Killing the Weak as Recovery Strategy

Reading about Rhode Island’s effort to return its unemployment fund to solvency in yesterday’s Providence Journal, I got the impression of a system so counterproductive that only government officials could conceive of it (and getting worse):

The employers’ payments are determined by the number of former workers qualifying for payments; those paying the highest taxes now will pay even more.

Employers will now be split into two categories and pay unemployment insurance taxes based on two taxable wage bases. Most employers will pay a tax calculated with a wage base of $19,600 — a 3-percent increase over last year’s base of $19,000.
But those employers whose taxes are calculated at the 9.79-percent rate because they have the highest number receiving benefits will have a wage base of $21,1000. That’s intended to offset the large drain these employers exert on the unemployment fund…

It’s funny: When children are poor, we don’t tax their parents more because their kids are a drain on the system, yet when the economy turns sour, we tax the hardest-hit businesses most. That’ll teach them! No doubt, as they begin to recover to profitability, they’ll be that much more reluctant to hire new employees.
And call me cynical, but splitting the “wage base” looks like an elaborate way to avoid having the high-end tax break the 10% barrier. Taken together, these two points illustrate well how the government in Rhode Island perceives businesses — not as partners, allies, or patrons, but as a “them” that has money to take.

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Monique
Editor
9 years ago

Yet another way that the state has found to beat on businesses.
Ironic that the ultimate authority – the General Assemby – for this latest beat-down is the body that created the business environment that undoubtedly played a large role in precipitating the layoffs to begin with.

Russ
Russ
9 years ago

Silly me, I thought you might be concerned with the plight of the jobless (the actual weak), but what’s their struggle compared with that of those poor corporations! I guess for conservatives “personal” responsiblity only goes so far . Yes, corporataions have an obligation to their employees. No, those same corporations shouldn’t be able to layoff and rehire employees week to week while expecting no consequences to their actions.
If your point is that we’re all in this together and that profitable corporations need to share more of the burden of support those people disenfranchised from the productive economy, then I’m with you. But somehow I doubt it.

Dan
Dan
9 years ago

“I thought you might be concerned with the plight of the jobless (the actual weak), but what’s their struggle compared with that of those poor corporations!”
Nobody here should be surprised at this point that Russ fails to see any connection between the two. Not all businesses are evil, giant, faceless corporations, as Russ would have you believe. The contrary is true – the vast majority are small businesses. The few that have not yet shuttered their windows or left Rhode Island for friendly states are struggling to survive – precisely because of the kind of demonization and exploitation that would-be central planners and “progressives” like Russ push here.
“Yes, corporataions have an obligation to their employees. No, those same corporations shouldn’t be able to layoff and rehire employees week to week while expecting no consequences to their actions.”
Like any viable business would fire and rehire people every week – a completely aburd strawman. Most companies will jump through hoops not to lose employees because it is so expensive to advertise, interview, rehire, and retrain them. Not to mention the social costs – ask company owners and managers what the worst part of their job is and they will almost invariably answer that it is letting employees go. I suppose it’s more philosophically convenient for progressives to view all companies as cigar-chomping oil tycoons than families trying to put food on their kids’ plates, which is much closer to reality. Especially in Rhode Island, which most of the “1%” firms wouldn’t touch with a 10-foot pole.
Absent a closed-shop union, excellent workers have excellent leverage, mediocre workers have mediocre leverage, and poor workers have poor leverage, which is exactly how it should be. Unemployment numbers aren’t any more the fault of businesses than the fault of the individuals.

Russ
Russ
9 years ago

“Not all businesses are evil, giant, faceless corporations, as Russ would have you believe.”
*Yawn* I’ve started 2 businesses and I’ve had to lay people off, more than most here could claim I’d suspect.
“Like any viable business would fire and rehire people every week – a completely aburd strawman.”
I’ve worked for businesses that use the social safety net as a way to bridge them through slow periods. Justin can surely attest that there are many firms in the construction trade that do exactly that. Wasn’t intended to be absurd at all. Exaggerated perhaps, but true none the less and a problem that remains unaddressed by those that think businesses should have no skin in the game.
I left open the consideration that perhaps the risk should be shared more with profitable corporations, but those who would eliminate the individual corporate responsibility are faced with the inevitable prisoners’ dilemma of bad actors that would seek only to maximize their own profit (technically a corporation’s fiscal duty – interesting that Dan would choose to describe that behavior as evil, giant, faceless).

Dan
Dan
9 years ago

“*Yawn* I’ve started 2 businesses and I’ve had to lay people off, more than most here could claim I’d suspect.”
You should be ashamed of yourself, Russ. You violated your moral duty to those individuals and put profit above people. The occupiers should camp out on your front lawn. I’m guessing your “employees” were not part of a union either. Tsk, tsk.

