversations, I would say the mainstream conversation. And now that we are out of the crisis, now that we are in a period of recovery, are the essential workers faring better than before?

Have we materially changed the employment conditions of working families? And I think here the answer is that there are some bright spots. There are some increases in wages at the bottom end of income distribution, but we also are faced with inflation. So I think on net I do see that we haven’t transformed the economy or the labor market.

And the Covid pandemic was an opportune time. And despite all the conversation of strengthening the labor market, workers, et cetera, we are still not quite where we should be. And so to the question of “are we at full employment?”, the answer I think is still unfortunately, no. Because even today there are 5 million people who are looking for work, sending resumés, trying to find employment.

They’re not able. There are others – around 5 million again – who are working part-time for economic reasons. They don’t really necessarily benefit much from a pay increase. What they want is more hours, more stable hours, and we have millions more who are outside of the labor force who have left the labor force altogether.

So if we were to look at what’s traditionally been called, the expanded definition of unemployment rate, we will see that it’s about double the official rate. But even that is not terribly useful as some of our listeners might know. I like to look at unemployment spatially, geographically, because the national data, the national statistics, even these expanded definitions, they don’t tell the whole story.

And when you just survey states, when you survey metropolitan areas, when you look at remote regions, we see that there are big pockets across the country of mass unemployment. And there are communities that experience perennial double digit unemployment. So they’re not really benefiting from this swift recovery that we have seen at the national level.

And to me, that’s a good check on what we’re talking about. Have we really improved the lives of people materially, or have we left behind communities that were traditionally left behind in previous recoveries?

[00:09:15] Grumbine: When I was a young man, one of the books that I read, and you gotta remember, this is like 1988, 1989. And I think it was George H. W. Bush at the time. And the book Reaganomics was rolling around and one of the things that stuck out in my head, cuz I was a Republican at the time, I used that book to quote in one of my papers.

And I’m just paraphrasing here. He talked about if we have 500 cable splicer openings in New Jersey, but we just laid off 200 cable splicers in Los Angeles, do we have unemployment or do we have underemployment? And he says, well, we’ve got a bunch of job openings there. What are you talking about? And even though Reagan was revered at the time, especially in my home, it struck me like a ton of bricks.

I wouldn’t wanna move away from everyone that I know and love just to go get a job because that’s what I’m good at, and have to go cross country to work. When you look at the country in aggregates, it’s like looking at GDP, it’s a story, but it’s not the whole story. And in these pocketed areas, especially as flight occurs in various regions where industry is left pockets of poverty and joblessness in tax deserts where there’s just not enough money to fill the void.

I imagine there’s also really poor jobs and inescapable conditions. Is that what you’re referring to?

[00:10:41] Tcherneva: Yes, definitely what I’m referring to. And part of the reason why we don’t pay attention to these geographical disparities and we don’t pay attention to the quality of employment that these communities have, is that economists still are looking at the job market at the very, very aggregate level. Economists tend to believe that there is one labor market.

There are some sort of supply and demand conditions that determine the volume of employment, and that’s wrong. And the reason why it is wrong as well, because we know that different states, different regions have different level of development. And when there are poorer jobs, when there are more precarious jobs, the very engine that revives these communities, that sustains these communities, that makes life livable and comfortable, it’s just not there, and folks are trapped. Well, there are jobs. We can look at just the aggregate numbers and we can see that there is employment, but they may be very poorly paid jobs without essential benefits. So one of the reasons why we’re not looking at this regional spatial distribution of employment is because economists have given up.

They tend to think that full employment is a situation where the cyclical unemployment has been eliminated, that there’s no cyclical unemployment. In other words, the kind of unemployment that occurs when a crisis hits. So even the Bureau of Labor Statistics, basically the statistical agency that is charged with tracking the unemployment rate, they define full employment as an economy where the unemployment rate is the NAIRU.

The non-accelerating inflation rate of unemployment. They define full employment as a condition where the economy has no cyclical unemployment, or GDP is at its potential or whatever that may mean. So actually, structural unemployment is not part of the calculus. If there’s a wholesale exodus of industry from Ohio, Michigan, rust belt, and that is just considered normal business.

