Posted on 07/22/2021 12:02:40 PM PDT by george76
One of the most important principles of economics is that people respond to incentives. You get more of whatever you incentivize. You get less of whatever you disincentivize. This is irrefutable. The supplemental unemployment payment does both—it incentivizes people not to work, and simultaneously disincentivizes them from working.
The number of people who have dropped out of the labor force in Colorado, those who are not actively seeking employment, remains near record highs even as open jobs go begging. Employers cannot find sufficient workers to restart their businesses, or to expand existing operations back to full capacity. They face higher costs by having to entice people out of unemployment. After a full year of partial economic lockdown in Colorado, this is holding back our recovery.
According to U.S. government data, total employment in Colorado has yet to return to pre-lockdown levels. Personal income in Colorado has yet to return to pre-lockdown levels. Real GDP in Colorado has yet to return to pre-lockdown levels. Furthermore, employment and income losses are concentrated among the poor and minorities. The last thing they need is an increased incentive not to work.
Another important economic principle is that income is created by production. When fewer people work and fewer businesses operate at capacity, it is axiomatic that less income is produced. Government payments in lieu of earned income may help some individuals in the short run, but it harms the economy as a whole in the long run. One dollar of supplemental unemployment does not have the same economic impact as one dollar of production-based earned income.
Progressives imagine that they can ignore the laws of economics. But they cannot ignore the consequences of ignoring the laws of economics. They imagine that their policies, that pay people not to work, do not result in fewer people working. They are shocked, shocked, at the very suggestion.
With supplemental benefits, many people receive more in unemployment than they earned in their previous job. And, although even more people receive less in unemployment that at their previous job, the differential at the margin is frequently not enough to incentivize a return to work. A recent article in the Wall Street Journal makes my point, “Unemployment Rolls Shrink Faster in States Cutting Aid.” Businesses see an increase in job applications as jobless aid is reduced. That is based on data—what used to be called “science.”
Even for those who receive more in unemployment than by working, the short-term money cannot make up for the long-term loss of moving up the employment ladder, achieving seniority, and earning raises. At a sociological level, the loss of earned self-esteem that comes from gainful employment is incalculable. Generational damage will occur from children not observing the social benefits of employed parents.
The unintended economic consequences to Colorado of paying people not to work go far beyond the immediate impact of reduced employment. From where will the money come? Taxes on job creators? That harms all Coloradans as fewer jobs will be created. The government printing press? That harms all Coloradans through increased inflation. From Communist China buying more U.S. Treasury debt? That harms all Coloradans by making us more beholden to a country that has shown itself to be a global enemy of freedom.
I am reminded of a saying by one of my favorite economists, Murray Rothbard, “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
paying people not to work is not intended to make USA richer.
it is intended to rot out our productive capacity, wreck our prosperity, and render millions more Americans dependent on the communist/nazi/far leftist political crooks (including buying their votes, of course).
“The unintended economic consequences to Colorado ...”
Unintended my arse.
Just about everyone was predicting in the beginning that this would be a problem if the payments weren’t temporary, but now the time has long since passed for there to be any doubt. At this point, it’s all completely intentional. Not even a question except for those who want to deny intent.
The real question is what they exact purpose is.
I suspect it’s a combination of goals, but among the most important is the increase the size of the dependent class, because the dependent class are a reliable democrat voting bloc.
It sure won’t help me get served at the local restaurant. These places are turning people away and cutting back hours due to lack of help.
Its not the first time it happened. There are still farmers being paid NOT to grow food.
There was no hope once MAGA was abandoned to even remotely pay for this.
This is about collapsing the US dollar and replacing it with China’s Yuan.
The elites are probably already transferring their wealth, now.
It is so businesses have to raise wages pure and simple.
Communism doesn’t thrive on freedom and self-sufficiency, it requires a people dependent on government, and silent in their opposition.
The bigger the government, the poorer the average citizen. The smaller the government, the richer the average citizen.
Freedom tends toward individual wealth. Government tends toward individual poverty.
The greatest recent examples for freedom connected to individual wealth are Hong Kong until 1999, and America in the 1800's where the feds spent around 5% of the GDP.
Easy to find examples of oppressive government connected to individual poverty - they're everywhere.
Glimpses of communism’s low IQ.
It is so businesses have to raise wages pure and simple.
~~~
I agree with that.
Artificial scarcity is a great way to increase price. If you can cut off the employer from a labor market, it’s pure economics what happens next.
Once the employers have to pay more for labor, prices go up, and bing... more inflation. In the end, the low end laborers are still getting the equivalent pay, relatively speaking
All in all, it’s the destructive agenda of communism and other anti-free market psychopathies.
people on the dole get to say “I am fully employed- not to work
woops- meant- it’s a full time job not working
If the work avoiders quit getting paid to avoid work, there'd be less young adults with free money making house payments during the "recovery" and the housing market would deflate back to normal and be more affordable to all the young adults flocking to Colorado. But as long as Colorado keeps paying people to be stupid, the housing market has both mature buyers and stupid buyers increasing demand.
Frankly, most people don’t give a damn about consequences. Most people will sit on their butts and cash a check for doing nothing for as long as they can. It’s a “I’m gonna get mine” mentality.
Colorado Ping ( Let me know if you wish to be added or removed from the list.)
Captain Obvious is in da house.
Precisely. They couldn't get a minimum wage hike so they are forcing it by forcing employers to raise wages MUCH higher and provide other incentives to entice people to get a job that pays more than free $7.50 an hour ($300 a week supplemental) over regular unemployment benefits. Insidious. These economic idiots have no idea how business will react instead (less employees, more automation), ultimately hurting the people they say they are trying to help (ie. those with little or no skills or education)
So many people have become as bad as the homeless bums on the street corners, too lazy after months of free sh*t to work. Help wanted signs everywhere. Businesses struggling to stay open. Thanks, Polis, you jerk.
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