Jobs Jobs Everywhere?

I put out a policy report yesterday, arguing that despite the ACT’s low unemployment rate, we should nonetheless be worried about the number of Canberrans (particularly low-skilled workers) without a job. This is particularly the case for families with children. The Canberra Times ran a page one story and an opinion piece,* which concluded:

The federal government’s failure to offer wage subsidies to low-wage workers should not deter the ACT from implementing its own program. Many American states (and the District of Columbia) have their own wage subsidy programs, some worth thousands of dollars per year for low-wage families with children.

With the highest per-capita income of any state or territory in Australia, the ACT government should consider providing wage subsidies for the low-paid. Rather than offering payroll tax breaks to new firms, the Territory should instead focus resources on providing employment to low-skilled workers, whose labour force participation rates have been steadily falling. We should do this for the sake of those workers, who are currently denied the dignity of a full-time job. And we should do it for Canberra’s children, who are more likely to find jobs if they grow up in a household where work is the norm.

* The op-ed was entitled "Time to look beyond the unemployment statistics”. This is the third "Time to…" piece I’ve had published in the past year, following on the heels of “Time to rediscover the liberal arts” (AFR) and “Time to reclaim this legend as our driving force” (SMH). Of course, newspaper contributors never pick their headlines, so maybe I and my coauthors just bring out the time to’s in editors.

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3 Responses to Jobs Jobs Everywhere?

  1. Spog says:

    Actually, I was mildly offended by the article. My wife and I have worked part-time by choice ever since our first child was born back in 1990. Your writings seemed to cast me into some undignified position because I’m not full time.

    I would have thought it’s the $ earned rather than the hours worked that’s important here. Most people work part-time by choice.

    Perhaps you’re the victim of a sub-editor here.

    And you’re still back on that EITC hobby horse of yours. As I’ve asked before (and not had answered), why is an EMTR reduction of x% different if it’s delivered via that route than by some other device (eg, changes in withdrawal rates of transfer payments)?

    These gripes aside, it is good to see someone writing about the welfare to work interface and the high EMTRs there.

  2. Andrew Leigh says:

    Spog, I’m sorry if you were offended. My reading of the evidence is that having at least one parent in the workforce is good for kids. Though it’s possible that FT work is better than PT work, I haven’t seen much in the way of robust evidence on the PT/FT tradeoff. One could tell plausible stories either way.

    On the EITC, I’m sorry not to have spotted your most recent posting. You’re right to say that cutting phaseout rates by 10% is the same as a 10% EITC. But of course, cutting phaseout rates has a limit: at best, a low-wage worker earning $1 gets to keep $1. The EITC actually subsidises work, so a US low-wage worker earning $1 can get a subsidy of 40c or more. In other words, for every $1 of wages they earn, they get $1.40 in their pocket.

    The other issue is jurisdictional: the ACT also can’t do anything about high EMTRs arising from federal welfare programs, but it could offer wage subsidies to partially offset them.

  3. spog says:

    I’m not sure about PT vs FT either. My wife and I decided initially to both work 50% of normal hours, so that at any given time one of us was at home with the baby. Now that the eldest baby is well into teenage years, and the youngest is in the last year of primary school, our hours are rather longer, but not yet full-time. I hope we haven’t traumatised our kids by our choice of working arrangements.

    As far as the subsidy goes, the gain you envisage can only occur if the subsidy or EITC is greater than the withdrawal rate of every other part of the tax-transfer system combined (ie, the EMTR without including the effect of the subsidy/EITC). If it’s not (and given the way we withdraw welfare etc, it ain’t gonna be) it’s still no different than just winding back the rate of withdrawal. Well, it is different really, it’s an extra layer on the complex onion we already have.

    The jurdisdictional point is interesting. Haven’t seen that one before.

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