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OPINION | The dangerous fantasy of a ‘jobs guarantee’

FORGET for a moment about “Medicare for All.” A proposal is gaining steam on the left that would overhaul the U.S. economy in a far more radical way.

Known as a federal job guarantee, the plan would require the government to provide work on demand to any American at a minimum of about $12 an hour plus full benefits.

Three senators and rumored 2020 presidential candidates, Kirsten Gillibrand, Cory Booker and Bernie Sanders, have publicly supported the idea. Their visions for the program vary, but the fundamentals of a job guarantee were fleshed out most fully in a proposal released in March by the Center on Budget and Policy Priorities. I sized up that plan in a critical study last month, which had two major findings: The sky-high cost alone makes the job guarantee a bad idea, and the changes it would force on the labor market are an even greater danger.

The plan’s authors estimate an annual price tag of about $543 billion. Defense is the only discretionary federal expense comparable in size, at about $639 billion last year. Some funding for the job program would be offset by cuts to other government programs. But there’s good reason to believe the authors significantly underestimate the number of participants it would draw, a major component of its cost.

The proposal estimates that about 11 million people would opt into the job guarantee. That would already be several times as large as the world’s next largest employers, such as Walmart and the U.S. and Chinese militaries. But it could get a lot bigger. The authors assume virtually nobody currently employed would leave his job and join the program. That seems unlikely, given that 41 million workers currently earn less than the program’s $11.83 minimum wage. They also base their projections on today’s historically low unemployment rate. A future recession would send displaced workers fleeing to government jobs for relief.

Beyond its cost, the job guarantee would turn the fundamental logic of work on its head. Generally, people work for employers, whether private organizations or government agencies, because employees add enough value to sustain their wages and still benefit the employer. Under a job guarantee, creating value is an afterthought. The program’s potential is limited further by additional rules the authors propose, such as barring competition with existing private or public jobs and requiring that the positions be low-skilled.

Finding enough work for more than 10 million people would be a herculean task. The authors have a kind imagination: Among their ideas are caring for children and the elderly, clearing vacant lots and building community theaters. But they make no attempt to show how or even if the work could be assigned. The proposal suggests that these decisions should be made at the local level, which begs the question.

Suppose you are mayor of a city of 300,000 people. The federal government has asked you to assign 9,000 people to low-skilled jobs that don’t overlap with work your government and businesses already do. That number would likely double in a recession. It would take every department in city hall to keep the enrollees matched with productive work. The predicament recalls the 1985 comedy “Brewster’s Millions,” in which Richard Pryor’s character must spend millions of dollars as quickly as possible without regard for the value of what he buys. People’s labor, which usually has considerable value, would become a burden on those expected to employ them.

The program’s administration, virtually ignored by the authors, would present numerous opportunities for corruption, such as businesses bribing officials for free labor. Monitoring such a colossal program would be difficult and expensive. Companies also would seek to influence the program’s public works. A big-box retail chain, for instance, might want a community to prioritize the clearing of a vacant lot next to one of its stores.

The federal job guarantee would do even greater harm to the overall labor market. Temporarily unemployed workers, along with millions of low-paid workers, would be diverted into a complex bureaucracy with no mechanism or incentive to put the workers’ skills and time to their best use. This could greatly weaken the productivity of the overall economy, leading to a decline in output and further job losses.

Public policy should aim at helping unemployed people in ways that strengthen their potential, rather than making them lifelong dependents. For a fraction of a job guarantee’s cost, public and private programs could help people develop new skills to bring to the job market.

A federal job guarantee would cost more in its first two years than the entire New Deal, in today’s dollars. Americans can do far better by our struggling neighbors without ripping up the fabric of America’s economy.

Mr. Gulker is a senior research fellow at the American Institute for Economic Research.