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The Job Guarantee and the MMT Core: Part Eight, The JG Rate

A little time out from my critiques of the various posts contending that the MMT Job Guarantee (JG) proposal is not the core of MMT as an approach. As I’ve argued in previous posts in this series, I very much think that it is, because I think it is the best means we know of right now to achieve the view of public purpose which is at heart of the prescriptive side of MMT in democracies. However, I think I’ve seen some disagreement among MMT proponents who think the JG is core to MMT, about the level at which the JG wage should be set in the US.

Everyone agrees on the accompanying benefits however, which would would be a full “standard” package, including Medicare or something like it for all JG participants. But when it comes to the wage level itself there’s now wide variation among some leading MMT practitioners.

Here’s Randy Wray, in an address he gave at a conference organized by Bill Mitchell in December, for example:

Rather, the best way to operate a money monopoly is to set the “price” and let the “quantity” float—just like the water monopolist does.

My favorite example is Bill’s buffer stock job guarantee program in which the national government offers to pay a basic wage and benefit package (say $15 per hour plus usual benefits), and then hires all who are ready and willing to work for that compensation.

And Pavlina Tcherneva says:

It is time for policy makers to take the Job Guarantee (JG) proposal seriously. Direct employment by government at living wages is the most immediate method for reducing the unemployment rate and keeping the jobless and their children out of poverty.

In another post, she says that a figure closer to a living wage than Warren Mosler’s preferred $8.00 per hour JG wage is $10.00 per hour, suggesting that her own notion of a “living wage” may well be on the order of $12.00 per hour, which she notionally suggested earlier.

Also, Bill Mitchell has advocated a JG wage sufficient to meet “a minimum acceptable living standard,” while I’ve seen other statements by Randy mentioning JG wages of $10 and $12.00 per hour.

However, Warren Mosler continues to hold to his position that the JG wage should be $8.00 per hour.

My own view, as a policy analyst, rather than a professional MMT economist, is that a $10.00 per hour JG wage with full fringe benefits is OK for the lowest cost areas in the US, but that the JG wage should be cost-adjusted by region, with the JG wage in New York City or other areas of comparable cost being about $24.00 per hour. I think that Warren prefers the $8.00 per hour rate because he proposes the JG in the context of State revenue sharing and a full payroll tax cut for employers and employees, and he fears that a more expansive JG wage rate could provide sudden demand and competition shocks to the private sector that might trigger inflation.

That’s a real concern. But in my view, it would be better to design a program that provided for automatic tax increases based on excessive increases in the CPI, while no longer postponing the day when a living wage in America is the same as the minimum wage, which in effect would be set by the JG wage. In my view, there is no place in the US where $8.00 per hour is a living wage. There are probably some places where one can probably live on $10 per hour, but in most places in the US a good deal more is needed, and in our most expensive cities, wages of $10 per hour are a cruel joke, not a living wage.

In any event, my main point in this post is to call attention to the disagreement among MMT adherents in their proposals about the appropriate JG level. Disagreements aren’t necessarily bad, but I think we ought to make clear to one another the differing judgments/assumptions/ trade-offs that account for the differences we see in the JG wage rates being proposed by various leaders in the MMT field. We also need some modeling and and to use whatever empirical data we can get to decide how far we can go in providing a “living wage” for JG workers, while also providing price stability, as the private sector begins to hire back people and JG employment shrinks to a relatively small level.

In proposing this, I’d like us to keep in mind the idea of “public purpose;” to ask ourselves what the major components of this notion are; and to also consider whether there are still conflicts among its various components. MMT suggests that Full Employment with Price Stability can both be achieved without conflict.

But, the question being raised by Warren’s post linked to above, is whether Full Employment at a living wage, is possible with price stability. Warren seems to be implicitly questioning this, and also implying that public purpose is better served by placing more weight on avoiding an unwelcome one-time price adjustment to a JG that is set at too high a level, than it is by avoiding a JG wage that isn’t really a living wage.

For my part, I think our private sector businesses need to pay more for labor and to have less profit. For far too many years they have taken advantage of a friendly political environment to keep wages down, and to pass most productivity gains to the top of increasingly steep income and wealth pyramids.

This has to stop, and a JG that pays a living wage is one way we can begin to stop it. So, my trade-off is to take the risk that the one-time price adjustment from too high a JG wage level won’t be near as important to people as the end of unemployment and of employment that doesn’t pay a living wage. So, I’m for a JG wage a good bit higher than the $8.00 per hour proposal. How about you?

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Joseph M. Firestone, Ph.D. is Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director and co-Instructor of KMCI’s CKIM Certificate program, as well as Director of KMCI’s synchronous, real-time Distance Learning Program. He is also CKO of Executive Information Systems, Inc. a Knowledge and Information Management Consultancy.

Joe is author or co-author of more than 150 articles, white papers, and reports, as well as the following book-length publications: Knowledge Management and Risk Management; A Business Fable, UK: Ark Group, 2008, Risk Intelligence Metrics: An Adaptive Metrics Center Industry Report, Wilmington, DE: KMCI Online Press, 2006, “Has Knowledge management been Done,” Special Issue of The Learning Organization: An International Journal, 12, no. 2, April, 2005, Enterprise Information Portals and Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003; Key Issues in The New Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003, and Excerpt # 1 from The Open Enterprise, Wilmington, DE: KMCI Online Press, 2003.

Joe is also developer of the web sites,,, and the blog “All Life is Problem Solving” at, and He has taught Political Science at the Graduate and Undergraduate Levels, and has a BA from Cornell University in Government, and MA and Ph.D. degrees in Comparative Politics and International Relations from Michigan State University.