I was talking to a former teacher of mine about the issue of unemployment. I agree with unemployment is theory, but I cannot disagree more the the current implementation of it. As it currently stands, Congress on a day to day basis offers an extension to unemployment benefits. This creates a perverse incentive.
One of my teacher's friends is currently unemployed. Prior to his unemployment he worked for a salary upwards of $200k. Now that the market has collapsed, whenever he seeks a job, the best salary he can find is in the low $100k range. If he remains unemployed, he will continue to earn unemployment benefits and reject job offers for a relatively lower salary.
My proposal is simple. Unemployment insurance should be a single payout large enough to help someone through a tough time. The size of this payout is not important, but what is important is that a monthly payout system encourages people to reject a lower salary even if the market is telling them that the lower salary is all that their labor is worth. By coming to the realization that people respond to incentives, congress will take the unprecedented step towards understanding the economy that they ignorantly regulate.
Apiary – place where bees are kept
Dictum – positive statement
No comments:
Post a Comment