Modern Monetary Theory; Part Two Government Job Guarantee

A fundamental part of MMT is a Government Job Guarantee. Basically this is a commitment for the government to act as employer of last resort at minimum wage. Everybody who wants a job up to 40 hours a week can get one regardless of circumstances. It removes all involuntary unemployment and underemployment. If you have 10 hours a week in the private sector but need 40 hours to pay your bills, rather than rely on welfare you can top up your hours with the government. Just got out of prison and can’t find a job? Got you covered. Patchy work history due to any manner of reasons including physical and mental health? Got you covered. Just out of school or university but no work experience? Got you covered. Over 50? Got you covered. Boss bullying you and feel trapped? Got you covered. Basically Work and Income centres would become job matching centres, matching your skills, experience, location & circumstances (eg children, disability) to whatever job programme was the best match for as long as you needed it. Could be a few weeks until you find better pay and prospects in the private sector, or a lifetime if your physical or mental health circumstances make it unlikely you will be ever employed by a private employer.

What the Government Job Guarantee is not is the promise of a lifetime government job with career progression. The government will never pay you more than minimum wage yet it is not work for benefits. Even if you are there for decades you are still effectively “buffer stock”, technically able to swing between the government and private sector as the economy waxes and wanes.  You may gain experience and skills that allow you to move into a “Tier One” government position with promotion prospects. And you will receive all the sick leave and holiday entitlements of other government employees but it is not a permanent expansion of the state sector workforce. There could be the potential for a whole range of “Tier Two” positions in government departments, State Owned Enterprises and Crown Research Units. Graduates paid the minimum wage but getting valuable experience until they land either a Tier One position or a job in the private sector. Better than unpaid internships or the stress of an indeterminate period of unemployment.

What it does is put a floor under the job market in terms of pay and conditions. Private employers, especially minimum wage industries, have to up their game and offer a better combination of pay, conditions and prospects. Bad employers will be abandoned and go out of business. Jobs that are physically onerous or dangerous but currently pay poorly will have to offer better pay/conditions to be filled. There will be no requirement that you relocate in search of work. You will be matched to a local need.  A full time job, even if it is at minimum wage, becomes a basic right. A backstop that no matter what, you wont be forced into absolute poverty.

What the Government Job Guarantee also does is dispense with the neoliberal concept of NAIRU (Non Accelerating Inflation Rate of Unemployment) that performs a little known but important role in orthodox economic policy. It is the opposite of the Job Guarantee. Instead of paying buffer stock labour a minimum wage up to 40 hours a week, NAIRU demands that a certain percentage of the workforce are kept unemployed, as official policy, to keep downward pressure on wages, especially at the low end of the spectrum. Unemployment is used as an official economic and political tool to keep 4-5% desperate for work and another 10% precarious enough they don’t rock the boat too much, don’t ask for better pay or conditions unless they are let go. It is regressive and cynical.

In New Zealand what form might this Government Job Guarantee take? There are any number of jobs that might be undertaken. The current government has an ambitious target for planting trees. Thousands could work in their local area around the country planting and growing seedlings. Or working with the farming sector to fence and riparian plant waterways. Building “kitset” low income housing including on Maori land. Many towns and settlements have poor water & sewerage systems. Pest eradication. Civic beautification. Musical and cultural performance. Teacher aides. Nursing aides. Overseas aid projects. Community journalism and public TV…..

Again there is historical precedent in New Zealand. State departments like Railways, Ministry of Works and Post Office used to unofficially act both as employers of last resort but also as providers of essential services outside the market. Yes they were economically “inefficient” in today’s current orthodox sense but they performed a vital employment function in small towns all around New Zealand and built a lot of its core infrastructure. And what could be more inefficient and cruel than keeping hundreds of thousands on the scrap heap or a state of desperation?

Here is a link to one of the most vociferous Job Guarantee proponents in the US, Pavlina Tcherneva



  1. […] land below open market rates and the government will fund the house. This could be enhanced by a Job Guarantee, whereby those who want to move back to their Iwi area can do so knowing they will have a local job […]

  2. […] Job Guarantee involves the Government paying a minimum wage to anyone, for any reason, for up to 40 hours pw, in […]

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