Artifact of business, of trade, of competition, and there’s not much that policy can do about it. So structural unemployment over time has become part of the full employment definition, and I think that that is really a problem because it also suggests that policy doesn’t really need to do too much to address that.

So today we still have these pockets in the country of, as I said, double digit unemployment. If you look at California, I mean, you’d be surprised. You look at the West Coast or even in the East Coast, you will be surprised that there are still some metropolitan areas that have 7, 8, 9% unemployment, even 15% unemployment rates, and those tend to be considered to be structural problems.

[00:13:59] Grumbine: The thing that I like about the job guarantee, especially for these structural deficits of employment, we’re talking about redefining work at a fundamental level. The jobs that we are talking about, were not competing with the private sector. I think people don’t understand that just because there’s automation that’s evaporating different roles and these things play into some structural unemployment, that there’s an opportunity to fill that with meaningful, socially beneficial work that is not competitive with the capitalist idea of wage labor.

That is fundamentally helping local communities and building up areas of resilience that would otherwise not exist. How would you see a job guarantee scenario? I guess first of all, painting what a job guarantee is through your vision and how would you see it addressing some of those structural deficiencies?

[00:14:59] Tcherneva: Well, the job guarantee is just a public program that employs people who show up looking for work. It’s a regional, it’s a local program. You can think of it as a modern “new deal”, but it is local and accessible to anyone. Open-ended who, for whatever reason, is looking for employment. So it’s really just a public employment option.

Now, I think the present time is perhaps the best time to put in place a job guarantee, because the economy is right now doing reasonably well. But there are these areas that still have very high levels of unemployment, that have precarious employment, and they are just as much in need of an economic stimulus as any other.

And the job guarantee essentially finishes the job that the stimulus couldn’t finish. And this is perhaps my greatest frustration, is that as soon as the economy recovers, as soon as we experience reasonably good recovery, we forget that we still have quite a bit of work to do and policy stops. There is no more directed, targeted stimulus to distressed areas.

We’re in fact caught in a conversation of how to reduce government spending, how to mind the budget. This is a perennial cycle of conversations and so the unemployed folks whom still need good work, are left behind. The job guarantee, ensures that if we had a public option, whatever the economic circumstances, rain or shine, there will be some access to employment for those who need it.

So why is it also a good time to do it now is because, you want to put in place infrastructure, you want to start thinking about the kind of employment that these communities need, in times of relative calm and relative growth. You do not want to be thinking about putting in place employment projects in the midst of a storm, in the midst of a crisis, when companies are shutting their doors and they’re laying off workers.

That is a far more difficult proposition. Now is the time to put the infrastructure that will be ready. We can work out the jobless, the logistics of creating employment, because the next downturn is around the corner. It will come sooner or later, and we will now once again see accelerated unemployment.

That is the one reliable feature of the labor market is that when there’s a downturn, there’s a very rapid acceleration in layoffs. We want to prevent that. We want to stop that, and a job guarantee will be essentially providing employment as needed, on demand, and then stop this avalanche, if you will, of job losses.

So I think there is no better time than the present to do it and to create preparedness. Because our policy has always been reactive, and it’s become increasingly more difficult to rely on Congress to pass stimulus packages when we are faced with crisis. And, as we’re well aware, the polarization has made it more difficult to pass substantive packages, and we are increasingly reliant on these discretionary expenditures.

But the job guarantee would be an automatic program. It will be just like some of the other permanent policies that we have implemented, like social security, like unemployment insurance, like food stamps. There are policies that are there, types of entitlements, that are tapped in times of distress and downturns, and the public employment option will be another such structural policy.

That will be preventative and it will be automatic. So in an ideal world, it won’t be as dependent on the political process, on the shifting political winds for its survival.

[00:19:16] Grumbine: In light of the debt ceiling fight we just had, one of the concerns is the government paying its bills and its bills would include things like social security. This debt ceiling, which we can look at minting a coin, we can look at the 14th amendment, and all these different clauses that have been passed since the 1917 Act that put the debt ceiling in place anyway, for different reasons altogether.

