Job Voucher Plan
I applaud the President for acting boldly to save America’s economic future. However, boldness must be coupled with the right prescription for our time. Unless we act decisively with the right tools, we will face a decade of languishing high unemployment. If we are to escape the fate of our grandparents, government must partner with American business to create historic advances in innovation and productivity.
A partnered solution can replace extended unemployment payments with a hiring voucher plan. Small businesses can hire voucher employees at their unemployment rate. In return, Voucher employees can work twenty five hours per week and receive the same pay they would have received through unemployment. The Federal Government can then reimburse employers the employees’ wages without increasing the unemployment budget.
A few benefits include: Employees learn new skills and can continue to seek full employment. Employers lower risks of hiring new employees, spur innovation, and reduce prices of goods and services to compete in the global market. Government supports job growth through direct infusion of dollars into small businesses, and lets the free market determine how to maximize resources.
Issues: Rules will keep bad employers from cheating. The free market will determine how to employ people and will ensure America gets a return on its investment. The plan can be phased out as America gets back on its feet. All Americans will once again contribute to American ingenuity and global competitiveness. This idea can employ all Americans now, and can move many from the sidelines of our economy onto the field of American ingenuity and global competitiveness.
The idea behind the voucher plan comes from the fulcrum of five ideas. One is that America is losing jobs to other countries through multinational corporations transferring our trade secrets and innovations in exchange for the opportunity to sell into foreign markets. Second, small businesses have great ideas to improve their communities but lack capital and credit in this great recession. Third, the unemployed have great skills and a desire to be employed in productive jobs that have purpose for society. Fourth, extended unemployment greatly harms both America and the unemployed. And fifth, America will not allow our citizens to go hungry even when the economy is in an extraordinary recession, and therefore has extended unemployment an unprecedented 99 weeks for another 13 months.
When these five ideas are stirred into a thought soup, out comes the voucher plan. Eliminate restrictions of our existing paradigm and a new paradigm rises to the surface. Can the committed dollars of unemployment actually pass through small businesses to help them innovate and create jobs that compete with those leaving to foreign countries? Can these same dollars create a fluid, market based employment process that hires all able Americans and reduces the stigma of the long term unemployed? I think the answer is yes and I hope you will join me in asking Congress to debate the merits.
Can Job Voucher Plan Overcome Government Waste, Fraud, and Abuse?
In all the discussions which I am proposing my voucher plan, the issue of unscrupulous business owners gaming the system by replacing current full time employees with short term, part time voucher employees is the most prevalent concern. In any government program, there is always waste, fraud, and abuse, and you are right to be skeptical.
Safeguards must be put in place to guard against the few unscrupulous employers that would game the system. A simple fix is to allow only businesses that are growing to employ voucher employees, and to dictate that any company that lays off a full time employee must first let go all voucher employees. Certainly, the voucher plan introduces opportunity for waste, but what could be more wasteful to the economy than paying valuable workers to sit on the sidelines of the economy.
As a small business owner that has hired and fired hundreds of employees, I can speak with authority on the issue of replacing full time employees with part time voucher employees. Anyone who has managed a small business knows how hard it is to find, train, and keep an employee that fits the business. Full time employees are the backbone of a small business, and no prudent employer would let go such a valuable employee that has taken years to develop and replace them with short term, part time employees.
Some mention that there are better ways to stimulate the economy than my voucher plan. I am hopeful that they are correct. I am concerned that the government has very few economic bullets left to try. Interest rates are effectively negative. Quantitative easing may help temporarily but in the process may destabilize financial markets and corrupt our position as the reserve currency of the world. Bank infusions haven’t eased credit or access to capital. Consumer spending won’t be coaxed given excessive consumer debt. Stimulus has some merit when focused on future competitive infrastructure like energy independence but is limited.
My voucher plan has a specific three part focus that is paid for without increasing the federal budget. It uses dollars already allocated for the unemployed to employ all through the free market. It circumvents bank illiquidity giving “capital” to small businesses that have been cut off from capital and credit in this recession but have traditionally provided the hiring out of recessions. It provides intellectual capital to small, non-multinational companies that historically have been the breeding grounds for innovation; that critical factor that must be spurred to counteract the transfer of jobs overseas. It is an idea that merits a serious review.
