The plan acts as a shock absorber for the economy and ensures just working conditions.

The Job Guarantee has the features of a public option and the benefits of a price support scheme. As a public option, it guarantees universal but voluntary access to a basic public service employment opportunity to anyone who wants one. 1 It is similar to the way individuals are guaranteed a public defender if they choose not to hire a private one, or the way families are guaranteed a seat in a public school even if they opt to send their kids to a private school instead. Since the Job Guarantee provides a fixed base wage, it also serves as a price support policy, not only for workers in the program, but also for all workers in the economy. This is because it acts as an alternative to the most undesirable private sector jobs – those with poor pay, abuse, harassment, wage theft, dangerous workplaces, and other problems – thereby establishing the minimum required pay and working conditions for all employers to meet.

Price Supports, Buffer Stocks, and Living Wages

The notion that an essential resource in the economy – working people – should enjoy some form of a guarantee and price support is hardly a radical proposition. We do it regularly and effectively for all sorts of inputs of production, as a matter of both principle and economic efficiency. One may think of the minimum wage as the price floor for workers but, without the guarantee of employment, it is not entirely effective. So long as there is a shortage of jobs, the wage of the person who cannot secure a minimum- wage employment opportunity is, in fact, zero.

Consider how price supports work for agricultural commodities. Governments around the world have employed a range of methods for setting and stabilizing commodity prices. Often this was done via so-called buffer stock programs, 2 where the government would purchase the surplus production of the commodity (say corn) at a predetermined price when demand suddenly fell, and then release it for sale from storage once demand for the commodity recovered. 3 Buffer stock programs have the effect of ensuring that the price of the commodity does not fall below the government-administered price. By purchasing the surplus and selling it when there is market shortage, the government both employs the commodity (i.e., ensures that no bushel of corn goes unsold) and maintains its price floor.

When it comes to employment, the government has instituted a federal minimum wage, but not a comparable program for purchasing the surplus, so to speak, i.e., for employing the unemployed. This means that the government price support policy (the minimum wage) is rather weak, as it does not extend to the unemployed. To establish a robust wage floor, the government needs both a fixed base wage policy and a policy that would employ the unemployed on standby at that predetermined wage.

The Job Guarantee would act as an employment buffer stock scheme with the added benefit that it stabilizes the wage floor, overall prices, and the economy as a whole. Mass layoffs in recessions depress worker wages and total demand, putting downward pressure on all prices. By employing the unemployed, the public option would maintain full employment at living wages, ensuring a much more robust floor to collapsing aggregate demand than in conditions of chronic unemployment. When the economy recovers and firms resume hiring, workers would transition from the Job Guarantee program into private sector employment. Government spending and payrolls would shrink, relieving any potential inflationary pressures from private sector hiring and the increased demand. This countercyclical feature of the program, offsetting changes in private sector demand for workers, would stabilize both economic and price fluctuations and could be strengthened by training, credentialing, and other efforts to transition Job Guarantee workers to better-paid employment opportunities. In other words, the Job Guarantee would provide an economy-wide living-wage floor, true full employment, and a powerful shock absorber for the economy.