But bottom line is, this political football has been used to bring the present administration basically to its knees, to bargain with the Republicans, when in fact, the legal precedent was there, that they could have done something far more beneficial. With that in mind, the job guarantee is part of that.

So when the government spends money, at least the kind of money that we use through the Fed system, there is that debt limit once again. And so the job guarantee payments and that structure, even though it would be an automatic stabilizer, would it not fall under the purview of “we can’t pay it if we default on our debt, if we don’t pass a continuing resolution?”

Would that be something that would fall apart in that case? Is that yet again, another reason to get rid of the debt ceiling?

[00:20:32] Tcherneva: Sure. Just like any other program, the job guarantee, if we had one, would be in some jeopardy from these negotiations. It’s not in any way different than, let’s say social security or unemployment insurance. So if we had another entitlement, then the funding will fluctuate automatically, and we’ve seen large scale employment programs around the world.

For example, the program in India, which is again an entitlement, it’s very significant. It provides employment to 25 to 35% of rural households on any given year. It’s demand driven. It’s very interesting, and a conservative government is trying to basically destroy it, by reducing or delaying the expenditures, but still it is written into law and it can’t be taken away, and it creates policy space around which workers can organize and extract demands. In the pandemic, workers were asking for doubling of the employment allocation. They’re entitled to a hundred days of work, they were demanding 200 days of work, because the a hundred days of work were used up in the first half of the year. Youth are now organizing around it. Urban employment could be addressed through this program.

So these things are never panaceas. You really need to work hard on implementing them well and fighting for them. Just as we have been fighting for social security since its inception. But it is a different kind of structural policy that will not be eliminated that easily, just because of debt negotiations. I think you’re quite right.

That is just silly conversation. It is absurd. It’s been weaponized in the last few political cycles, and it just needs to stop. So we need to either eliminate it or the Biden administration does need to embrace a very bold solution, let’s say like “the coin”, to establish a precedent. That can then be used in the future.

[00:22:39] Grumbine: The Fed interest rate policy in terms of targeting unemployment. This is the stated objective. If I’ve read my literature correctly, the goal of this is to bring about a slowdown in employment. Larry Summers loudly said, we need to lay off 10 million people. It was profoundly absurd. So there’s a battle there.

An ideological battle, I would imagine an academic school of thought battle as well. What constitutes a healthy economy and the neoliberal arrangement approach to unemployment and to building price stability? The idea of laying people off. I haven’t seen any indication that they’re gonna stop raising rates.

What is the impact on unemployment? And by giving full employment, would that not say that we have another fight that we have to determine, and that is the role of interest rates on employment, and full employment. I don’t think that debate has really been had publicly, not in a way that puts it to bed.

What are your thoughts on that?

[00:23:47] Tcherneva: Yeah, I think here the problem lies with the economists. Again, I think that there has been a lot of discussion on why the NAIRU is a inappropriate policy guide. There has been a lot of criticism on using unemployment to fight inflation. There has been even some concession on the Fed side, that unemployment, we don’t really know what the NAIRU level is, that even today, unemployment is not the source of price increases.

But the fundamental problem remains that full employment is defined as this mythical NAIRU and economists continue to search for that level of unemployment that will bring price stability. So not only does the Bureau of Labor statistics define full employment consistent with some sort of NAIRU. The Fed is also explicitly stating that it has to reduce credit conditions, which means that it needs to slow down employment or decrease employment to fight inflation, even if inflation does not emerge from the labor market. And those who are criticizing this approach have not credibly offered an alternative.

The only alternative is the job guarantee. Because even folks who say, okay, well we don’t believe that there is a clear relationship between inflation and unemployment., there is this idea that we need to just keep pushing the labor market and make it hotter and hotter. And that might come with some inflation increases, but it still surrenders the territory because a hot labor market, actually could generate inflation or wage pressures in certain sectors.

