Questions regarding Service for the Common Good

Contents

How will a Service for the Common Good benefit the people who do this service?

The people performing the Service for the Common Good

  • receive an adequate income,
  • experience the satisfaction that comes with engaging in a meaningful activity that corresponds to their interests and skills,
  • experience social recognition and a sense of accomplishment as a result of their activity,
  • can gain greater experience and skills that may improve their chances to get better jobs,
  • may be able to convert their service for the common good into a remunerative self-employment,
  • improve their negotiating position if they apply for a regular job, because they are not applying as an unemployed person,
  • have the freedom to quit an unsatisfactory job even before they have found a new job.

 

How will the Service for the Common Good benefit society at large?

The common good will be directly promoted by the services performed. The kind of benefit of course depends on the specific services performed. Sites providing access to volunteering opportunities (such as the National Council for Voluntary Organisations in the UK) can provide inspiration of what is possible, but should never limit individual creativity! The people performing the service will generally be highly motivated to do good work because their activities correspond to their interests and skills. Beyond this, there are additional benefits for the entire society:

  • Equality of opportunity is enhanced: every person who is able to work not only has educational opportunities, but also an opportunity to find paid employment that corresponds to their interests and skills. This would, for the first time ever, implement the provisions of articles 6 and 7 of the International Covenant on Economic, Social and Cultural Rights. This international treaty, which has been ratified by 168 countries (including all important European and Latin American countries, most Asian and African countries, Australia and Canada, but not the United States) and which came into force in 1976, provides for the right to work (“the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts”) and the right of enjoyment of just and favorable conditions of work. In addition, Article 6 commits State Parties to the covenant to “policies and techniques to achieve steady economic, social and cultural development and full and productive employment under conditions safeguarding fundamental political and economic freedoms to the individual.” Today, the right to adequately paid, freely chosen and accepted work is pure fiction for many people in all countries of the world.
  • Economic opportunities correspond better to merit and accomplishment. With a moderate effort, any person who is able to work will be able to earn sufficiently to support hum or herself, because the Service for the Common Good is available to everybody. With greater effort, one can earn more, either by working full time at a better paid position, or by taking a half-time job next to the Service for the Common Good, or if one takes a better paid part-time instead of a Service for the Comm Good. People for whom a Service for the Common Good is too demanding can do a less demanding job (for example, jobs designed for people with disabilities) or depend on social welfare.
  • Employment for very low wages will tend to disappear, because poorly paid people can decide not to work full time in a poorly paid job, but rather to work there only half-time and do a Service for the Common Good, receiving a better total income as a result. This exerts a strong pressure on employers to increase the wages they pay until they can find enough people to work full time for those wages.
  • If the lowest wages are increased, this will also tend to cause wages in the middle range to be raised, in order to maintain the relative rankings of different categories of employees within companies. Thus, the Service for the Common Good also benefits employees who remain with their present employment.
  • Social justice is enhanced because the economic opportunities and incomes precisely of those people with little income and economic opportunities are improved.
  • The increased incomes of people with low or moderate income increase their spending ability. This creates an economic stimulus, especially expanding the market for goods and service that serve ordinary daily needs. These new opportunities will likely stimulate new investments by many businesses.
  • Economic crises will tend to become less severe because during a crisis, people will be more easily able to keep their incomes stable, stabilizing the demand for goods.

 

For what kinds of people would a Service for the Common Good be especially interesting? How many people might that be in the case of Germany?

Only if this idea is well known among a large part of the population can surveys actually answer this question. In the mean time, it is only possible to say for what kinds of people a Service for the Common Good might be interesting given their work situation, and to estimate the number of people those might be based on available statistical information (for example, numbers provided by the Federal Statistical Office on Underemployment in Germany). Double counting of course should be avoided. The types of people that I consider most relevant are

