Keep the Cheap Jobs Here

Arianna once again has her panties in a bunch, and I’m the libertarian brave enough to reach in and fix them.

Yes, it’ll drive Huffington into spastic frenzy. But, this is not a reason to subsidize the minimum wage. David Shuster will tunnel ever deeper into his rabbit hole of despair. Sadly, neither is this a reason to subsidize the minimum wage.

Great Depression Unemployment Line

Unemployment is somewhere between 6.3-17.3%, and that is why we need to allow small businesses to pay employees a couple bucks an hour and have unemployment make up the difference.

Don’t jump to conclusions here, please read my plan through. This isn’t an off-the-wall proposal. Republicans can reach across the aisle to Obama with an idea Paul Krugman himself supports. Presenting this as a “no-cost jobs bill” and “free stimulus” is exactly the kind of reform judo conservatives need.

Overall, as Cato points out 6.3% – 17.3% of America is unemployed depending on your definition of unemployment. In December 2009:

  • Unemployed from job loss is 6.3% (down from 6.7% in October)
  • Discouraged (not looking because they think there are no jobs) pushes the number to 10.5%
  • Add in 35 hour part time workers, and those who stopped looking for health reasons, school, family responsibilities and we get to 17.3%.

Using the middle number, we’re looking at about 10.5% unemployment. But it is much worse for unskilled workers. The NYT’s Bob Herbert points out 09/Q4 unemployment rates amongst the poor are 10x as high as the upper middle class:

  • Unemployment in household incomes over $150,000: 3.1%
  • Unemployment in household earning under $12,499: 30.8%

Meanwhile, many argue we are facing a “new normal,” that sans deficit spending, and sans market bubbles means higher productivity, thinner margins, and more unemployment (than in recent history with deficits and bubbles), even with GDP growth. Taking all these facts in together, the immediate need is millions of low cost jobs.

Let’s assume for a second Obama is right, that evil corporations are moving our jobs to other countries where the work is cheaper. Do we want to keep extending unemployment blindly? Is worker retraining really going to create millions of new green jobs immediately? Don’t be daft.

Here’s an immediate employment policy for Republicans to take to Obama: Keep the cheap jobs here.

Instead of some convoluted tax credit for new job creation…. let’s see what kind of new low-economy businesses blossom when:

  • After 3 months of receiving unemployment insurance, a worker must be willing to work 30 hours a week at a wage-subsidized job.
  • Unemployment insurance will make up for difference between what the employees earn and $300 per week. ($7.25 x 40 hours). This means the unemployed are earning $10 per hour ($300 for 30 hours work), and have 10 business hours left for job hunting.
  • Employers will be be able to search through anonymous lists of local unemployed and hire these workers at a discount. Highest bids per hour win. Employers will have to hire the workers for at least two weeks time.
  • To continue to receive federal aid, states must adopt this type of policy and platform.

We have a large supply of untrained & unemployed young workers & minority workers suffering disproportionately. The government is spending billions in unemployment insurance. Why not re-jigger the unemployment system to require work even if the real pay is low, and make up the difference?

Perhaps daycare will get cheaper. Perhaps housecleaning will get less expensive. Perhaps we’ll be able to compete with call centers in India. These are all services that would help single mom’s and poor people go back to work…. even to work from home. I suspect, like many credible economists, when subsidized labor is $3, $4, $5 per hour, shovel ready jobs will pop up.

What we do know is that if the unemployed have to work 30 hours per week to receive their benefits… they will have more reason to go looking for work and less reason to collect unemployment insurance.

Desperate times call for desperate measures. This plan is not far fetched, it simply applies Bill Clinton’s wildly successful Welfare to Workfare strategy to Unemployment and Minimum Wage.

Arianna, you owe me one.