What the job guarantee does is it creates employment in areas where there’s low employment, that the program itself creates tighter labor market without putting pressure on industries and sectors that are already at capacity. Without directing stimulus to sectors of the economy that are already overheating.

Do you see the conventional approach of stimulus and making the labor market hotter relies on actually working through the traditional mechanisms. You just let the private sector just generate the employment opportunities, so if you direct stimulus to those sectors, then you will see employment conditions and wage increases in those sectors. So what we wanna do is actually target our expenditure better. So the job guarantee to me is the clear alternative that can secure full employment without introducing inflationary pressures. And it is always there, that whatever circumstance the economy faces, we have some kind of employment support.

Now inflation can be tackled with various other tools. But the mainstream continues to believe that unemployment is the way to go. No matter how progressive you might be, no matter how much you might reject the NAIRU, without a job guarantee, you would tacitly accept this paradigm that unemployment will be a stylized fact of this economy.

[00:27:22] Intermission: You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube, and follow us on TikTok, Twitter, Twitch, Rokfin, and Instagram.

[00:28:14] Grumbine: It brings me to another question about this. And I really love something you have been saying a lot, and I’ve heard it for years and I didn’t really zero in quite as clearly as I think we maybe need to. You said it earlier, and that is when we’re looking at the economy, if we just look at the whole picture, it’s easy to lose sight of where the pain is.

How do you look at the economy beyond the big GDP aggregate? How do you look down at these lower levels and target these plans?

[00:28:50] Tcherneva: Yeah.

[00:28:51] Grumbine: What is your lens that you use for that?

[00:28:55] Tcherneva: Yeah. Two parts to this question. The first is, I’m really interested in who are the people who need employment. Who are the people we are not capturing with these national statistics? And if we are looking at just the expanded definition of unemployment, we’re gonna miss a whole lot of people. My colleague at the Economic Democracy Initiative Research Associate Kyle Moore, does this work very well.

He’s studying flows, he’s looking at labor flows, and finds that 70% of people who find employment in a given month, come outside of the labor force. 70%. So they are not even captured in the expanded definition statistics. And that is a significant number. There is a whole lot of pent up demand out there for jobs, for employment, that we are not really able to assess.

So for me, whatever unemployment rate expanded definition we have is basically perhaps the lowest bound. The next thing is, why are people leaving the labor force? This is something that I think it’s useful to take a look at. Men have been exiting the labor force throughout the entire post-war era, and that is true for all demographics, except 65 and older.

So our labor market doesn’t seem to be creating enough employment for all. And we do know that those who exit the labor force, tend to be lower education, and they tend to be also African American. So we have these labor market problems that we see in the data in terms of precarious employment, last and first out, we can also see them in the group that is exiting the labor market.

So you could hypothesize that economic insecurity is pushing people outside of the labor force. Now, the labor force used to increase because women used to enter in great numbers, but that has flatlined as well. Women are not entering the labor force as they did in the past. The only category, the only group that seems to be increasing their labor force participation is again, 65 and older.

Why are elderly folks coming in to look for jobs? What is it about our safety net that is incentivizing people to come into the workplace? So the way I tend to think about the job creators is, first, who is the economy creating employment opportunities for, are they good employment opportunities? Are they employment opportunities that allow people to support themselves and their families?

And if care burdens are pushing people outside of the labor force, then that means that we need to be doing something about the care burden to alleviate it. Does it mean that our safety net is weak and doesn’t provide enough income support in retirement? Yes, it seems to be indicating the fact that 65 and older are entering in increasing numbers means that there is some economic need for market income.

So that seems to be totally upside down for me. And then when you look at folks who are outside of the labor force, those who are not active, we find that the reason why they’re not in the labor market, apart from home responsibilities, is because they’re ill or disabled. And if you look at it over time, we find a greater and greater proportion of folks who were outside of the labor force who are ill or disabled.

So you see, there’s something going on there. That disability for me is not necessarily only a marker of health, but actually it’s a marker of also economic insecurity. That people are tapping in, sometimes disability, because they don’t have access to other income opportunity. That proportion of people has been increasing over time.

