PUBLIC SERVICE EMPLOYMENT: FULL EMPLOYMENT WITHOUT INFLATION

Résumé 0

In this article, I will briefly describe a program that would generate true, full employment, price stability, and currency stability. The basic idea is that the federal government provides the financing for an “employer of last resort program”, as advocated by Hyman Minsky. In effect, this provides a perfectly elastic demand curve for labor. The wage and benefit package is fixed by the government, hence, the program cannot be inflationary. It allows truly full employment, but with “loose” labor markets because firms always have access to labor that can be hired out of the public service employment program at a small mark-up over the government’s administered wage. It also provides a strong automatic stabilizer as government spending will move countercyclically. In a recession, labor flows into the pool, increasing government spending; in expansion the private sector hires labor out of the pool, reducing government spending. I will show that this program can be adopted in any nation that issues its own currency. In summary, I show how we might construct a public service program that guarantees true, full employment with price and currency stability.