The wonderful world of bad consequences arising from do-good policies. Casey B. Mulligan, University of Chicago economics professor: Unlike state unemployment-insurance benefits that are sometimes a kind of liability for the employer writing the pink slip, the federal unemployment-insurance expansions were paid by taxpayers generally, which means that an employer could lay off as many people as he wanted without adding to his federal tax burden. Maybe more vivid was the kind of ObamaCare experiment in the American Recovery and Reinvestment Act of 2009 that told unemployed people that if you like the health plan you had on your old job, you can keep it, and the federal government will pay. Before the Recovery Act, many employers used to voluntarily help employees with their insurance after a separation; these were expensive benefit programs for their employees. The employers had to consider that laying somebody off was going to end the value created by the employee but wasnt going to end the health expenses the employee creates. But employers readily explain how the Recovery Act completely changed that calculus. Lay somebody off during the crisis and, for the first time, among other things, the employer wouldnt have to pay for former-employee health insurance. So public policy intended to make layoffs less painful actually made layoffs cheaper and more common.
Posted on: Mon, 30 Jun 2014 11:33:09 +0000
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