So there are a lot of interesting dynamics. The current expansion shows that people who are employed with disability, that rate has recovered robustly. So it doesn’t mean that people with disabilities actually don’t want work or cannot work, it probably means that there are not enough opportunities for them to work.

So there are a lot of dynamics out there behind the curtain, so to speak, in terms of who needs jobs. How do we make sure the jobs fit the worker, the needs of the family, to be able to accommodate that demand? And then on the other side, you wanna ask yourself, well, who are the job creators and where are those employment opportunities created.

And so we can break this down and we can talk about the granular detail, but this is a largely service economy. We do have some industries that are large employers, and some industries that are shrinking, it’s a kind of irreversible decline. And so while so much of our attention is, let’s just stimulate manufacturing, let’s just stimulate information services, actually those two industries have been declining for the last 20 years.

So they can’t be the source of employment growth. The job creators in the economy are typically health services, private education, you have also government. So let me just close how I think about this with just one other little tidbit. The three biggest employers in the economy are private education and health services, professional business services and government.

Each employs about 15% of the labor force. Now, when you consider that the government provides enormous amounts of subsidies to the healthcare sector, to various other industries. You could, in a sense, ask the question: would these industries be sustainable had the government support not been there? Will those industries be able to maintain the level of employment that they currently have if they did not have the very large public sector support that they’re getting?

You can ask the same of financial activities, technology, transportation, farming, agriculture. The public sector is a very significant structural support to the economy, and in a way, I tend to think of it as, there is a whole lot of private sector employment out there that is very much dependent on the government subsidy, on the procurement, on the investment subsidies, on the tax benefits and the like.

And so from there you can ask yourself, well, why can’t the government do just a bit more, just a little extra to finish the job, if you will, and make sure that we have provided employment for all, for those who are not able to find employment in these various traditionally growing sectors. There is a very strong argument to be made, if the public sector already supports a good chunk of private sector employment, it certainly is in its right to implement a public employment program to secure the floor and to deliver all the benefits that we’ve discussed about the job guarantee.

[00:36:29] Grumbine: Absolutely. I think you brought up some really important points, especially about the public-private element. And one of the big “aha” moments that I’ve had in this journey, I worked in sales and so we would bid on government contracts and whenever the government puts those contracts out, companies bid on them and they’ve gotta have workers to do them.

But that again, is government creating jobs. Even though there’s a private entity on the end hiring, it wouldn’t exist, if the government didn’t put the contract out there, there would be no opportunity. And so, ideologically speaking, there is a tremendous lack of knowledge of where money comes into the economy and how it even gets there.

I think MMT does a phenomenal job of explaining the government spends it into existence. Spends it through these private sector businesses, many of which most of these people work for. Republicans in general work for these companies, and they receive a check that has been subsidized by the federal government every week.

And so the idea that we should cut federal spending and the elevation of the private sector as the job creators, while they certainly take the monies that come from the federal government and create jobs, I think that that point is lost. And so as you are asking for the government to do just a little bit more, it seems like there are a lot of people that keep us from seeing that as even a possibility.

Part of it is ideological, but a lot of it I can read newspapers or other mainstream media and I would never pick up from these articles that the government could in fact do that. For you as an academic and as a practitioner, what are the key blockers from getting some of these points across? What are your thoughts?

[00:38:26] Tcherneva: Well, one thing that is probably useful to say, and the average economist really should know this, but the fact that we have fundamentally restructured the economy in the post-war era, that prior to the Great Depression, the norm was major booms and busts, the industrial collapses, financial crises, and huge volatility.

Depressions were the norm. I think that was one thing that many people have forgotten. And sometimes, even economists who do not favor automatic stabilizers, I am always puzzled by their lack of look back at history, because this is really fundamental. Government prior to the Great Depression was anywhere between 2 and 7% of the economy.

It is just not technically possible to stabilize an unstable economy, and as the industrial economy was growing, as there were massive waves of investment and collapses, those were moments out of Charles Dickens novels, of mass unemployment and mass poverty. The public sector couldn’t do much. Bankers relied or hoped that J. P. Morgan would come and rescue them.

