BMJ Confidential: For Review Only A Federal Job Guarantee and the Health of Americans Journal: BMJ Manuscript ID BMJ-2019-052178 Article Type: Analysis BMJ Journal: BMJ Date Submitted by the 16-Aug-2019 Author: Complete List of Authors: Hensher, Martin; Deakin University, Deakin Health Economics; University of Tasmania, Menzies Institute for Medical Research Job Guarantee, Unemployment and Health, US Healthcare Reform, Keywords: Macroeconomics and Health, Modern Monetary Theory https://mc.manuscriptcentral.com/bmj Page 1 of 10 BMJ 1 2 3 1 4 2 5 6 3 Analysis 7 4 8 9 5 A Federal Job Guarantee and the Health of Americans 10 6 11 7 Martin Hensher, Associate Professor of Health Systems Financing and Organisation1,2 12 8 Confidential: For Review Only 13 14 9 15 10 1 Deakin Health Economics, Deakin University 16 11 2 Menzies Institute for Medical Research, University of Tasmania 17 12 18 13 Correspondence to: 19 20 14 Martin Hensher 21 15 Deakin Health Economics 22 16 Deakin University 23 17 221 Burwood Highway 24 18 Burwood 25 26 19 VIC 3125 27 20 Australia 28 21 29 22 Email: [email protected] 30 31 23 Phone: +61 3 9246 8143 32 24 33 25 Word count: 1977 34 26 References: 20 35 27 36 37 28 38 29 39 30 40 41 KEY MESSAGES 42 43 ● Recent proposals for a Federal Job Guarantee could see a future US 44 45 Government commit to provide assured work at a living wage for any 46 American who needed it 47 ● If implemented, a Job Guarantee could bring substantial health 48 improvements for the US population, through a variety of mechanisms 49 50 ● A Job Guarantee would also have important interactions with healthcare 51 coverage and costs, and needs to be considered in close conjunction with 52 healthcare reform proposals 53 ● The Job Guarantee is rooted in Modern Monetary Theory, an emerging 54 approach to macroeconomics that is gaining traction but which remains 55 56 controversial 57 58 59 31 60 32 https://mc.manuscriptcentral.com/bmj BMJ Page 2 of 10 1 2 3 33 4 5 34 Contributors and sources 6 35 Martin Hensher has worked on health financing, planning and economics as a senior policy 7 8 36 maker and researcher in the United Kingdom, South Africa and Australia, and as a 9 10 37 consultant for the World Bank, World Health Organization and the European Commission. 11 38 Martin’s research on the ecological and economic sustainability of health care systems has 12 Confidential: For Review Only 13 39 included examining a number of emerging heterodox economic approaches, two of which 14 40 are gaining in significance: ecological economics and “Modern Monetary Theory” (MMT). 15 16 41 MMT economists’ proposal for a Federal Job Guarantee has gained some important support 17 42 and interest amongst a number of prominent US Democrats. There has been little or no 18 19 43 discussion of what a Job Guarantee or Modern Monetary Theory more generally might mean 20 21 44 for US health and healthcare. This article builds on the MMT literature (and its critics) and 22 45 on the broader literature on employment and health to draw some initial conclusions in this 23 24 46 area. 25 47 26 48 Patient involvement 27 28 49 No patients were involved. 29 30 50 31 51 Conflicts of Interest 32 33 52 We have read and understood BMJ policy on declaration of interests and have the following 34 53 interests to declare: 35 36 54 This research was supported by an Australian Government Research Training Scholarship. 37 55 38 39 56 Licence 40 41 57 The Corresponding Author has the right to grant on behalf of all authors and does grant on 42 58 behalf of all authors, an exclusive licence (or non exclusive for government employees) on a 43 44 59 worldwide basis to the BMJ Publishing Group Ltd ("BMJ"), and its Licensees to permit this 45 60 article (if accepted) to be published in The BMJ's editions and any other BMJ products and 46 47 61 to exploit all subsidiary rights, as set out in The BMJ's licence. 48 49 62 50 63 51 64 52 65 53 54 55 56 57 58 59 60 https://mc.manuscriptcentral.com/bmj Page 3 of 10 BMJ 1 2 3 66 A Federal Job Guarantee and the Health of Americans 4 5 67 6 68 Standfirst 7 69 Some striking proposals for economic reform have emerged in the early stages of the race 8 70 for the 2020 Democratic Party nomination. Martin Hensher examines how a Federal Job 9 10 71 Guarantee might impact on US health and healthcare. 11 72 12 Confidential: For Review Only 73 Several proposals for very significant reform of the US healthcare sector have emerged from 13 14 74 the Democratic Party’s 2020 Presidential nomination contest and recent legislative 15 1 2 16 75 proposals. Yet less attention has been paid to a policy idea in the platforms of various 17 76 prominent Democrats which also has the potential to be of great significance to the health of 18 19 77 Americans – the proposal for a “Federal Job Guarantee”. This article will briefly describe the 20 78 concept of the Job Guarantee (JG) and its possible implications for health and healthcare. It 21 22 79 will also briefly outline the economic theory – “Modern Monetary Theory” (MMT) – in which 23 80 the Job Guarantee has its origin, and which is rapidly gaining attention in both economic and 24 25 81 political discourse. 