  1. People who are able to work, but are unemployed. In Germany, currently there are around 1.8 million unemployed people, though a considerable number of those are not actually able to work.
  2. Approximately 1.4 million people in Germany who are working part time, but would rather work more and earn more money.
  3. People who are working full time for little pay, and who would earn more if they reduced that work to part time while doing a Service for the Common Good for the other half of their working time. According to the Federal Statistical Office (2017: page 9), almost ten percent of full time workers receive low pay (less than two thirds of the median wage; in 2014 this was 10 euros an hour), meaning around 3 million of the 30 million people employed full time in Germany. Of course, if a significant number of these people started doing a Service for the Common Good and accordingly reduced their work time elsewhere, low wages would have to be increased to ensure that there would still be workers ready to do these jobs. This would mean that ultimately, most of these people would probably stay with their current jobs.
  4. People (very often women) with family obligations, who want to do paid work, but need flexibility of work times – which they could do if they were able to design their own Service for the Common Good. Such people are statistically classified as the “hidden labor force” (about 1 million people) or as “other economically inactive persons with the desire for work” (about 1.3 million people).
  5. People with an interrupted work biography or migrants, who have difficulties in conveying their skills to potential employers. These people are probably already included among the above numbers.
  6. People who have innovative ideas about how they can contribute to the common good, but who do not have a good idea how these activities could generate an income – at least at the time being. The number of these people can hardly be estimated, but is probably much less than the above numbers.
  7. People who have a business idea that would advance the common good, can not generate a living income from this idea during the start up phase, but need to get started producing their service in order to convince potential customers of its value. The number of such people is also likely to be substantially less than the numbers under points 1 to 4.
  8. People who wish to have a time off from their current employment, but do need an income during this time.

If one adds together all the people under points 1 to 4, one gets a total of 8.5 million people in a country of 80 million. However, not all of the unemployed people (point 1) are actually able to work, not all the people listed under points 2 to 4 would actually be interested in doing a Service for the Common Good, and low wages would soon have to be increased (reducing the attractiveness of the Service) if a substantial number of people would leave this employment sector (point 3). In light of these considerations, a fully implemented Service for the Common Good might employ the following numbers of people:

  1. 0.9 million of the 1.8 million unemployed,
  2. 1 million of the 1.4 million underemployed part-timers,
  3. 0.3 million of the 3 million low-wage full time workers,
  4. 1 million of the 2.3 million people in the hidden labor force, or among other economically inactive persons with the desire for work.

Altogether, these would be about 3 million people in Germany. This number is affected by numerous imponderables, however, and is no more than a first estimate. It of course would be affected by further developments in the labor market, which can change the number of available jobs at any time. Ideally, the Service for the Common Good would be only one component of a social-ecological full employment initiative that would create sufficient paid employment for all people ready and able to work, for example by building up the infrastructure for a renewable energy system, insulating buildings to a high standard, converting to sustainable agriculture and improving the quality of care work. In this case, only a fraction of the 3 million jobs mentioned above would be needed in the Service for the Common Good. Furthermore, the focus of attention would shift away from the people listed under points 1 to 3 above, towards those listed under points 4 to 8. In order to support the potential for innovation and the diverse life plans of these people, a Service for the Common Good would be immensely useful even if there was close to full employment.

 

Who should NOT perform a Service for the Common Good?

The offer of a self-determined Service for the Common Good is explicitly not directed at certain demographic groups, as follows:

  • foreigners without employment authorization in the country,
  • children,
  • people unable to work (e.g., because of mental or physical disabilities, drug addiction etc.),
  • people with a restricted ability to work, in so far as their disabilities prevent their ability to do a Service for the Common Good,
  • retired people.

The Service for the Common Good is not intended to replace social assistance for people in these situations. In order to achieve improvements for them, other policies are needed.

 

Do the poorly paid people, the unemployed etc. have the creativity and the wealth of ideas that are needed to do a Service for the Common Good?

In all strata of society there are both creative and unimaginative people – but people who are socially marginalized have fewer opportunities to realize their creative ideas. Therefore, they are often underestimated. A Service for the Common Good would provide them with better opportunities to realize their potential. Of course, advisory services for people who wish to do a Service for the Common Good could be just as useful as similar services for people starting a business.

The question what human potential would be mobilized by a Service for the Common Good could be answered at least partially before it was actually implemented. One can do surveys among people in relevant social situations, asking them whether they could imagine doing a Service for the Common Good, and what kind of work they would like to do as a Service. By means of pilot projects one can learn which activities are actually suggested and put into practice, and how much effort the people put into their work. Both surveys and pilot projects would be essential steps toward implementing a Service for the Common Good.