We have a fundamentally different economy today, as a consequence of rethinking the role of the public sector and rethinking the safety net. The 30s were transformative for the global north countries because in the global south, many countries don’t benefit from the same kind of institutional support that our governments provide, in the form of welfare support and large scale procurement.

So those are two pieces of the puzzle. Not only did we rethink what a job might look like: It should be a job that gives you day of rest. It should be a job that has a nine to five schedule. It should not be worked by young children. We had all of these conversations. We put in place laws and policies, and that created a more robust economy.

We put in place social security and essentially wiped out the vast majority of elderly poverty. So you see these were transformative and it’s very important for folks to understand what a solid foundation they provided for the economy and why we don’t see depressions anymore. But at the same time, the pain today is real.

People are seeing generation after generation, that they might not be able to have a home, that they might not be able to send their kids to very expensive education. So just because we don’t see breadlines and we don’t see depressions, doesn’t mean that there isn’t some very real economic uncertainty that people are living through.

And for me, that is perhaps the determinant factor in explaining, well, the rise of neoliberalism, the consolidation to illiberalism, the rise of, if you will, more authoritarian tendencies at the political level. That there are still important economic fundamentals that drive these political forces. And so while we have, with government, created a more stable economy, we did not put in place all the measures that will eradicate economic uncertainty, substantively.

And so we still experience issues with housing. We still have homelessness. We still have poverty, which is higher than it should be for an OECD developed country. We still have precarious employment conditions. And healthcare and education are more and more difficult to secure. These are the fundamentals, and if policy were to have a moment to rethink one more time, the structure of support that the public sector provides, to focus on issues of economic insecurity, I think we will move forward.

But so long as government tends to throw various contracts to select industries in hope that they will deliver jobs and economic certainty, I don’t think that that will be wholly successful. And as you know, we continue to do this with manufacturing and information services, as I said, those are not employers.

They will never be the engines of employment growth. While they may be important for other reasons, they cannot be counted on for employment generation. So we really need to be thinking in a new way about how we spend our resources. Not so much on how much.

[00:43:14] Grumbine: I love it. I want to pivot now. You’ve brought up the global south several times and geopolitics. Not just geopolitics, but geoeconomics. So I’ve talked with Fadhel and Jason Hickel and other economists from around the world. It’s really shined a light on how US policy has generated so much poverty in the global south through the IMF and structural adjustments. The work of in Ndongo Samba Sylla and others, working very hard to bring about full employment policies throughout Africa as well.

And I see a lot of the same problems in South America. A lot of really bad economic conditions, much of it brought on by foreign interference, namely through the US arm. How might a job guarantee in a developing nation come to be? You had Jefas y Jefes [de Hogar] in Argentina. You brought up India. I’ve even heard some stuff about France here recently.

I know France is not the global South, but in terms of larger world, not US focused,

[00:44:24] Tcherneva: Yeah.

[00:44:25] Grumbine: how might a job guarantee work in those areas?

[00:44:29] Tcherneva: Well, I would urge people to read Ndongo’s latest paper that he produced for us at the Economic Democracy Initiative. So if people go to edi.bard.edu, he has a paper For a Full and Decent Employment In Africa: The Role of a Job Guarantee and his basic starting point is one that I had made in earlier papers, that job creation should not be an outcome or derivative of growth.

It shouldn’t be an outcome of development. We need to think about strategies that are employment led, that we go through the direct employment approach to deliver the growth or development outcomes that we seek. And that is a significant shift of strategy and thinking about the problem. But I think it is much more sustainable because you are addressing at the heart the primary issue of economic insecurity, and that is the absence of stable employment.

What Ndongo also very well articulates in this paper, is how dependent people are in the global south, who are outside of formal employment relationships, how dependent they are on the few that have formal employment relationships. Paid employment is absolutely critical. I often hear this argument that, well, a job guarantee cannot really work in the global South because there’s just so much informal employment, and the scale of the issue is so significant that it just cannot work.

