Saturday, January 14, 2012

The Ultimate Job Guarantee Implementation: Can we Achieve Zero Wasted Labor AND Zero Material Waste Simultaneously?!?

Discussion in the MMT blogosphere has focused recently on the "Job Guarantee" (also known as "Employer of Last Resort", "Transition Job", or to some, "Workfare".) The concept is that everyone should have the option of a federally funded but locally administered minimum wage job. The economic motivations include (1) achieving loose "full employment" even when there is insufficient aggregate demand (spending) to create private sector jobs for everyone who wants one, and (2) enhancing macroeconomic price stability (low and stable inflation), and (3) raising the long term productivity of the economy. Job Guarantee (JG) proponents are among those who consider mass involuntary unemployment to be an enormous waste of willing human labor, resulting in many direct and indirect costs to society. And even Ben Bernanke has said:
"Long-term unemployment imposes severe economic hardships on the unemployed and their families, and, by leading to an erosion of skills of those without work, it both impairs their lifetime employment prospects and reduces the productive potential of our economy as a whole."
One of the recurring topics of JG debate is "what would all these people do?" Some commenters have a variety of constructive answers to this question, while others suggest than any job tasks chosen by the government (even local government, as opposed to Congress) would be a "boondoggle." I am not familiar enough with the academic research and modeling to weigh in with strongly held opinions for or against the JG concept in general (though I lean strongly toward giving it the benefit of the doubt), but this post will outline a concrete JG idea I have not seen described elsewhere. There are aspects of the idea I find highly compelling, but I expect some people may hate it.

First, some brief context. Modern economies have major problems with their environmental sustainability. One of these problems is that they have evolved to treat natural resources as an "input" to human activity and accepted a large waste stream as an "output", as though the economy were the center of reality. There have always been some observers warning that economies exist WITHIN the natural environment, not APART from it, and economies must adapt to function in a sustainable closed-loop way just like natural ecosystems -- where the output of every system of production and consumption is ultimately an input to another such system. Here is a diagram from zerowaste.org reflecting the current economic system's material flows:

Here is a diagram reflecting the conceptually ideal zero-waste closed loop system:

Three of the major problems with the current system as shown in the first diagram are external costs, that is, costs borne by society at large:
  1. Land fills consume finite land (for which available locations are diminishing), and can be unpleasant and costly to administer.
  2. Garbage incineration contributes to air pollution that adversely effects health, and consumes many materials that might have had better forms of reuse.
  3. The economy's raw material input requirements are larger than would be necessary if we reused more of our waste stream. In addition, the methods we use to extract new raw materials typically have large external costs as well (e.g., habitat destruction and pollution from mining). These external costs go down when we reuse more materials.

What if the role of job guarantee work was to "intercept" the not-currently-recycled part of the waste stream with the goal of reclaiming recyclable, reusable, and organic (compostable or biofuel-ready) materials to the maximum extent possible? Source separation (such as separate curbside bins) should certainly still be encouraged wherever possible to create pre-separated streams of recyclables, organic waste (yard and food scraps), and general trash, however many localities don't do any separation at all, and even general trash streams will inevitably contain recoverable waste. So a JG zero-waste program would focus specifically on reducing the waste streams that are currently going to landfills or incinerators.

The pie chart below shows the composition of the 250 million ton annual waste stream in the US, of which only 34% is currently recycled! (Source: EPA). That 66% currently going to landfills and incinerators contains extraordinary amounts of valuable material! Separating it further would be labor intensive work, and would probably not be profitable for individual companies extracting only the materials they could sell for more than the cost of labor. But, the job guarantee concept isn't intended to be "profitable" in such a narrowly focused sense!

An underlying presumption in this idea is that the more human labor is available for sorting, separation, and dis-assembly of complex items, the higher would be the percentage of the waste stream that can be reclaimed for new uses. There would likely be diminishing returns in adding new labor as separation of reusable materials approaches 100% of the waste stream -- since some portion of the waste stream may be too complex or contaminated for separation -- but this also means a potentially huge number of JG workers could be usefully employed, so the JG program could be exclusively focused on this goal! Here is a purely speculative graph of this labor vs output relationship (I have no detailed knowledge of the waste industry, so this could be inaccurate!):



Of course, automation should be used in waste stream separation to the maximum extent possible, and we shouldn't abuse "cheap" labor if there are reasonable automation options available! Single-stream recycling facilities already have impressive technology for separation of material types, and technologies for processing "dirty" trash streams appear to be advancing too! But based on my limited knowledge, even these advanced "dirty" processing facilities still require some human labor in the sorting process, and may also be too expensive for many municipalities. We are probably still decades away (I'm guessing!) from sophisticated enough computer vision and robotic dexterity to achieve everything a human can in this type of process.

