The benefits of implementing Federal Jobs Guarantee would not outweigh the costs – JG would generate demand-pull inflation

In terms of market distortions, a JG would likely compete with existing public and private sector activities unless it is involved in a very narrow set of activities with limited relevance. In addition, JG may decrease the supply of work to the private sector because JG workers may have fewer incentives to look for private jobs if the JG provides better working conditions. Finally, according to critics, like the New Deal work programs, the JG is likely to have a bad reputation and so send a negative signal to potential employers.

JG critics are skeptical of the cost estimates provided by JG proponents and argue that the benefits produced would not match the cost. The administrative cost of a JG would be substantial and would require a massive reorganization of the current government administration in charge of helping the unemployed. Not only would the cost of a JG be higher than estimated, but also the benefits would be limited because of the limited usefulness of the JG activities. The private or public sect already cover most of the useful activities.

Finally, JG critics think that the claims about the stabilizing effects of a JG are overstated or not accurate. Some authors argue that a JG would create addition demand while putting the economy at full employment, thereby leading to the same demand-pull inflation as in the typical Keynesian fiscal policy. Others have doubted the capacity of the buffer program to stabilize wages significantly becaus contrary to agricultural commodities or bank reserves, labor is not a homogeno commodity. In addition, the level at which the JG wage is set is important to termine the cost, benefits, and potential inflationary dynamics, and JG proponent have not spent enough time looking at this issue carefully.