Create a Special Job Credit for the Long-Term Unemployed
15th July 2011
Megan McArdle has an interesting idea.
One suggestion is to give them direct incentives to choose the long-term unemployed over those who are already in work, or out of work for only a short time. How? We could exempt new hires from both the employee and the employer sides of the payroll tax, one month for every month that they were unemployed. The result is a direct wage subsidy of more than 10%. But it is a time-limited subsidy, and one carefully targeted to those who need it the most. By the time the tax relief expires, these workers will have been reintegrated into the labor force. This will cost the government something of course–but not nearly as much as supporting them on welfare, disability, or early retirement–or the prison system.
I find it amusing that the best thing the government can do to reduce unemployment is to … eliminate a burden that government itself places on employment. Gee, what would happen if we reduced the government burden on employment for everybody? Maybe, just maybe, we wouldn’t have so much unemployment to ‘deal with’. Ya think?