I expect this to be a controversial suggestion, in part because of the "trash" association and concerns about human dignity (perhaps this is an inherently bad idea!) but I'll run through some of the pros and cons I can think of.
Here are some advantages:
  • Job guarantee workers would be providing an obvious-to-all public service with broadly shared benefits, because the waste stream is produced by just about everyone, and the negative externalities being reduced would otherwise be suffered widely also. With other JG roles sometimes suggested by commenters (reading to the elderly, planting trees in parks, removing graffiti, etc) there might be concerns by voters about jobs benefiting some demographics more than others, or about potentially poor choices of projects in general. But everyone benefits from a zero material waste economy!
  • If a program of this type intercepted the part of the waste stream not already being reclaimed, it would not compete with the private sector or charities (or perhaps very minimally). Presumably this work is too labor intensive to be cost effective for private industry, but cost effectiveness (with the typical narrow definition of a single entity's cash flow) is not the goal of the job guarantee.
  • It is inherently local (which is one of the MMT design choices for implementing a JG), because waste streams are produced everywhere people live and work!
  • The financial costs of waste handling are often already paid for by municipalities (source).
  • The savings in materials-flow-related external costs alone (pollution, landfill space, and raw material inputs to the economy) could significantly offset the program's "costs" in terms of wages paid to JG workers (not that a JG program should be required to be provably "profitable" to be considered a success).
  • After also accounting for the benefits to society of reduced involuntary unemployment (e.g., reductions in mental illness, crime, family breakdown, soup kitchen spending, safety net transfer payments, etc) such a program would look even more cost effective!
  • It would scale easily with the ever-changing size of the JG's buffer pool of workers. If the economy booms and the JG pool shrinks and there is no fiscal adjustment made by federal government to increase the pool (potentially needed if inflation were accelerating), then more of the waste stream will simply end up in the landfill or incinerator as is the practice today. Thus "zero" waste would be an exaggeration, but the waste reduction might still be large. Conversely, if the economy contracted and the JG pool of workers grew large, perhaps the sorting process could focus on reclaiming a much larger percentage of the waste stream, possibly even with extra time to break down and disassemble complex waste into component parts. What would the "typical" size of the JG pool of workers be? At least one MMT economist has suggested it might average around 3% of the work force.
  • Waste sorting and separation jobs would be easily filled by unskilled labor, consistent with the "hiring off the bottom" goal of the JG.
  • A job guarantee is widely recognized as setting a floor on economy-wide wages. However, it might also set a floor on conditions. Some commenters have expressed concern that having too many jobs viewed as "easy" in a JG (reading, tutoring, etc?) could be a problematic competitive force attracting workers from private sector jobs to the JG. An assumption in this thinking is that society relies on some industries in which the work can't be made "fun" and "easy" and while there should certainly be safe and humanitarian working conditions enforced, those industries' attempts to pay enough to retain workers might result in problematically large shifts in private sector wage structures, potentially raising the general price level by enough to force the nominal JG wage too far below a "living wage" to be politically acceptable. Thus, for better or worse, waste stream handling as a choice of JG program would be likely be seen by voters as not setting an overly "cushy" floor for work conditions.
  • Waste handling is a large enough problem that it might (?) be able to absorb ALL JG workers (even if that represents 3% or more of the work force).
  • Waste handling is a national and global problem so best practices could be shared widely across implementations.
  • Such a program might be able to piggy-back on some existing infrastructure.
  • Such a program might not be seen by voters as "make work" (see CETA-related quote here), and thus have higher political feasibility than some JG suggestions?

Here are some potential drawbacks:

  • There could be a large social stigma for JG workers handling society's waste in this way. But would it be worse than the social stigma of unemployment? And might society's notions of dignity be able to evolve? After all, one of nature's waste handlers, the scarab (a type of dung beetle), was considered sacred in Ancient Egypt...
  • Concerns may arise about the moral hazard for households and businesses in knowing that someone will "clean up after them." But with a national emphasis on good practices in sustainability, hopefully there could be ways to minimize this. And certainly manufacturers and such whose waste output is already regulated should continue to bear a higher responsibility (enforced by regulation) for minimizing their waste streams. (Often this process turns out to be profitable for them anyway.)
  • Such a program might not be "transitional" enough -- does it adequately prepare workers for transition to the private sector when a job becomes available? I don't know, and I'm not sure how favorably it would compare in this respect to other job types suggested for unskilled labor in JG programs.
  • Could the potential for unsanitary organic waste (dirty diapers!), sharp metal or glass, hazardous chemicals, etc make it too dangerous? Are there standards for hazmat suits and assistive tools and technology that would suffice? Even assuming so, there would need to be some sort of externally administered inspection process to ensure safe working conditions.
  • Could such work inherently lead to repetitive stress injuries? I'm not sure how highly repetitive such sorting tasks would be given the nature of a mixed waste stream -- it could include some interesting dis-assembly of a big variety of items (toys, electronics, furniture, etc) into their component pieces. Perhaps every certain number of hours would involve a shift in the "creative project" room designing and building the [mini-]pyramids for the 21st century and other art out of the waste not useable for other applications!
  • Separability of materials might be too difficult if organic waste can cause too much contamination... but this might be addressed with larger source separation initiatives (curbside food and garden waste containers) along with a willingness to send unrecoverable bags or clumps of trash to the landfill-bound conveyer.
  • Energy use for sorting, transportation, and reuse might be more of a limiting factor than the needed human labor. If getting the separated materials back into the industrial production stream in a useable form required too much energy, such a project might not be popular (at least until further strides are made in renewable energy). Of course, the organic waste stream may itself be an energy source given ongoing innovations in waste-to-energy technology.
  • Some new infrastructure (facilities and equipment) might be required. This could actually be beneficial to the economy if there was enough spare economic capacity to build and produce what was required within putting undesirable upward pressure on prices.
Aside from the drawbacks above and whatever else I've overlooked or gotten wrong, this almost seems too good to be true! What do you think?

To repeat, the high level aspiration outlined here is to "kill two birds with one stone" by matching the goal of reducing human labor waste (involuntary unemployment) with the goal of reducing other external costs currently borne by society. This post focused on the "other external costs" related to materials flow and associated environmental sustainability, but are there other large-scale external costs a JG could potentially address?

11 comments:

  1. Hbl, Mixing up two objectives (e.g. raising employment and protecting the environment) nearly always leads to a misallocation of resources.

    If environmental considerations dictate that the maximum permissible consumption of commodity X is Y tons a year, then commodity X should be taxed at such a rate as to bring about that maximum.

    That will AUTOMATICALLY make it worthwhile to do a bit of “commodity X recycling”: maybe using JG labour and maybe not: in fact the best way to do it might be a highly capital intensive way, using very little unskilled labour.

    In contrast, if JG labour is concentrated in the recycling business, that will quite likely result in an excessive amount of recycling being done. Plus it will likely result in forms of recycling which are less efficient than other methods.

    BTW: I just love rummaging through dustbins and heaps of trash to see what I can find. But then I’m eccentric.

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    1. Ralph, thanks for your feedback. Some responses:

      "Mixing up two objectives (e.g. raising employment and protecting the environment) nearly always leads to a misallocation of resources."

      I think that's a big risk when the objectives are simply correlated (and certainly when they may be in conflict) but in this case one provides a direct solution to the other. (i.e., Labor solves tasks that we've ignored because they require "too much" labor).

      "If environmental considerations dictate that the maximum permissible consumption of commodity X is Y tons a year, then commodity X should be taxed at such a rate as to bring about that maximum."

      The textbook theory sometimes is applicable -- for example it appears to be helpful in regulating industry -- but there are always limitations with making this work in the real world overall. In the US, even the small tire disposal tax causes a lot of tires dumped in local creeks, for example! And at least in the US neither the commodity inputs that go into products households buy nor households' waste stream seems to be taxed in a way that can incentivize a reduction of the material flows that are most "worthwhile" to reduce. Perhaps there is a way to be successful this way, but until it is found, I've suggested another way of addressing those costs.

      "That will AUTOMATICALLY make it worthwhile to do a bit of “commodity X recycling”: maybe using JG labour and maybe not: in fact the best way to do it might be a highly capital intensive way, using very little unskilled labour."

      Well the US already does have a third of its waste stream being recycled, often with automated sorting equipment. So wherever worthwhile, such practices definitely should continue and even expand! But what do you do with what's left, and what is it costing society in hidden ways?

      "In contrast, if JG labour is concentrated in the recycling business, that will quite likely result in an excessive amount of recycling being done. Plus it will likely result in forms of recycling which are less efficient than other methods."