26 27 82 28 83 29 30 84 The Job Guarantee 31 85 Two candidates for the Democratic Party’s 2020 Presidential nomination have included a 32 33 86 “job guarantee” or a guaranteed right to work in their platforms (Bernie Sanders, Kirsten 34 35 87 Gillibrand), and others have discussed it at various stages (e.g. Elizabeth Warren, Cory 36 88 Booker); it also figured in the recent Green New Deal resolution.3 More than one detailed 37 38 89 proposal for a Federal Job Guarantee has been published, but the best-developed comes 39 90 from a number of economists associated with the Modern Monetary Theory approach to 40 41 91 macroeconomics.4 Under it, a federally funded Public Service Employment program would 42 92 provide a standing offer of work at a living wage ($15 per hour in this proposal), along with 43 44 93 key benefits, including healthcare coverage. Employees of this program would be deployed 45 46 94 on a wide range of public works and community development activities, delivered through 47 95 federal, state, local and non-profit agencies. The authors argue that this proposal would 48 49 96 effectively eliminate unwanted joblessness and underemployment, and would rapidly force 50 97 up private sector wages to match this “living wage” alternative, lifting millions out of poverty 51 52 98 and greatly improving the incomes of the working poor.4 Proponents argue that the Job 53 99 Guarantee offers the most efficient “automatic stabilizer” for the economy throughout the 54 55 100 business cycle, able to adjust up and down to reflect the changing economic health of the 56 57 101 private sector. In economic downturns, the JG would provide guaranteed employment to 58 102 stop people falling into poverty and losing employability, while also supporting aggregate 59 60 103 demand to lift the economy out of recession. In boom times, workers will simply exit the JG https://mc.manuscriptcentral.com/bmj BMJ Page 4 of 10 1 2 3 104 program for the private sector, as firms offer higher wages to secure the additional labor they 4 5 105 need. 6 106 7 8 107 Health and Healthcare impacts of a Job Guarantee 9 10 108 Decades of accumulated evidence from the US and overseas have shown a strong and 11 109 consistent association between unemployment and a range of adverse health outcomes, 12 Confidential: For Review Only 13 110 including all-cause mortality, mortality from cardiovascular disease and suicide, and higher 14 111 rates of mental distress, substance abuse, depression and anxiety.5 6 More recent evidence 15 16 112 also indicates that job insecurity is similarly associated with poorer self-assessed health 17 113 status, mental distress, depression and anxiety.7 8 Unemployment and economic adversity 18 19 114 are intimately related with despair and lack of hope, which have increasingly been linked 20 9-11 21 115 with mortality and the rise and severity of the opioid epidemic. Figure 1 therefore 22 116 attempts to illustrate the direct health benefits that a JG program might be expected to bring 23 24 117 for individuals and populations. Clearly, a Job Guarantee program on this scale has not 25 118 been tried before, so it would be quite unjustified to claim that these health benefits can be 26 27 119 assured. Nonetheless, for health professionals and anyone concerned about population 28 120 health and the health of the poor and disadvantaged, the Job Guarantee certainly merits 29 30 121 much closer attention – implementing a JG program would indeed be a bold experiment, but 31 32 122 one that could offer dramatic payoffs in improved health status nationwide. 33 123 34 35 124 36 125 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 https://mc.manuscriptcentral.com/bmj Page 5 of 10 BMJ 1 2 3 126 Figure 1: Health effects of a Job Guarantee Program 4 5 127 6 Pathways Mechanisms Likely Health Benefits 7 8 Decreased unemployment 9 Decreased 10 underemployment 11 12 Confidential:Reduced incentive For to Review claim Only disability benefits Reduced premature 13 Direct benefits for 14 individual Job » Increased wages for low- » mortality from suicide, 15 Guarantee workers paid workers opioid and substance 16 Decreased household abuse, cardiovascular 17 poverty disease 18 19 Reduced job insecurity Reduced mental distress, 20 Healthcare coverage depression and anxiety 21 22 Reduced opioid and other Increased