Enter Bloomberg News columnist Michael Strain, who has a "solution".
The fate of the long-term unemployed is arguably the most immediate social and economic challenge facing the U.S. today. How have our leaders in Washington responded to it?
The left wants to extend the maximum duration of unemployment benefits for the long-term unemployed. This is helpful, but not nearly sufficient. And President Barack Obama recently held a meeting with chief executives urging them not to discriminate against this group -- maybe a little helpful, maybe not. If anything, the right has been worse -- with a few notable exceptions -- offering its usual menu of tax cuts, less federal spending and less regulation.
Society owes these workers better -- creative public policies to help increase their chance of staying in the labor force. They want to work; they want to earn their own successes, to help the economy grow, and to support themselves and their families. But they can’t, in large part because they happen to be alive and working during a once-in-a-generation economic downturn.
Now, if you stopped the article there, you'd still be in reality. But that's no fun. We need to go straight to Freakonomics land!
We know that despite Obama's plea, many companies will look at their job applications with skepticism given their long unemployment spells. An employer may be concerned that workers' long periods of joblessness will negatively affect their future job performance. Will a worker be able to tool up, learn the job and be productive in a reasonable time? Perhaps he has personal problems? Perhaps she has been unemployed for so long because she keeps blowing her job interviews? With about three unemployed workers for every job opening, companies can afford to be choosy.
Fundamentally, we are talking about risk. Because of the federal minimum wage, the company knows that it has to take at least a $7.25-an-hour chance on a worker. If we knocked the minimum wage down to, say, $4 an hour, we would significantly mitigate employers' risk from hiring a long-term unemployed worker. Allowing employers to pay this group of people 45 percent less than other minimum-wage workers provides a strong incentive for businesses to give the long-term unemployed a shot.
Awesome. Hiring people at $7.25 an hour is too risky, and we have a readily available supply of long-term unemployed to exploit here, folks. Let's pay these dregs of society $4 an hour, because if they were actually worth something, they'd have a job by now. But wait, there's even more glibertarian nonsense!
Of course, we can’t just lower the minimum wage for the long-term unemployed to $4 an hour and leave it at that. Society must have as a goal that no one who works full time and heads a household lives in poverty. This policy would have to be paired with an expanded earned-income tax credit, or with more straightforward wage subsidies -- federal transfer programs that supplement a worker’s labor market earnings with tax dollars.
Specifically, he wants the federal government to pay the other $4 an hour. So see, they'd be making $8 an hour. Liberals if you don't love this plan you're all awful hypocrites who hate the poor!
Bonus points for paying for it by eliminating the mortgage deduction. We need to make housing even more unaffordable and drive up rents for MOAR PROFITS.
Super bonus points for this:
Michael R. Strain is a resident scholar at the American Enterprise Institute.
Of course he is, darling. Of course he is.
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