My Two Ideas on Jobs
By Arnold Kling
1. Cut pay for state, local, and Federal workers.
Many people worry about governments having to cut back on employment. They see this as an argument for higher government spending. However, it is actually a much stronger argument for cutting salaries of government workers. The advantage of cutting pay is that you can keep government workers employed without taking resources away from the private sector.
If you start to lose employees to the private sector, then you can raise pay to compete.
2. Cut the employer contribution to the payroll tax. In the short run, this will reduce labor costs and increase profits. This will lead firms to expand and to raise employment. In the long run, it will lead to higher wages. When recovery comes, you can either bring back the payroll tax or replace it with a less regressive tax.