Well, the reality is that it is precisely because there are informal employment arrangements why the job guarantee is so essential. Because it provides that network, that infrastructure, that supports large swaths of the population. And it is precisely large global south countries that have experimented with large scale employment programs.

And you can learn so much from all of these experiments. Let me just as an example, give you South Africa’s two experiments. There was one program that was expanded Public Works employment program, and that was implemented in the early 2000s with significant success. It was direct employment program in infrastructure projects, and it was reauthorized. In the Covid Pandemic, the presidency issued unemployment stimulus program.

Which wasn’t so much public works, but it resembled much more the job guarantee as we think of it, as a multi-pronged strategy to provide employment support in various sectors of the economy, from education to the healthcare sector, to farming, to social services, community projects, and it was really fascinating.

This employment stimulus program was designed with the needs of the community and the person in mind, and they were able to meet their gender quotas, youth quotas, because they wanted those to be equitable, that they’re targeted in such a way that those who need the employment most will benefit from it.

And the employment stimulus program was able to do that. The public works project had some difficulty in this area, because the public works project were looking for specific skills for people who were trained in particular areas, and they were not actually targeted to the communities, and so they actually had, in some cases, trouble staffing the projects.

So you see how you think about the direct employment approach matters very much, and it will be very much context specific. I can give you another example of Ethiopia where the direct employment is connected to food security. Huge famines, floods, there’s a big problem with hunger, but the employment piece, they chose to marry with their strategy for hunger alleviation.

So people now have both employment support and food support, and sometimes it comes in kind with food if there are floods, et cetera. But there is an employment piece that holds those communities together. So, I think that there’s just so much that we could learn from these countries that are experimenting with the direct employment approach.

Much of our conversations that I have had on the job guarantee has been so abstract and esoteric, and can we do it, can we not do it, do we have the capacity? And time and again, you’ll look at implementation, whether it’s the New Deal in the US, whether it is, you know, South African projects or India.

There are good practices that we could learn from in terms of implementation. I’m very interested in the developments in Europe. I’ve been working with colleagues there on building a job guarantee coalition for Europe, because France has a significant experiment. France has the so-called zero long-term unemployment areas that were entirely launched and built by the solidarity economy.

They were put in place on volunteer basis. And those volunteers eventually were able to pass a law in France to institutionalize these and to obtain federal or national funding for these programs. And a couple of years ago, 10 experimentation areas were expanded to 50 experimentation areas. And it’s very interesting to see how they’re creating jobs on the ground and how they’re targeting the needs of the unemployed in communities, in a developed context. And again, these solidarity networks are still essential for running the projects, for providing employment, and they are transformative. And their principle idea is that no one is unemployed, that there’s plenty of funding to provide the jobs, and that there is plenty of work to be done. So around this project, we’re trying to work on proposals.

We have a piece with a MP from the European Parliament on a job guarantee for Europe, and there are some legislative action there, so it’s something to pay attention to it. Hopefully there’ll be other developments.

[00:50:41] Grumbine: That’s fantastic. I do wanna ask you, I remember a few years back when there was a couple politicians getting ready to run for president, I think Corey Booker was one. They had a trial job guarantee, we’ll throw it out there in some random community and see if it works. And the power of the job guarantee is not just in terms of providing people jobs, it’s also in the funding mechanism, the most important aspect of it, because it’s, like you said, depoliticized, it’s an automatic stabilizer now.

But, a lot of folks just simply do not understand the difference between a local community budget, or a state government ,or a federal government, in terms of the ability to enact automatic stabilizers at scale, and in perpetuity. And it seems like the concept, the currency issuer/ currency user dynamic, plays a tremendously important role here.

A lot of the pilots I heard about in the US, they were gonna fund them with local and state budgets, and clearly that’s just not the proper way to do it. But in Europe, with the ECB and the Eurozone, how would the funding mechanism work for a job guarantee in Europe overall?

[00:51:55] Tcherneva: They have the same kind of challenges. So for example, there’s a similar program in Belgium, and the program is funded through local budgets. What that actually does is it creates a savings, so to speak, on unemployment insurance. The federal government does not have to provide unemployment insurance for those who have taken up those employment opportunities.