Finally: the Service for the Common Good would achieve its positive impacts even if far from all unemployed or underemployed people would choose this option. Even if it existed as a realistic alternative for everyone, it would expand the opportunities for all.

 

How much should service workers earn?

Various payment models are possible. In any case, the payment should be substantially better than the current legal minimum wage so that the service workers need not live in poverty and are substantially better off than people living on welfare. On the other hand, the incentive to look for employment in the regular labor market should be preserved. Finally, the common good service should be adaptable for people in diverse situations.

The flexibility as well as the incentive to look for regular employment would be provided if the service workers would have to work a minimum of 15 hours per week in the common good service, but no more than 30 hours. The minimum would clearly differentiate the service from volunteer work, which rarely exceeds six hours per week. The meximum figure would mean that service workers would be able to earn more, either by doing part-time or self-employed work in addition to their service work, or by doing a better-paid full-time job instead of the common good service.

In the German context, a standard wage of 12.50 euros an hour would yield a monthly income from service work alone ranging from around 750 to 1500 euros a month, or in a household with two adults 1500 to 3000 euros a month (gross pay – take-home pay would be somewhat less after health insurance and pension payments are deducted). Assuming the availability of other supports for children and people unable to work, this should assure that the vast majority of households would be safe from poverty.

Alternatively, the hourly rate of 12.50 euros would be the minimum, and more highly qualified service work would be better paid (for example, up to 18 euros an hour; yielding maximum monthly pay of around 2150 euros). In this case, the salaries could be made equivalent to a range of employment categories in the public service, and be a matter of negotiations between the relevant unions and the state. This could make the service for the common good more attractive for more highly qualified people, and create a larger impact on the salaries paid such people in the regular labor market.

 

How can a Service for the Common Good be financed?

If a uniform rate of 12.50 euros per hour was paid, 3 million people performed a Service for the Common Good, and they worked an average of 20 hours a week, their payment would cost 43 billion euros in tax money each year. However, it is by no means sure that this many people would want to perform this Service, meaning that this is more likely to be a high than a low estimate.

How could this sum be financed? In this context, it should first be mentioned that the total tax revenues in Germany, including the federal as well as state governments, come to about 600 billion euros annually – thus, the sum we are talking about would be about 7 percent of total revenues. There are several ways in which these revenues could be generated:

  • Savings in social welfare expenditures, because of reduced need. This pertains not only to people performing the Service who previously depended on social welfare payments, but also to people who previously supplemented their wage income with social welfare payments, but whose improved negotiating position would enable them to get a better wage, eliminating their need for state supports.
  • Savings in other areas. The activities of Service workers could diminish many social problems and thereby reduce government expenditures. For example, criminal activities, violence and vandalism might diminish, leading to reduced expenditures for police and maintenance of public property. Such indirect savings can be estimated once the service for the common good has been tested at large scale in a few cities.
  • Increased incomes from labor at the expense of incomes from capital. The introduction of the common good service is intended to lead to an improvement of wages for poorly paid workers. People with higher incomes pay more income tax, and their increased consumption expenditures lead to increased value-added or sales taxes by local businesses. At the same time, at least in the short term, increased wages lead to reduced income from capital, but the effective taxation of capital incomes is often rather low. On balance, there could be an increase of tax revenue. Estimates of this effect can be obtained through modelling studies and by evaluation of the experiences once the common good service is introduced at large scale in a few cities.
  • Ecological taxes and fees. Taxes or fees on CO2 emissions or other ecological damages are intended to reduce resource consumption and create incentives to reduce reliance on fossil fuels. This is important in order to ensure that consumer demand supports the most environmentally sustainable options, especially in the context of a policy that puts more money in the pockets of people with a lot of pent-up demand. At the same time, ecological taxes should lead to the creation of a lot of new jobs in the insulation of buildings, investments in energy efficiency and sustainable agriculture.
  • Increased taxes on large inheritances, large wealth, high incomes and/or capital gains; intensified pursuit of tax evasion, money laundering etc. Tax increases can only feasibly be collected from people with superfluous income, and should be focused on unearned incomes (for example, an heir has done zero work in order to receive that inheritance). In Germany, there is certainly room to increase taxes on the rich, because the public sector share of the GNP as well as the taxes imposed on the highest income earners have been reduced substantially since the 1990s.

