Wage Subsidies

This sounds like a reasonable suggestion to me. In the Washington Post Jared Bernstein and Dean Baker suggest giving wage subsidies a try:

Sen. Cory Booker (R-N.J.) recently introduced a three-year pilot program offering a guaranteed job in 15 urban and rural places. That’s a smart way to proceed, one that should allow us to see if our concerns are justified. If so, local governments in the pilot areas will find themselves having to essentially re-create the private low-wage labor market by undertaking a huge expansion of public-sector jobs.

Therefore, it makes sense to also try a less interventionist approach to job creation. Various members of Congress, including Sen. Chris Van Hollen (D-Md.) and Rep. Ro Khanna (D-Calif.), are rolling out ideas for subsidized jobs programs that target long-term jobless workers and/or those with persistent poverty-level earnings. The job would have to pay at least the minimum wage, and employers, who could be in the public, private or nonprofit sector, would receive a subsidy to cover wages, overhead and training costs. Unlike many earlier versions of such plans, these subsidies would last for a significant period: at least 18 months, and possibly as long as 30 months (with the opportunity for subsidized workers to “re-up” with a different employer if necessary).

As long as the Powers-That-Be insist on open borders it’s quite possible that the wage that employers will offer, particularly for entry-level work, will be below the federally-mandated minimum wage. If there’s one area in which I support federal intervention it’s in offsetting the run-on effects of federal government policy. And jobs have psychological and social implications that extend far beyond the paycheck.

Speaking of run-on effects, another idea that is unlikely ever to get a fair hearing is subjecting all federal regulations to cost-benefit analysis. There is an infinite number of good ideas but not all good ideas have benefits that outweigh their costs.

2 comments… add one
  • TastyBits Link

    I would expect that employers will react the same way as with the health insurance mandate. Few employers will pay more than 30 hours a week, and with the wage subsidy, they will only employ a person for the length of the subsidy.

    In addition to being part-time workers, they will be short term workers. Fixing one bad policy with another bad policy is not a solution.

  • walt moffett Link

    Sounds like a real money maker for the employers and a way to get cousin Steve a job instead of lazing on living room couch. Though if we want to do employment subsidies why not increase the number of Section 8 rent subsidy slot, fiddle with expanding medicaid services, grants for work supplies ($50-100 for steel toed boots might mean working tomorrow). tighter enforcement of wage/hour laws, etc. In other words, lets look at what we got before looking elsewhere.

    Cost/benefit analysis, if it helps donors/constituents and wins the news cycle for the day, what else needs to be considered?

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