Job Guarantee causes high chost and inflationary tendencies

Since the JG has been studied more carefully, a number of mostly skeptical evaluations have been done by Aspromourgos (2000), Kadmos and O'Hara (2000), King (2001), Sawyer (2003), and Seccareccia (2004). In relation to the New Deal work programs, Jensen ( 1989) and Margo ( 1991 ) made similar critiques that broadly range from the limited capacity to deal with structural unemployment and labor market distortions, to high cost and inflationary tendencies. Probably the most common critique is that JG is not able to deal with structural unemployment. Solving structural unemployment requires retraining, whereas JG does not provide training and there are only limited learning opportunities on the job because most JG occupations involve low or common skills. Worse, JG may weaken skills by assigning individuals to tasks that do not fit their skills. 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 limit 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 t same demand-pull inflation as in the typical Keynesian fiscal policy. Others have doubted the capacity of the buffer program to stabilize wages significantly because contrary to agricultural commodities or bank reserves, labor is not a homogenous commodity. In addition, the level at which the JG wage is set is important to determine the cost, benefits, and potential inflationary dynamics, and JG proponent have not spent enough time looking at this issue carefully.