There have been a lot of plans from different public officials trying to spurs debate over how to get our country back to work. One recently caught my attention. A representative from Ill. proposed a bill for the federal government to employ all 15 million of the countries un-employed at $40,000 per year. According to the representative putting 15 million people back to work immediately would create new tax revenue and spur new spending in our economy. While there are a number of negatives economically to this proposal I would like to focus on what this could do to the labor markets?
If the government was able to employ that many people it would immediately reverse trends in the labor markets. Currently the demand for labor is low but the supply is high. This reversal in the labor market could have a number of negative effects.
1. Supply of available labor would be reduced drastically.
2. Labor wages would be drive upward in most parts of the Country causing the private sector to retract even greater in efforts to remain competitive.
3. Inflation while somewhat contained would enter the markets at a much more rapid pace.
4. Those currently employed for less than the established $40,000 per year would all seek other opportunities within the government causing an exodus from the private sector into the public sector
This proposal while noble would rotate the labor market from one dilemma to another. Public sector would grow exponentially and the private sector would be forced to retract causing our nation to fall even greater from its status as an economic power as more jobs would be moved overseas due to non-competitive markets and lack of qualified work force in the United States. While this proposal is a five year deal to many jobs would be moved overseas during that time period to create enough jobs to employ those individuals when the five years is up. ARTICLE