Congress' failure to extend the stimulus reveals a broken safety net, but a jobs guarantee could wipe out unemployment for good

• Pavlina Tcherneva, a Bard professor and one of the economists pioneering research into Modern Monetary Theory, said federally guaranteed jobs may address poverty and help communities better than universal basic incomes.
• The coronavirus pandemic wiped out millions of jobs, and one report estimated that 17.6 million unemployed Americans may not return to their pre-pandemic jobs.
• Tcherneva said guaranteeing a public service job could lead to improvements on community-wide issues like public health and access to food — while eradicating unemployment completely.
• Unemployment is still in double digits, and congress failed to extend expanded aid in late July.

After the coronavirus pandemic has wiped out millions of jobs and left many Americans unable to pay their bills, policy makers have advocated for giving citizens a universal basic income that would lessen inequality.

But simply giving Americans money may not solve every problem. The real solution to pervasive inequality might be guaranteeing every citizen has a job to go to, argues economist Pavlina Tcherneva. It's an especially pressing matter as congress failed to extend the expanded unemployment benefits that have kept the economy afloat amid the pandemic while unemployment is still in double digits.

Tcherneva is a leading researcher on monetary policy and one of several economists who have advocated variations on "Modern Monetary Theory" in the early 21st century. This school of thought is related to "post-Keynesianism," and advocates much bigger government spending than even the great economist John Maynard Keynes proposed during the Great Depression.

Tcherneva, an associate professor of economics at Bard College and a researcher at the Levy Economic Institute, recently authored a new book, "The Case for a Job Guarantee." In it, she argued that addressing poverty and destitution is a multifaceted problem, and that a jobs guarantee comes closer to solving it than UBI.

While automation will kill some jobs, a popular argument Silicon Valley elites give when advocating for UBI, giving citizens cash doesn't necessarily address all problems related to wellbeing if they still live in a polluted community or a food desert.

Federally guaranteed jobs solves two problems at once: communities would be able to hire for jobs that specifically address their needs and unemployment would no longer exist.

"The vision that I'm questioning that we are helpless in the face of technological change," Tcherneva said in an interview with Business Insider. "There would be automation, and we can still create good employment opportunities for people who need them."

Tcherneva says we shouldn't just reduce unemployment — we should eradicate it completely

In her book, Tcherneva said that economists should focus on ways to eradicate joblessness altogether, instead of assuming there will always be a "natural" rate of unemployment. In the US, the Federal Reserve accepts the "natural rate of unemployment," accounting for workers changing jobs or leaving the job market, to be about 4%.

But any amount of unemployment can devastate a family or a community, Tcherneva said. An increase in a neighborhood's unemployment rate by 10% leads to a 1.5-year loss in life expectancy, per the AP. The Urban Institute think tank finds that communities with a higher share of long-term unemployed workers have higher rates of crime and violence. Various studies indicate that children of unemployed people tend to preform worse in school.

"We don't talk about a natural rate of homelessness," Tcherneva said. "We don't say that there is some optimal level of homelessness at which the economy would be prosperous. What we attempt to do is eradicate homelessness."

Tcherneva said that while many job creation programs exist, few localities have yet to experiment with federally guaranteed employment. India launched a small-scale job guarantee program for rural workers hit by the coronavirus pandemic, which led the unemployment rate to fall to 7.26%, actually lower than before the country went on lockdown.

In the US, Tcherneva said program funding for federally guaranteed jobs could come from the money allocated toward county unemployment offices. Instead of dedicating money to skills retraining programs or resume building, these offices could create and offer a public service job within the community.

Tcherneva said her biggest worry after the pandemic will be "normalized" unemployment. CNBC reports that 17.6 million unemployed Americans may not return to their pre-pandemic jobs, citing a study by the Economic Policy Institute. Some recruiting experts predict that previously full-time workers may shift to the gig economy.

As private-sector jobs get wiped out, guaranteed public jobs could put an end to a flawed system.

"Even the experiments which show that people do better with cash show that people don't stop looking for work," Tcherneva said. But after the pandemic, many jobseekers won't be able to find a job if they aren't guaranteed one — resulting in a "cruel game of musical chairs," as Tcherneva describes, that happens when people are competing for fewer and fewer jobs.