Is workfare really such a bad idea? I share the outrage over the state, in effect, giving free labour to large corporations. But mightn’t there be a case for a scheme whereby the long-term unemployed, in exchange for benefits, do useful public work such as improving open spaces, building houses or whatever the local area needs? I’m thinking of five advantages of such a scheme:
1. It would improve the well-being of the jobless. It’s well-known that the unemployed are less happy than the employed. This is not just because they lack income, but because of the feelings of isolation and not being wanted - being redundant. As Andrew Oswald said (pdf):
The worst thing about losing one's job is not the drop in take-home income. It is the non-pecuniary distress…an enormous amount of extra income would be required to compensate people for having no work
Workfare would address this problem by giving the unemployed useful work and the camaraderie of working with others. Evidence from Germany shows that subsidized employment can increase well-being. So why wouldn’t decent workfare?
2. In getting the unemployed out into society, it would increase their circle of friends and acquaintances. This might help them get back into private sector work, not only by encouraging work habits and skills, but also by widening the social networks (pdf) through which people learn of job opportunities. In this regard, workfare might be a better alternative to the numerous courses offered to jobseekers in how to find work.
3. It would increase welfare benefits. Because the “unemployed” would be seen to be doing useful work, it would no longer be possible for them to be stigmatized as scroungers. This wouldn’t just increase the well-being of the jobless by reducing the stigma, but would also remove the (mistaken) opposition to decent benefits.
4. It would reduce the fear of unemployment. Joblessness isn’t just bad for those who suffer it. It also reduces (pdf) the well-being (pdf) of those in insecure jobs who fear becoming unemployed. Insofar as workfare diminishes the sting of unemployment, it reduces the fear of joblessness.
5. It would allow for more powerful counter-cyclical fiscal policy. One problem with using discretionary changes in public spending to counter recession is that there might not be many “shovel-ready” projects available to spend upon. This lack increases the “inside lag” of fiscal policy, with the result that discretionary fiscal policy takes the form of tax cuts instead, but these have higher leakages than public spending - some of the cuts are saved, or go on exports. A public works agency, whose budget could vary counter-cyclically, would mitigate this problem.
Now, you might object to all this that what I should be advocating isn’t workfare at all, but rather that old leftist call, a massive programme of public works. But maybe the sort of workfare I have in mind could gradually become such a scheme. (Note that I’m not saying that the unemployed be coerced into such a scheme either).