The question of how exactly a self-determined service for the common good is to be financed will become truly relevant, as well as answerable, once it has been tested at reasonably large scale in several localities.

 

How could a Service for the Common Good be designed in practice?

Who finances the Service?

Preferably the federal government, though it could also be financed by both federal and state governments.

Who decides on applications and their relevance to the common good?

Guidelines will have to be passed by laws or ordinances, including a positive list of possible activities. The positive list would not be exhaustive in order to leave maximum freedom for innovation. Applications should be submitted to local offices. Details about who should decide on applications would have to be worked out. It would be possible, for instance, to involve representatives of local civil society organizations.

Who confirms whether the person is actually performing their Service?

This needs to be determined on a case by case basis and must be addressed in the application. If the Service worker works within the context of a nonprofit, somebody with this organization could confirm that he/she is actually doing the work. A Service worker who implements a project could deliver proof of completion of each stage of the project to somebody who would be able to judge the quality of the work and communicate this assessment to the financing body, as in conventional project management. Service workers who help people in need of assistance might obtain confirmations from these people that they have done their jobs.

How is the Service for the Common Good to be kept distinct from regular jobs?

First, by law, private companies and public agencies can be prohibited from employing people as Service for the Common Good. Second, even nonprofits can be prohibited from advertising jobs as a Service for the Common Good – if somebody wants to employ somebody for an advertised position, they have to pay them a normal salary. Third, as a Service worker, one would not be allowed to produce marketable goods or services, for which there are potential customers willing and able to pay. For example, the Service workers are expected to engage in the protection of environmental quality (which belongs to no one and for which there is no market), or to help people in need of assistance who would not otherwise be able to afford this care. Fourth, the Service would only be paid as a half-time job (18 to 20 hours a week).

How can you prevent nonprofits from firing regularly employed people and instead having their work be performed by Service workers?

As described above, nonprofits would not be allowed to proactively search for a person to do a job for them as a Service for the Common Good. If they fired somebody, they would have to depend on somebody with the appropriate qualifications and skills just happening to come along and offering just the right Service at that organization. This restriction should limit abuse to a minimum. If needed, further measures could be implemented to prevent abuse.

How will organizations react if Service workers are paid better than people with a regular job who do similar work?

They can offer the regular employees a better wage and improve their working conditions.

 

Isn’t it far too much bureaucracy to make decisions about all these applications and to control that the people doing the Service for the Common Good actually do the work?

The bureaucratic work is essentially the same as for any advertised job, regardless of whether it’s in the public or private sector (including the controls to check that the work is actually done).
However, the bureaucratic work will be substantially diminished for:

  • people looking for work (because they need to write fewer futile job applications),
  • employment agencies (because it will be much easier to find a suitable solution for each job seeker),
  • businesses that advertise jobs (because far fewer unqualified people will apply for jobs), and
  • people who want to start projects for the public good (because their search for sources of money will be greatly facilitated).

 

Would an unconditional basic income (UBI) not be a better way to redistribute income while promoting human dignity?

No, for the following reasons:

  1. The currently applicable principle, that social benefits are paid to those who need them, is a valid one – only the method by which this principle is put into practice leaves a lot to be desired. Today, apllicants have to prove that they are needy and that they have failed in their efforts to find jobs. As a result, they are forced to accept a gift of money, without being able to reciprocate in an adequate way. A UBI throws out the baby with the bathwater if it not only rejects a needs-test, but refuses to even ask what somebody needs or wants. In the case of the Service for the Common Good, the needs-test is not needed; instead all people get the opportunity to do paid work that they themselves consider doable and meaningful. Anybody who is willing to work for a moderate payment thereby shows that they want and need this money, and they do not need to accept this money as a gift, but as payment for services rendered. This is more consistent with human dignity than being forced to accept a gift.
  2. A Service for the Common Good provides poorly paid people with an alternative that is not only financially more attractive than a poorly paid job, but which also entails at least as much self respect and social recognition, and provides opportunities for a sense of accomplishment. This fall back option would enable many people to refuse poorly paid job offers, or to negotiate for better pay from their current employers. In contrast, because a UBI is paid out to all people, somebody who obtains merely a UBI is always worse off financially, and usually also in terms of self respect and social recognition, than with the UBI plus any kind of paid employment. In such a situation, it is not so easy to refuse employment because of too little pay, because every euro or dollar counts for people who are close to the minimum needed to survive.
  3. An unconditional basic income would legitimize the idea that unearned income is no cause for concern, and would thereby contribute to legitimize the unearned income even of the very rich (just like small stockholders follow the Dow Jones Index as if their income depended more on stock prices than on prevailing wage rates). In addition, once a UBI was implemented, it would become politically much more difficult to defend the minimum wage – after all, the wage would no longer need to provide for all the costs of living, but only for those costs that exceed the UBI. Therefore, there would likely be a tendency either to abolish minimum wage legislation entirely, or to fail to adapt the minimum wage to inflation, meaning that it would gradually lose its purchasing power. These effects do not correspond to the goals of leftist supporters of the UBI, but rather to the conceptions of neoliberal followers of Milton Friedman.
  4. Supporters of the UBI believe that it would greatly reduce the costs of bureaucracy. In fact, the bureaucratic costs of the current welfare state are often exaggerated (in Germany, around 3 billion euros out of the total tax revenues of 600 billion euros are used for this purpose). Although a UBI could certainly reduce bureaucratic costs in the area of needs-testing, it would conversely increase the costs of assessing people’s incomes. If a UBI is implemented as a “negative income tax” (meaning a subsidy) for people with low incomes, it would require the precise assessment of all incomes, including those incomes that are so low that they are not taxable and are nowadays usually ignored by the tax collecting agencies. In addition, a UBI would require a much more progressive income taxation (middle class and rich people would have to pay a larger share of their incomes as tax). This would increase the incentive for tax evasion, which means that more bureaucrats would have to be employed in tax investigation. The reduced employment of bureaucrats in employment centers could easily be compensated by the increased employment of bureaucrats in the tax collection agencies.
  5. Advocates of a UBI expect that it would motivate people to become more engaged in promoting the public good, because their survival anxieties would be diminished. This argument depends in part on how high the UBI would actually be (most people’s survival anxieties would remain virtually unchanged if the payments were not substantially greater than current social welfare benefits). Furthermore, this argument assumes that all people are more or less the same, an empty slate without a life history. Some people might indeed use a UBI in order to liberate themselves somewhat from paid employment and to devote their time to activities that promote the public good. However, a person who has gone through a lot of discouraging experiences, has become depressive, has lost hope and has a diminished sense of self worth will hardly be animated to new accomplishments by a guaranteed income. Criminals could even use the UBI as a welcome subsidy for their criminal activities. It is not sufficient to claim that the “average” effects of a UBI would “probably” tend in this or that direction before starting to fundamentally restructure the entire social welfare system. A Service for the Common Good approaches the issue very differently: it is introduced stepwise as a complement to existing social benefits, and people are paid in order to work for the public good. If they do not provide service for their payment, their contracts can be terminated.
  6. A UBI will either be too small to achieve the effects desired by its leftist supporters, or it will be impossible to finance. Proposals for a UBI or a negative income tax (income subsidy) for low incomes that provide for an income not much different from current social benefits would do little to improve the income of poorly paid people, or their negotiating power when facing employers. These proposals would have the advantage, however, that they could be financed without very large tax increases. If on the other hand the UBI would be so high that one could live on it fairly reasonably, then it would require huge tax increases (in Germany, it would require something like a doubling of current total tax revenues of local, state and national governments). This would hardly be feasible politically. In addition, there could be further effects that would be very difficult to control. If many people withdrew from the labor market, the tax base financing the UBI could be eroded. At the same time, there could be a strong inflation of prices of items of daily use, without being able to ramp up production of these goods within the country (because there would not be enough people ready to work). This inflation could be avoided by importing these goods from countries with cheap wages – but in this case, the UBI in rich countries would depend on the exploitation of people in poor countries! In contrast, the payment for a Service for the Common Good could certainly be high enough to achieve the desired effects. At the same time, the effects could always be controlled through the political process, because the number of available Service positions could be determined by government.

 

By which steps could a Service for the Common Good be put in practice?

