HomeThe right to a job? Let WINZ run the economy
27/10/2014 27/10/2014 feminoptimal marketsjobs, unemployment, WINZ
In a discussion recently about defining Left and Right, someone offered the following distinguishing question.
“Does everyone have the right to a job?” Yesses to the left, Noes to the right.
(If that was you, please let me know so I can attribute it properly! I really must learn to include sources in my notes.)
As usual, I want a third option for answering that question. People who choose the “no sensible answer to this question” door are also revealing something about their beliefs.
The question makes no sense to me because, in our society, jobs are allocated by the labour market, while rights are things that are too important to be left up to markets.
Rights are too important to be left to the market
A right is something that you can’t take from a person – it’s morally intolerable to do so. We have rights to life, to safety, to freedom of expression. These things are so important that they’re enshrined in various laws.
If it’s morally intolerable to deprive someone of a job, then the labour market becomes morally intolerable. The market places a price on labour. Almost all goods have reserve prices – if the market price fell that low, it would be unprofitable to produce any. But if the good in question is a human right, that’s unacceptable. The good must always be available, regardless of price. Human rights can’t be supplied by the market.
To clarify that point, imagine there was a dramatic failure of law and order that meant our safety was supplied by the market (maybe this is after the zombie apocalypse). People have a certain level of demand for safety products such as tall fences, weapons, or bodyguards. Now what if these products became extremely expensive to produce for some reason (possibly curtailed supply due to destruction by zombies)? People wouldn’t be able to pay enough for safety. They’d have to go without safety, at least in the short term. Bad enough in a post-apocalyptic world; intolerable in our real society.
Because it takes time to search for, find and employ the right worker, the labour market is slow to adjust. Consequently, there’s always a certain level of unemployment in a well-functioning market. That violates the right to a job. There’s no real way to elevate having a job to the status of a human right while keeping the market mechanism. Any attempt to do so will eventually run up against a recession, the demand for labour will fall, and people will lose their jobs. Policies that speak of a “right to a job” while keeping the labour market are just empty words.
Jobs are too important to be treated as rights
Okay, so why not just get rid of the labour market? Because the alternative is too costly.
The alternative is to make sure everyone who wants a job has a job. Any job. The best way to achieve that is to fill all the low-skilled jobs first. That way there’s the least chance of having people in jobs they can’t do. So everyone who wants a job will first be offered work as a cleaner, a dishwasher, a berry picker or a shelf stacker – even if they’re actually a trained construction worker, librarian, teacher or chef. Sound familiar? This is how WINZ operates.
No one is winning here. Society is missing out on all that good librarianning, cheffing etc. Trained workers are missing out on fulfilling work. Employers of low-skilled labour are missing out on employees who might actually enjoy the work rather than grousing all the time about wanting to do something else. The only winner is the job placement agency, which is meeting its target of guaranteeing everyone a job.
What’s missing? Search. In the labour market, compatible employers and workers search for each other. They place ads on job websites, visit employment agents, ask around their networks and speak to training institutions. When they find each other, there’s the process of each party verifying that the other is right for them – CVs, interviews, tests, research, background checks. All of this is costly. Workers are willing to bear search costs to help them find the job they want. Employers are willing to bear search costs to help them find the worker they want. WINZ? Not willing to bear search costs, almost at all. It’s cheaper to just cram the next worker on the queue into the next job on the queue. And so you get skilled workers forced into unsuitable jobs, and everyone loses.
But that’s ridiculous, no one is suggesting getting rid of the labour market
No, they’re not (on the whole). But trying to create a “right to a job” is basically the same thing. Markets create jobs based on both labour supply and labour demand, and if supply is the only thing that matters (everyone who wants to work gets a job), that’s not a market solution.
What’s a good way to ensure that people who want jobs have the best chance of getting them? Make sure the market is efficient.
Support any and all new ways of looking for work or workers – more efficient matching is a sure-fire way to get more people in work.
Do whatever it takes to make sure the full range of skills available is represented in the market, including all racial, gender and other groups.
Let people be paid what their skills are worth. If higher-skilled work is paid more, workers will have a reason to acquire those skills. The world needs them.
Supporting an efficient labour market isn’t easy, but it’s easier than dismantling the demand side of the market to create a “right to a job”. If we follow that path, we’ll end up with an entire economy run by WINZ. And that’s a dystopia that no one wants to contemplate.