Cato Institute: Jettison those musty jobless benefit and union rules

Many of the laws covering today’s workforce were written more than seven decades ago during the New Deal. Collective bargaining and the unemployment insurance system, for example, were both established in 1935. Since then, the U.S. labor force and industrial structure have vastly changed, which creates an opportunity to update the laws to better suit the modern economy.

Let’s look at unemployment insurance. UI has aided millions of laid-off workers during the recent recession, but the system has also created problems. For one thing, high unemployment and expansive benefits have drained UI funds in most states, and now most states — including Maryland and Virginia — are jacking up UI taxes on businesses to replenish their reserves. But the economic recovery is still very shaky, and higher UI taxes will dampen business hiring at a time when unemployment is still very high.

Another problem is that UI pushes up the unemployment rate because it dissuades laid-off workers from reducing their wage demands, moving or making other tough but needed decisions. Harvard University’s Robert Barro estimated last year that recent expansions in UI benefits pushed up the U.S. employment rate by about 2.7 percentage points.

MaryKay wrote:I think they need an email or two. How about it members? Please send your thoughts and comments. How about the fact that people not corporations are hurting?