Job Voucher Plan Helps Reduce Bureaucracy
I share most Americans’ concerns that creating bigger bureaucracies to help fix our debt problems is a cure that kills the patient. A benefit of my job voucher program, is that it allows the government to support a program for all Americans to begin working without creating a new bureaucracy.
The voucher program will be no more difficult to administer than the current unemployment program; in fact much easier. It can be administered by the same state workers that currently administer the unemployment program. It will actually reduce their workload. With many less unemployed persons requiring verification of evidence of job seeking, the program will reduce pressures to balloon the bureaucracy further to deal with our much larger unemployed population and the inherent social problems that are being manifested by the long term unemployed.
The job voucher plan simply passes payments that would have gone directly to unemployed persons through businesses, expecting that businesses will use the abilities of our citizens then to spur innovation and productiity.
Are Americans Entitled to Extended Unemployment?
Tea Partiers are ignited about the idea of abolishing long ago formed agencies that have been cemented in stone buildings along Constitution Avenue. They believe that good government concepts never really die and eventually become entitlements that stymie original intent. However, once formed, these ideas take hold in the American consciousness and we begin to believe we are entitled to them as unalienable rights.
Take unemployment insurance for example. Like defense, education, and the rule of law, unemployment compensation has its roots in increasing the efficiency of capitalism. With a temporary stipend, unemployed workers are free to move from businesses that are sliding past their plateau of usefulness to those that are innovating. Without the fear of losing their homes and other assets, employees move to healthy businesses even during economic downturns. Because this idea supported the beliefs of both parties of congress, unemployment insurance passed by an overwhelming majority in 1935 as part of the Social Security Act.
In most downturns, the unemployed are able to find jobs within the insured period of 26 weeks. However, an underlying sickness gutted our sustainable job base during the last thirty years as we borrowed our way through successive economic bubbles. Only after the credit default swap bubble collapsed our economy did we understand that our jobs were gone. Not only had our manufacturing blue collar jobs been shipped overseas, but our technically skilled jobs were exported as well. Our average period of unemployment has now swelled to 37 weeks.
It was only natural that Congress quickly adjusted the unemployment period as a stop gap measure when faced with the Great Recession. They rightly protected our longer term unemployed to keep them from losing all they have gained in contributing to our country. Now that the ranks of the 99ers, those that have fallen past the safety net of extended unemployment, are swelling, America is debating if unemployment benefits should extend further, and whether the unemployed are entitled to a longer benefit period.
The debate on entitlements needs a paradigm shift. Instead of discussing whether unemployed should receive more than two years unemployment compensation, we should be creating a process that allows our citizens to quickly re-enter the workforce and once again contribute to America’s success.
My voucher plan is a paradigm shift. Instead of paying unemployed to sit on the sidelines of our economy, America instead invests in our future by getting our people back to work. Small businesses can hire voucher employees at their unemployment rate. In return, Voucher employees can work twenty five hours per week and receive the same pay they would have received through unemployment. The Federal Government can then reimburse employers the employees’ wages without increasing the unemployment budget.
Tea Party members will be concerned that this voucher plan will become yet another entitlement. They can rest assured that the voucher plan will be a relic of the Great Recession, created to automatically expire as the economy improves. Voucher dollars will decrease as the percent of unemployment decreases, requiring employers to cover more of voucher employees’ wages. As a result, voucher employees in barely sustainable businesses will transfer to healthier ones.
Some claim that the unemployed feel entitled to remain unemployed, collecting extended payments. While we can all find a few examples of misuse of American altruism, I have found that most people want meaningful employment. The entitlement argument stems from the disincentive our unemployment system creates for rejoining the workforce. It’s not unreasonable to compare available jobs with current unemployment payments. When a worker leaves a job that paid $14 per hour, is getting $8 per hour for unemployment, and is faced with a job that pays $9 per hour, their incentive to work is only $1 per hour; substantially less than their former job and only a dollar more than unemployment. Unemployment should not create a re-employment inertia differential. My job voucher plan creates the largest re-employment incentive because unemployment extension payments end.
Americans might be concerned that my voucher plan would be used to balloon what they believe is already too large a government providing too many entitlements. They cite previous government programs that raised social benefit costs without creating profit generating, taxable products or services. My job voucher plan, however, grows jobs only in private sector small businesses, and can be supported by existing government agencies without expanding their budgets.
