The jobs created by government would be basic things like picking up trash or helping out in hospitals (running errands and such), etc. People employed in those jobs would not get benefits. ‘Real’ jobs would receive the same amount of money — at a minimum — and include at least some benefits. So people would prefer those jobs. Those government jobs would be last-resort jobs. If someone preferred to be in those jobs, they would not make a good employee for anybody, anyway, but this way they could at least be consumers for the goods and services that businesses produced.

Probably it has never been the case that the value of the labor of any two people who were paid the same amount of money was exactly the same. IN theory that is the way the system works, but not in reality. No business calculates the marginal contribution of any employee in deciding how much to pay anyone.

There is no money that I know of that can be eaten, fiat or not.