The economic policy stance currently dominant around the world uses unemployment as a policy tool to control inflation. When inflation rises, the government pursues contractionary fiscal or monetary policy, with the aim of creating a buffer stock of unemployed people, reducing wage demands, and ultimately inflation.[2] When inflationary expectations subside, expansionary policy aims to produce the opposite effect.

By contrast, in a job guarantee program, a buffer stock of employed people (employed in the job guarantee program) is typically intended to provide the same protection against inflation without the social costs of unemployment, hence potentially fulfilling the dual mandate of full employment and price stability.[1]

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A job guarantee would:​

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1. reduce unemployment: A state job guarantee would provide employment opportunities to people who are currently unemployed. This would help to reduce the social and economic costs of unemployment (such as poverty and social exclusion). A state job guarantee would provide a stable source of income for individuals who may struggle to find employment in the private sector. This would help to increase economic security.

2. enhance job skills and experience: The state job guarantee could provide training and experience for individuals, which would enhance their job skills and make them more employable in the future. This would help to reduce long-term unemployment and increase productivity in the economy.

3. provide public goods and services: A state job guarantee could also provide public goods and services that are currently lacking or underfunded, such as infrastructure maintenance, education, healthcare, and environmental protection. This would help to address social and environmental challenges, while also improving the quality of life for citizens.

4. reduce inequality: A state job guarantee paid at minimum wage would help to reduce inequality by providing employment opportunities and stable income to individuals who may have limited access to the labor market. This would help to reduce the gap between the rich and the poor and promote a more equal distribution of resources.

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1.  Wray, L. Randall (23 August 2009). "Job Guarantee". New Economic Perspectives. Retrieved 31 July 2018.

2. Parliament House, Canberra. "Jobs Guarantee". www.aph.gov.au. Retrieved 6 April 2021.