Take America Forward

Putting Idle Hands to Work

If ever a situation existed to beneficially not “let a good crisis go to waste,” it is the current struggle by Congress to pass and pay for an extension of unemployment benefits. While they are doing this, they have the opportunity to “Make a Silk Purse out of a Sow’s Ear.”

In this gridlock over unemployment benefits and stimulus funds it should be realized that money itself is not a stimulus. It is the production that is enabled by money that is the real growth.  Unemployment benefits are (and have been) an ongoing stimulus shoring up the basic economy, Without those benefits, businesses providing basic needs would be observably under much more economic duress.

Envision if,  instead of job searching, competing with twenty to several hundred other applicants in an exercise in futility, unemployed people could use their time to create real product. While continuing to receive benefits for, say, six months, workers could be rehired by their former employers, who would pay them only the amount by which their former salary exceeded their current benefits. Several million pairs of idle hands could be put to work!

As so few of the unemployed are finding work, these benefit costs will be incurred whether or not such a program is implemented. This would be a grass roots stimulus, increasing profits and future productivity. It would also increase sales by making it possible for some businesses to lower prices. Greater monetary velocity, in a positive feedback loop, would contribute to rebuilding the economy. Extra workers on a production line would result in less cost-per-unit. Extra waiters or baristas would result in faster and better service. People could build storage facilities, set up a more efficient shop, or do whatever else might make for more productive utilization of labor. Employers could then be clamoring for workers, reversing the current hiring situation.

For their part, employers would agree to no layoffs for one year. When rehiring, they would give priority to subsidized workers. Workers who could not be accommodated by their former employers could link to, and be found by, other similar employers through existing employment programs such as “iMatch Skills” in Oregon. Costs of long commutes could be handled by cash reimbursements, tax-free to the worker but deductible by the employer. Any excessive commuting time could be credited to the 40-hour work week.

Unlike other jobs plans that are sector-specific, this plan spreads its stimulating boost across the broad spectrum of the economy. This could be the evasive, sought after “kick start.”

An estimated 2.7 million are due to run out of benefits by the end of April. Assuming $10,000 each for the six months, a 27-billion-dollar cash stimulus would create not just 27 billion dollars worth of new production, it would create the amount of product that would be generated by the implementation of 27 billion dollars in added labor. This far greater amount of productivity would generate substantial additional tax revenue to offset the costs.

The growth in GDP might even make it revenue-positive!

© Peter Asher, 1 March, 2010