The Superiority of Guaranteed Employment to a Universal Basic Income for Addressing Ever-More Robust Creative Destruction

Jon Wisman and Quentin Duroy

No 2025-03, Working Papers from American University, Department of Economics

Abstract: Technological advances and freer international trade have greatly increased economic welfare. However, the benefits have been unevenly shared, with harsh consequences falling upon society’s poorest and least educated. Employment insecurity and stagnant wages in the United States have provoked a backlash that has contributed to polarized politics and support for authoritarianism, posing a danger to democracy and future economic dynamism. There is urgency in crafting institutional innovations to enable capturing the future benefits of technology and trade in a sustainable and just manner. Two policy responses have been proposed: A universal basic income that provides everyone with a set amount of continuous income, and guaranteed employment at living wages, and where necessary, reskilling to remain productive members of society. This article argues for the superiority of the second response. The idea of guaranteeing employment is hardly new or especially radical, having been proposed by FDR during the 1930s and embraced by elements within the Democratic Party until the late 1970s. What is new is the need to pair this with reskilling where necessary. This article surveys the benefits and opposition to unleashed technological change and free trade. It then addresses the superiority of guaranteeing employment over a universal basic income. It concludes by revealing how guaranteeing employment and reskilling would work, taking note of the many benefits beyond meeting the challenges of ever more robust technological change and globalization.

Keywords: Automation; Robotization; AI; Globalization; UBI; Guaranteed employment (search for similar items in EconPapers)
JEL-codes: E24 F19 H5 O33 (search for similar items in EconPapers)
Date: 2025
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