And if you know, in Belgium, that support is very generous. Again, these programs are voluntary. I really wanna emphasize this, like nobody’s asked to take a job. They’re open door policies and people choose to take the job and give up the unemployment insurance, but it’s an issue because then the locality is funding this program.

But it’s not getting the kind of federal transfer that they really should be getting from the savings on unemployment insurance. Again, they’re in the Eurozone, so is France. Now, what they’re saying is that, essentially, unemployment is very expensive, that governments already dedicate enormous resources to fight unemployment.

And we are not just talking about unemployment insurance, but we are talking about all the other issues. With housing issues, with subsidies, with youth programs that you have to train, and the various public health expenditures. If you were to tally up all the resources that we are dedicating today to unemployment, actually giving somebody a job is a better proposition.

So in the Eurozone, there isn’t this federal funding mechanism, although Aurora and I have proposed various ways in which if a European job guarantee were implemented, that it can be funded at the Euro level, and then that will be a net contribution to the countries that are then implementing the programs locally.

And you could envision how this could become a policy for social and economic integration, and even some kind of fiscal support to mimic an automatic stabilizer, if it were open-ended, and would then increase with periods of need. So it is true that if we have federal funding, and it’s open-ended, it will be far superior than the alternatives.

But it is also true that today, every country, every government, spends money on fighting poverty and unemployment, and these are unnecessary costs. And we simply can redirect our resources and do things better.

[00:54:35] Grumbine: That’s very good. Let me close out with asking you, I probably didn’t ask you questions that I would’ve liked to have asked you, but more importantly, that you’d probably like to be asked. If you had your druthers, what would be the one question you would’ve liked me to ask that you can answer as we close this out?

[00:54:53] Tcherneva: Let me just take the moment to say that I have been collaborating with colleagues in Europe, and specifically from the Democratizing Work Initiative, and those collaborations have been very fruitful, very encouraging. We are now a group of academics that come from different disciplines who are organizing around the democratizing work principles, and those principles very broadly extend to all forms of work. We are rethinking what democratic work would be. And that would include democratizing the firm in private settings, providing not just more representation of workers in the workplace, but providing them with a governance role in places of work, how they can influence decision making. So, That’s one of the pillars of our work.

The second pillar is decommodifying work, decommodifying labor. The idea here being is that so long as employment is only offered for monetary return and not for social need, then we will always have unmet needs and many people who are unemployed.

And if we are to decommodify, we can begin to think more broadly about creating employment, socially useful employment, and redefine the meaning of work along the lines of the job guarantee. And then the last piece of our work is on decarbonizing the planet,, that these transformative policies in the workplace really need to assist that other major goal, existential goal for us. And that is to address the climate issues and create a more livable environment for us all.

So that work has been very exciting, encouraging. I urge people to pay attention to our monthly seminars because we’ve been looking at more recently, job guarantee experiments, proposals, but we are talking about great many issues from unions to various form of participatory democracy in the workplace. I think that the themes are very closely related to our work on the job guarantee here.

And I’m also very excited that there is a UN report on the job guarantee that will be coming up later this month. And I have worked with the UN Rapporteur on extreme poverty and human rights, Olivier De Schutter providing feedback on the report. And this is very encouraging that there is now more work at the international level and let’s just see where that goes.

[00:57:27] Grumbine: That’s awesome and I would love to pick your brain about new voices to elevate and get their work out there, because that’s what we’re all about here.

[00:57:35] Tcherneva: Happily.

[00:57:36] Grumbine: Thank you so much for your time.

[00:57:39] Tcherneva: It’s been a couple of years, but it’s really good to be back and I’m happy to bring to your audience a great many scholars that are doing fantastic work on democratizing work and so much more.

[00:57:52] Grumbine: Thank you so much, Pavlina. This is Steve Grumbine with Macro N Cheese, my guest, Pavlina Tcherneva. With that, we are outta here.

[00:58:07] End Credits: Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Andy Kennedy. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.