Every step will have to prepare the way for the next step, by gaining experiences and evaluating lessons learned. This could for example happen via the following sequence:

  1. A survey among people, for whom the Service for the Common Good could be an attractive option, in order to learn what kinds of things they might want to do as a service.
  2. A survey among leaders of nonprofit organizations, to learn what kinds of service activities might complement their organization´s work. The results of both surveys would be used to create a positive list of possible activities and guidelines.
  3. Workshops and consultations with relevant government agencies that would need to be involved in the implementation of a Service for the Common Good. The goal is to develop concrete and reasonably detailed implementation procedures.
  4. Pilot projects in several localities, preferably in places with high unemployment rates, offering several hundred Service positions. All administrative procedures are tested, evaluated and subsequently improved.
  5. Scaling up to a greater number of positions in more localities, offering several thousand positions. More experiences are gained, not only concerning procedures, but also considering knock-on effects (for example, impacts on local labor markets).
  6. Step-by-step further expansion to a nationwide program, up to any desired size. Continuing scientific evaluation in order to determine whether the desired effects actually occur, and in order to better estimate the costs and savings.

 

Unemployment is very low now! Why is such a policy needed now?

Employment statistics in most countries, and especially in the United States, do not reflect much more widespread underemployment and “hidden” unemployment (such as people who have given up searching for a job). Again with special reference to the US, unusually low unemployment rates are actually a sign that the next crisis in imminent. Unemployment peaks in crisis years, then gradually declines and shoots up in the next crisis, as shown by official data. According to the average period of time between crises, the next crisis is actually overdue (and a crisis in the US would have global repercussions). It is much better to have a good labor policy in place before crisis hits, rather than reacting belatedly after the fact.

I expect the next crisis to happen soon. Stagnating incomes among ordinary people lead to reduced growth prospects for businesses, meaning that they invest less. At the same time, increasing wealth among the rich and deregulated financial markets mean that more money is invested in speculative financial products. Both of these tendencies are being exacerbated by Trump’s policies. The speculative bubbles will inexorably burst, leading to the next economic crisis. I can not predict the date of the crisis, but I expect it will happen by 2020 at the latest.

 

Has anything similar been done or suggested before?

The idea that the state should do something to ensure full employment has circulated among economists at least since John Maynard Keynes. A small number of economists promote a “job guarantee”, which can be very similar to the proposal presented here (depending on the specifics of the proposals). Public policies to finance activities for the public good were implemented several times, for example in the United States under Franklin Roosevelt and in Argentina during the economic crisis years of 2002 to 2007. However, restrictive conditions that do not correspond to this proposal for a self-determined service for the common good were placed on participation in these programs. The results were certainly beneficial, but these programs were discontinued because of political opposition.

Sources:

Kaboub, F., 2007, “Employment Guarantee Programs: A Survey of Theories and Policy Experiences,” Working Paper 498, Annandale-on-Hudson, NY: The Levy Economics Institute.

Paul, M., Darity, W., Hamilton, D., and Price, A. E., 2017, “Returning to the Promise of Full Employment: A Federal Job Guarantee in the United States,” Insight Center Research Brief, Volume 2.

Tcherneva, P. R., 2012, “Beyond Full Employment: The Employer of Last Resort as an Institution for Change,“ Working Paper No. 732, Annandale-on-Hudson, NY: The Levy Economics Institute.

Wray, L. R.; Dantas, F.; Fullwiler, S.; Tcherneva, P.; Kelton, A., 2018, “Public Service Employment: A Path to Full Employment,” Research Project Report, Annandale-on-Hudson, NY: The Levy Economics Institute.

 

Would a government ever be willing to offer the number of Service positions that would actually improve the power of working people to the extent advocated here?

Certainly not right away – and I would not consider that advisable, because the proposal needs to be tested at a small scale before being implemented on a large scale. However, if the Service was successfully implemented at a moderate scale, enough people might recognize its benefits to create a movement to increase its scale. This could set off a self-reinforcing cycle that eventually would lead to implementation on the scale envisioned here, in a similar way as universal suffrage was not introduced all at once, but only stepwise.

On the other hand, a Service for the Common Good would have beneficial effects already at a small or medium scale. After all, it would give many people a chance to do something meaningful for the common good, which would also provide benefits for many other people.

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