Does the job guarantee cause inflation?
No. The job guarantee is an inflation-fighting policy. It stabilizes one key price in the economy: the basic wage. Raising the wage floor is expected to produce an adjustment in the private sector and eliminate poverty wages but would not create a continuous increase in the price level (i.e. inflation). The job guarantee program’s price stabilizing features include:
- It functions anti-cyclically;
- It increases both supply and demand;
- It reduces costs (real and financial) associated with unemployment.
Although the job guarantee workforce can be directed to addressing supply-side bottlenecks that produce price pressures, it is not a cure-all for all inflationary concerns. There are many sources of inflation and the job guarantee is not designed to mitigate them all. Additional fiscal and monetary policies would be necessary.
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