By Dr. Harold A. Black
blackh@knoxfoctus.com
One morning I decided to count the “now hiring” signs to/fro an errand. There were 12 and two job fair signs. I can’t remember when it seemed like every business was hiring. My son who runs several popular 24/7 restaurants in Metro Atlanta said that “COVID relief is killing me.” He has “now hiring” signs on all of his stores but says that they serve little purpose since all businesses have similar signs. He also said that he has had to operate some stores on only one shift because of labor shortages and that his employees are so overworked that he has to breakup disputes between them almost daily. His hope is that once COVID “relief” is over, that his old workers will return and he won’t have to train an entirely new workforce.
Labor statistics show that there are more job openings than people unemployed. How can this be? The unemployment calculation is made from people who are out of a job and are looking for work. Therefore, the statistics indicate that there are large numbers of citizens who are not working and are not looking for a job. This must be the COVID relief effect and raises several issues. First, there must be a mismatch between available jobs and job applicants if the available positions go unfilled by those looking for work. Second, every sign I saw was on a business that was possibly low paying although I saw signs wanting metal workers, mechanics and carpenters. Third, I assume that if the reasons for the low labor force participation numbers and the high job openings are the money flowing from COVID relief (namely the $300 weekly jobless benefit), then those not looking for a job earn less when working than they do by not working. Some point to this as an indicator of what happens if a guaranteed income were enacted.
Currently a bill has been introduced by Rep. Ilhan Omar (D-MN) to pay all adults (included undocumented aliens) making up to $75,000 a year $1,200 monthly and $600 per child. After $75,000 the payments do not end but are reduced by $5 per $100 of adjusted taxable income. It is estimated that the cost would be $3.75 trillion annually if implemented this year. This is pay without work. This is the ultimate goal of the left and is embodied in each of the massive spending packages pushed by the Democrats – to make every resident dependent upon the government.
Of course, one problem with a guaranteed annual income is that it provides incentives not to work amongst workers who earn an amount equal to or less than the monthly payment. This is being played out now where I would guess the majority of those not seeking work are being gifted a payment equal to or above their hourly earnings. The other problem is the price tag. I have a modest proposal. Currently there are over 80 federal welfare programs spending $1.03 trillion. That adds up to $90,960 for each impoverished family of four. Why not adopt a guaranteed income with an income cutoff and eliminate all federal welfare programs along with their attendant bureaucracies? It would grandfather in all families and subsequently pay $0 a month for each additional child past two children. So Omar’s plan would give a family of four $43,200 directly rather than the $90,960 spent mainly on the government bureaucracy today. However, the $43,200 should be the maximum benefit per family. That income would be taxed at a flat rate (say 10 percent) with no deductions allowed. Think of the savings!
There is another idea that worth mentioning that the left will never embrace – Milton Friedman’s Negative Income Tax. Friedman proposed this plan to replace all government welfare. The plan has an income cutoff – say $50,000 – with a negative tax rate – again say 50%. Those earning less than this amount would receive a check from the government. If one earned $40,000, they would receive $5,000 ($50,000 – $40,000 = $10,000/.50 = $5,000. If they earned $10,000 they would receive $20,000. Thus, low earners would have an incentive to work since they would always earn more. There would be no payments to those earning more than $50,000. Of course, since the plan has no embedded disincentives, does not create dependencies and being administered by the IRS would not create additional government bureaucracies. It would never be adopted.