Others claim that my voucher plan is just an entitlement to small business, creating an inefficient makeshift set of jobs for the unemployed. While I agree that my plan can rapidly employ all Americans, and as such may create some early, inefficient placement of workers, it nonetheless will also create a micro-venture capitalist function for millions of small businesses. Some of these ventures will successfully create taxable revenue, and some will be incredibly successful, paying back America’s investment through future taxes on corporate profits and employee compensation.
Finally, concerns have been raised that any program such as this may create an entitlement mindset that all Americans must work. Government work programs have been abused by some to collect compensation while performing work at subpar levels. This problem is self correcting in my voucher plan. Employees would still be governed by private sector principles. If the job is not a good fit, employees will not find safe harbor in this program. For the program to be successful, government intervention will have to be restricted to current EEO and ADA requirements. But, in the end, one entitlement should fly true. America will find it is entitled to renew its future.
Can the Job Voucher Plan Create Renewal in America?
A sense of purpose is as important to one’s work fulfillment as the financial reward that work provides our family. I am reminded of the story where a passerby asks a stone mason who is chipping away at a cornerstone what he is doing, and the mason replies not that I am cutting a block, but that I am creating a cathedral.
Here in Florida, I am surrounded by neighbors who have lived in their homes for 30 years only to turn them over to the bank because of hard times. Their share of the “cathedrals” they created for our country was stored in their home. When the banks foreclosed on them, they lost the results of their life’s work.
Losing their home is just one step down the painful road that millions of Americans are enduring during this Great Recession. With the loss of so many millions of jobs, the difficulties of just one jobseeker can get lost in all the noise. How do jobseekers cope when they have become part of the 99ers, those whose extended unemployment has run out?
During this Great Recession, as each month passes, the job seeker begins to realize that somehow this recession is different. In the first days after he recovers from the shock of losing his job, he determines to quickly pursue businesses which best meet his career and geography requirements. As the months go by, he realizes that opportunities are diminishing, and he must now lower expectations if he is to cover expenses and keep the kids in the same schools. As unemployment compensation comes closer to the end, he recognizes he may have to move to open up more job possibilities. He reluctantly lists his home only to find over time that it is competing in a surplus market, and that its value is lower than the mortgage.
Yet he persists, getting up each day to comb opportunities till dusk with a hopeful heart of scheduling a job interview. His efforts pay meagerly because interviews are not plentiful in this stagnated market. Each month, more people transition to the unemployed, and they are being called in before him. He has similar qualifications, but somehow because he has been out longer, employers begin questioning why he has not been hired. Sensing their skepticism on the phone, he shows a lack of self confidence in the few interviews he gets, further lessening his chances for hire. His wife and kids quietly grow anxious with him, and he fears they are wondering what his “failure” will mean to their lives, their friendships, and their futures.
At some point, any job would be better than grieving through this spiraling loss of self worth. Then one surprisingly sunny spring 2011 morning, he turns on the TV to see President Obama, surrounded by leaders of both parties on the White House lawn, announcing the “Job Voucher Plan”. As promised, within weeks, the internet and local papers begin filling with job offers in all areas of employment. His spring is renewed with hope.
After several interviews, he begins working again, and not in some makeshift job, but one with career potential and purpose. The owner of a small business has painted a picture of an innovation in need of an American with the skills to make his dream a reality. Now purpose driven, he sets about to create real value for his employer and his community.
He knows that small business ventures are not always successful and that there are no guarantees this job will turn into something permanent. But the American people have committed for the next two years to give him 25 hours a week to help his employer and product to success. Each morning seems brighter as he gains control through his efforts to build a career in this new small business venture. Not only is his family experiencing this change; he sees a purpose growing in the entire community. There is a belief that we are all working for something larger, for a renewal in America.
While this spot is not where he had hoped he would be in the years leading up to the Great Recession, he now has a sense that things will get better. He is being paid the same wages as before the recession but with fewer hours. He will help this company with hope and loyalty of purpose, and will have done his part to dig America out of its slump. As the economy improves and competition for employees heats up, his small business owner will compete to keep his new, valuable employee. Nonetheless, the job seeker will diligently use his 15 extra hours a week to once again pursue the American dream.
The above chart shows unemployed broken down by time of unemployment. It does show a slowdown in newly unemployed. However, it does not accurately depict all unemployed because many have fallen off the curve and are no longer counted. Unfortunately, it does show that the mean time of staying unemployed is growing.