Apr 28 JDN 2458602
In previous posts I have talked about the “easy parts” of the Green New Deal (infrastructure, healthcare and education), as well as one of the “hard parts” (net-zero carbon emissions). But today it’s time for the “very hard parts”: guaranteed employment and housing.
“Guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.”
“Providing all people of the United States with – […] (ii) affordable, safe, and adequate housing; (iii) economic security; […].
- Let me start by giving you a sense of how difficult this is: No country on Earth has ever successfully guaranteed employment and housing. Even Scandinavia’s extensive social safety nets and active labor market programs are not sufficient to eliminate homelessness or unemployment (though they do dramatically reduce them).
- The Soviet Union came close to guaranteed employment, but only as part of a labor system that was extremely inefficient and unproductive. Effectively, they guaranteed everyone a job by not even firing people who didn’t actually do the jobs they were given. This is clearly not a sustainable solution.
- There are serious proposals on the table for a job guarantee program, but they are extremely ambitious.
- The Center on Budget and Policy Priorities has a proposal that would add 9.7 million people to the federal workforce and cost over $500 billion per year to operate. For comparison, the current non-postal federal workforce is only 2.1 million. The postal service has about another 600,000. So we are talking about quintupling the federal workforce, at a cost comparable to the entire (bloated) military budget. That’s a huge number of people and a lot of money.
- The basic idea of such a program is that we can (hopefully) find various forms of public service that need to be done, and pay people to do that public service at a certain minimum level of pay and benefits. These jobs would be available to anyone who wanted them, and any time you lost a private-sector job you could always take the guaranteed job. This would effectively create a floor on wages and benefits; any job that offered a worse deal than the government job would be competed out of existence.
- I’ve written before about why I’m skeptical of such programs. If there is all this work that needs done, why aren’t we already doing it? If people have the skills they need to do this work, why is no one currently employing them?
- Maybe there is a way to solve these problems. Maybe I’m underestimating the public goods that could be produced by people with low levels of skill. But at the very least we need to face up to the fact that it is a problem. We need to actually find work that it makes sense to guarantee—we can’t just wave our hands and say that “obviously” there is plenty of valuable work to be done that will happen to line up exactly with the skills of the people who are currently unemployed.
- And then we need to think about the fact that we can’t really guarantee it, not the way the Soviet Union did. We do need to be able to fire people. We need to be able to fire them for not showing up to work, for being drunk at work, for sexually harassing co-workers, or simply for being incompetent. We need to be have some sort of policy in place for what happens to people who get fired: How long before they can get another guaranteed job? And being fired should hurt: It’s supposed to be an incentive to do your job correctly. We don’t need to punish laziness or incompetence with homelessness—but we do need to punish it with something.
- Ultimately what I would like to see is not guaranteed jobs but guaranteed income: A basic income that everyone gets, no questions asked. And then I would hope that our norms about work would change, and people would stop defining themselves by their paid employment and start defining themselves by other things, like creating art, supporting their family, or contributing to their community.
- What about guaranteed housing? On that front I am more optimistic.
- Housing is quite expensive, particularly in major cities. But homelessness is also very expensive from a societal perspective. In the long run, free housing might actually pay for itself.
- One of the most successful programs at reducing homelessness is called Housing First. Rather than going through the usual machinations of shelters and transitional housing, the program just takes people off the streets and gives them homes. Like a basic income, it sounds ludicrously simple; it’s the sort of thing a five-year-old would suggest. Surely it can’t be that easy?
Well, the results speak for themselves. Implementation of Housing First programs in several major US cities has resulted in reductions in homeless of over 30% and reductions in the social cost of homelessness of over 50%.
The current population of about 80,000 chronically homeless Americans each cost taxpayers about $40,000 per year in social costs, via emergency room visits, shelter maintenance, crime, court costs, and so on. This is about $3 billion per year. For that same amount of money—or potentially even less—we could have put all those people into homes.
- There is an additional population of about 500,000 transient homeless—people who are homeless for a short period after an adverse life event (such as losing a job, having a divorce, or getting their mortgage foreclosed) but will find housing within a few weeks or months. Their situation is not as dire, and the costs they impose on society are not as large. But standard estimates are still generally over $10,000 per person per year—which, if given to them in cash, would probably be enough to get most of these people into homes.
- So this is not a question of affordability: We are already paying these costs, but doing so in a way that doesn’t actually solve homelessness.
- The real challenge is subtler than that: How do we make this fair and politically feasible?
- When we’re talking about chronically homelessness, I think we can make a pretty strong case: These people are in a really bad way and they need our help. Since we’re already spending all this money anyway, we may as well spend it in a way that would actually help them.
- But transient homelessness gets a bit more complicated. Many people who are transiently homeless are not all that poor. They may be college students, or recent divorcees, or failed entrepreneurs, or people who could afford a home but not the expensive home they actually tried to buy. Once they get back on their feet, they will probably go on to maintain a middle-class standard of living. So it really does seem unfair to just hand these people free homes that other people would not get.
- And making housing in general completely free is simply a pipe dream. No country has ever even gotten close to that. Housing is such a huge part of a country’s expenditures that even a country like Denmark where the government is half the economy still can’t afford to put everyone in public housing.
- I think what I would do instead is provide guaranteed subsidized loans—much as we do for student loans. These loans could be used to pay rent, to pay a mortgage, or even to make a down payment. They would be available to any adult US citizen, regardless of credit history, in relatively large amounts (the average down payment in the US is about $14,000, but as high as $50,000 is not unusual), at very low interest rates (I’d say aim for 0% real interest, so target the nominal interest rate to inflation) and very generous repayment terms (like student loans, you would never be required to pay more than a certain percentage of your adjusted gross income on the loan). If someone did try to avoid paying, their wages could be garnished or their taxes could be increased—this would make the default rates very low.
- This policy would allow people who are temporarily homeless to get back into a home immediately, rather than having to wait until they can get more income—which can become a paradox as most employers will require a permanent address. But it wouldn’t be a free home; this policy would cost taxpayers next to nothing. The only costs would come from subsidizing interest rates and bearing defaults, which wouldn’t be more than about 5% of the outstanding balance—even if we loaned out as much as $100 billion, that still wouldn’t be more than what we’re currently losing in social costs of homelessness.
- Had this policy been in place during the 2008 crash, people who lost their homes to foreclosure would have been able to immediately re-borrow and buy new homes. This would have blunted the financial crisis and maybe even done as much as the far more expensive stimulus package and quantitative easing programs.
- These policies would not, unfortunately, eliminate unemployment and homelessness. Maybe that’s not even possible. But they would at least greatly reduce the harm caused by unemployment and homelessness, and that alone makes them worth doing.