Shocking News: People Are Less Likely to Work When Government Subsidizes Joblessness

Kudos to the Detroit News for a great story revealing that people are refusing to accept jobs because of government unemployment benefits. None of this should be surprising to people who understand that if you subsidize something, you get more of it. Alan Reynolds has been beating this drum for quite some time, but the message doesn’t seem to get through to politicians who think it is compassionate to lure workers into lives of dependency. But perhaps this excerpt from the Detroit News report will help (In a perverse way, I admire the one guy who admits that he doesn’t plan to find work until the government stops sending him checks):

In a state with the nation’s highest jobless rate, landscaping companies are finding some job applicants are rejecting work offers so they can continue collecting unemployment benefits. It is unclear whether this trend is affecting other seasonal industries. But the fact that some seasonal landscaping workers choose to stay home and collect a check from the state, rather than work outside for a full week and spend money for gas, taxes and other expenses, raises questions about whether extended unemployment benefits give the jobless an incentive to avoid work. …Chris Pompeo, vice president of operations for Landscape America in Warren, said he has had about a dozen offers declined. One applicant, who had eight weeks to go until his state unemployment benefits ran out, asked for a deferred start date. …Some job applicants are asking to be paid in cash so they can collect unemployment illegally, said Gayle Younglove, vice president at Outdoor Experts Inc. in Romulus. “Unfortunately, we feel the economy is promoting more and more people and companies to play the system and get paid or collect cash money so they don’t have to pay taxes,” Younglove said. …A full-time landscaping employee would make $225 more a week working than from an unemployment check of $255. But after federal and state taxes are deducted, a full-time landscaper would earn $350 a week, or $95 more than a jobless check. …The federal jobless benefits extension “is the most generous safety net we’ve ever offered nationally,” said David Littmann, senior economist of the Mackinac Center for Public Policy, a free-market-oriented research group in Midland. The extra protection reduces the incentive to find work, he said. It’s impossible to know exactly how many workers are illegally declining employment, but 15 percent of Michigan’s economy is underground, where people trade services, barter or exchange cash without reporting it to the government, Littmann said. One former landscaper, who has been on unemployment for a year, said he will search for work when the benefits expire, but he estimates he earns about $50 to $60 less a week than he would if he were working. “It’s crazy,” he said. “They keep doing all of these extensions.”

Read Full Post »

Greetings from Curacao

As you can tell from my last couple of posts, I’m getting increasingly upset with politicians who do the wrong thing and make our lives worse off. I’m especially bitter about how so much of what government does is for the benefit of powerful insiders and has a negative impact on the less fortunate in society.

So the time has come for me to take a deep breath and appreciate the fact that I’m on a beautiful Caribbean island. I’m in Curacao for a speech to a Wealth Preservation conference, where I’ll be talking about the importance of fighting international bureaucracies (such as the OECD) that are trying to hinder the flow of jobs and capital from high-tax nations to low-tax jurisdictions. To put it bluntly, I want to make it easier for people to “Go Galt” and protect themselves from rapacious politicians. Given what has happened in Europe, this battle is getting more important every day.

Read Full Post »

Why Do I Hate Republicans? Let Me Count the Ways

Apologies to Elizabeth Barrett Browning, but I had to paraphrase her famous line after reading this Bill McGurn column in the Wall Street Journal about how Republican political hacks in the Illinois state legislature voted to kill a voucher bill that would have rescued inner-city children trapped in terrible government monopoly schools. If you don’t hate government and despise politicians after reading this excerpt, there is something deeply wrong with your soul:

Illinois has given us a new breed of Republican: Roger Eddy. Mr. Eddy is what they call a downstater, an assemblyman who serves an east-central Illinois district hugging the Indiana border. His day job turns out to be in government as well, as a public schools superintendent. Last week Mr. Eddy became the face of the Republican failure to get a voucher bill through the Illinois assembly. The bill had passed the Senate. Yet despite being pushed by a remarkable coalition involving fellow Republicans, a free-market state think tank, and a prominent African-American leader, only 25 Republicans in the House voted yes. That was 12 votes short. Mr. Eddy was one of 23 Republicans who killed it by voting no. …the GOP failure is striking. Republicans typically complain about not getting black support for reforms that would benefit primarily black families. In this case, however, they had that support, in the form of the Rev. James Meeks, a African-American state senator leader whom Barack Obama has called a spiritual adviser. …According to the Illinois State Board of Elections, since 2002 Mr. Eddy has accepted more than $76,000 in campaign contributions from the Illinois Education Association, the Illinois Federation of Teachers, and the Chicago Teachers Union. … Less than a month ago, the same teachers unions that have given so generously to Mr. Eddy made up a large chunk of the 15,000 protestors who converged on the state capital shouting “Raise Our Taxes” as the solution to the state’s $13 billion budget gap. ..The pity is there were 25 Republicans who did come through. The Republican house leader did what he could. One Republican legislator, a former public school teacher, was in tears on the House floor, begging for this bill. All these people went out on a limb with Mr. Meeks—and Republicans like Mr. Eddy sawed that limb off.

Read Full Post »