Professor Elam

Sunday July 11, 2010

Mark Steyn recently had a column suggesting that dependence on government could easily change in two generations. He cited how Europe had quickly embraced the state cradle to grave security system, so much for the plucky adventurer in life. 

A recent interview on one of the television business channels offers the same view in different fashion. Without realizing it, government has made employees a liability. Unending unemployment payments, required maternity leaves, and looming unknown medical plans have jobs either disappearing or moving offshore. Here is yet another dynamic on how America is changing its perceptions of the rewards of work. 

The tv anchor was interviewing a head hunter. The recruiter recounted the he called an out of work male engineer about a $60,000 job. Rather then positively respond, the engineer reasoned as follows. 

Well, I am making $400 a week on unemployment (probably tax free I would guess)

I am staying home while the wife works so we do not have child care costs. 

If I take the job, I will be paying the higher progressive income tax on my earnings, higher than my wife pays. 

So if I net out the child care, the money I do make, the increased taxes, and frankly the fact that I don't miss the hassle of working, I would rather stay home. The recruiter was  bit dumbstruck but the anchor could see the point of the engineer. 

Personally, my sister married a German citizen, he rationalizes the same way. He has not had a job in Germany since she married him, she works, for the same reasons, child care ( the kids are adults now), taxes, etc. And so we hurtle towards 1956. In 1956 one parent, usually Mom, was home with the kids. Whatever you think of her advice, Dr. Laura was making this point not long ago, that kids should not be shuttled off to day care, the kid kennel, as she put it. While unemployment payments may not last forever, there has been talk of the government providing stay at home payments for this reason. 

Certainly there are underground economy alternatives of performing various household chores, mowing lawns, painting houses, cleaning offices, etc. And we suspect that the prospect of paying taxes may well be an attraction to some stay at home Dads….

My point in all of this is that two years of paying  unemployment benefits has Americans perhaps thinking that one stay at home partner is not a bad idea. Yet government ostensibly wants people to go back to work, and of course pay more taxes. Hmm, is the genie out of the bottle?  Can the government convince those enjoying the pay me not to work syndrome to go back to work?   This may well be the unintended consequence of the social safety net.