      I suspect industry experts could analyze what the costs of additional recycling of waste flows would be (outside the cost of JG labor, which we already know from MMT is "affordable" to the federal government) plus the revenue that can be obtained from those reclaimed material flows, and compare to the costs of waste disposal as it is currently handled. Of course it's hard to price the cost of incinerator air pollution, loss of real estate to land fills, etc.

      "BTW: I just love rummaging through dustbins and heaps of trash to see what I can find. But then I’m eccentric."

      Actually I think a lot of people find fascination in the trash of others... after all "one person's trash is another person's treasure". Safety and condition concerns are a serious issue for this type of proposal, but I'm actually not sure that people would hate the work -- it might be very engaging to many!

      And anyway, there is already an "informal" waste industry in poor areas that involves scavenging from trash... why not pay people for it if it helps society?

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  2. I think this is a brilliant idea, and I think would require JG workers to learn more and more skills, as this probably requires at least some training to understand what can be placed in what recycling bin etc, and the more training the better. Participants may also find this a career opening into more interesting parts of the rec ycling industry.

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    1. Yes, I agree that there might be some meaningful training opportunities... especially when it comes to learning to disassemble more complex products. There are already unofficial recycling facilities run by enthusiastic individuals that use small armies of volunteer labor to break apart shampoo bottles to separate the types of plastic, etc, and I think they eventually seem to find buyers or re-users for most of the materials they separate. If not they make art out of them!

      Such skills might be useful background for private sector jobs in construction, manufacturing, or other industries. At the very least there is the maintenance of work habits tied to solving real world problems in a group setting.

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  3. Love the idea. Thank you. More please!

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  4. Really nice idea. Doesn't even have to be part of a JG.

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  5. where do i apply?-joe

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  6. "a federally funded but locally administered minimum wage job."

    MMT does not require that the JG be locally administered. That is a political issue, not an economic issue. I personally would prefer the JG be administered at a national level, similar to the WPA or any other Federal agency.

    There is already quite a bit of sorting and recycling going on in some parts of the country, both private and public. Sorting the material is one part of the job, then it has to be bundled or crated and shipped to a processing plant.

    Scrap prices vary and it's not necessarily profitable to ship and process things like tin cans or glass, even if you had free sorting labor. Random scraps of paper and plastic such as you find in household trash are generally not recyclable. Mainly you'd be looking for aluminum, copper, and brass.

    All that said, I'd certainly be OK with having a sorting operation at the local landfill, to pick out aluminum, copper, brass, and possibly steel, depending on scrap prices. It would create a few jobs, but not very many, certainly not nearly enough jobs to soak up the local unemployed -- a dozen people would be plenty for the typical county landfill.

    Along the same line of thought, an obvious JG job would be picking up trash along local roads. This is already being done to some extent by volunteers or by jail crews, but there are many rural roads that are neglected. The aluminum cans picked up could and should be recycled.

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    1. "MMT does not require that the JG be locally administered..."

      Local administration seems to be the design typically suggested by the MMT originators, but I agree it may not be a requirement.

      "There is already quite a bit of sorting and recycling going on in some parts of the country, both private and public."

      Agreed. There are even privately run recycling centers run by volunteer labor who offer their time simply to make a difference! That was one of several inspirations for this post.

      Here is a more recent post comparing the current US recycling rate of under 35% of the waste stream to the Zaballeen outside Cairo who had been recycling over 80% of the city's waste on a tiny budget:

      http://www.thoughtofferings.com/2012/05/zero-waste-jobs-program-revisited-can.html

      "Scrap prices vary and it's not necessarily profitable to ship and process things like tin cans or glass, even if you had free sorting labor."

      I don't think narrow measures of profitability are appropriate for a government run program serving "public purpose" such as the one suggested here. There would be large reductions in external costs "elsewhere" in the economy and environment -- such as reduced harmful side effects of mining, forestry, etc. Plus of course the societal benefits of reduced unemployment. But all that is admittedly hard to measure!

      "It would create a few jobs, but not very many, certainly not nearly enough jobs to soak up the local unemployed -- a dozen people would be plenty for the typical county landfill."

      Perhaps you are correct and if so, then this idea might not be practical on a large scale. I don't have in depth knowledge of the industry so I am definitely interested in this type of feedback -- thanks. But I also wonder if there is a lot more product dis-assembly (electronics, furniture, etc) and reclamation of more marginal materials that a JG approach could "afford" than would be profitable for a for-profit waste management conglomerate.

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  7. Well, JG may help in dismantling used electronic hardware, recovering the still-operable parts to add to the facilities needed for further item recovery (like circular clamps for the wires, for instance). The rest can be recycled for other purposes or broken down to be reused in newer products.

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