Russ
Russ
9 years ago

So now we know who it actually is that puts forward absurd strawman arguments. Proof I’d say that I was spot on about my comment that I know more about running a business than most of the “experts” over here (no offense intended to those who have actual experience in the matter or even to those with something germane to say).

ANTHONY
ANTHONY
9 years ago

“I guess for conservatives “personal” responsiblity only goes so far .”
Russ… AR is a big tent site just like conservatism. You, Sammy,Passe Lefty etc. are free to exchange ideas in a marketplace just as most business has a mixed bag clientele. Employees and their corporations are essentially on the same team albeit at different pay scales. Corporations of all sizes provide services and jobs generating income. Layoffs,firings,downsizing,etc. are part of the real imperfect world. It is NOT necessarily an us vs. them zero sum game.

Dan
Dan
9 years ago

Russ – Starting a business doesn’t make you an “expert” on anything. The activity is extremely common in the United States, and most businesses fail, as yours apparently did. You’ve chosen not to provide any details about these businesses, which could have employed 1 or 2 people for all we know, so I will give you a corresponding level of deference.
I never claimed to be an “expert” on starting a business, or management, or anything of that nature. All I have ever claimed here is that I am educated in and understand basic legal and economic principles, which is a lot more than you, Lefty, or Phil can say for yourselves. By making ridiculous statements about the evil “corporations” supposedly ruining Rhode Island, you display your ignorance of these topics again and again and again.

OldTimeLefty
9 years ago

Dan
You said, “Like any viable business would fire and rehire people every week.”
A company that sells high-end household appliances advertises for workers on Craig’s List. Unemployed people who are looking for work answer their ad, placed under “Carpet Cleaners wanted”. They attend a series of unpaid meetings explaining how to demonstrate the product. As they learn during the meetings carpet cleaning per se has nothing to do with the actual work. The “trainees” are informed of wonderful benefits that kick in after 6 months. Those hired use their own vehicles and pay their own expenses to travel from one homeowner (hereinafter called “prospect”) site to another to demonstrate the product. During the course of the demonstration they are expected to produce a number of “leads”. If the prospect is “hot”, the hot lead is turned over to a closer who then attempts to sell the product. Almost all of the trainees are fired or quit well before the “benefits” kick in. Look under “Carpet Cleaning” in Craig’s List and chances are that they are advertising for employees. The company’s plan is to hire and fire within six months. They make their money by turning over employees The constant turnover keeps the company from paying medical and other benefits and is much cheaper than their unemployment tax rate. The unemployment tax rate that they pay may considered “a cost of business expense”.
OldTimeLefty

Russ
Russ
9 years ago

An expert, no? More of IT geek in that regard, but it does make me more familiar than most with the struggles of a small business owner. I offered it only in contrast to the progressive strawman you put up who can’t understand “basic legal and economic principles.”
Like I said, no offense intended. Most everyone has worked for a business, which is as valid a view as any.

Dan
Dan
9 years ago

OTL – 6 months is a little different from a week, but I’m not going to defend the company. Still, despite the best efforts of your central planners, you can’t outlaw stupidity. Those workers are squarely in the same category as my roommate who shipped his HDTV to Nigeria for a $3000 money order that never came – another craigslist adventurer. An old saying comes to mind from your example – you can’t con an honest man. Those who chase get rich quick schemes typically don’t.

Warrington Faust
Warrington Faust
9 years ago

“The harpies of the shore shall pluck the eagle of the sea”

OldTimeLefty
9 years ago

Dan,
The job seekers are desperate people. I am personally acquainted with one. This person is quite intelligent, albeit naive about the ways of the business world. This person has been out of work for about two years and receives no unemployment benefits. This person started out an eager recruit and ended up being duped and dumped.
Where do you get the idea that this was a get rich scheme. This person was honestly and eagerly looking for employment.
There is absolutely no comparison between sending money to Nigeria and looking for honest employment. Your characterization could not be further from the truth of the situation.
Also, most “employees” are let go after a few weeks, very few last more than 2 months.
You may have the last word here if you like.

OldTimeLefty
9 years ago

Dan,
You may still have the last word, but aren’t you blaming the victim here?
What does central planning have to do with how this company operates?
OldTimeLefty

OldTimeLefty
9 years ago

Warrington,
Your oblique remark is apropos of what?
OldTimeLefty

Dan
Dan
9 years ago

“Also, most “employees” are let go after a few weeks, very few last more than 2 months.”
This is simply wrong, although it would fit in nicely with your Marxist worldview if true. According to BLS, median employee tenure was 4.4 years last year.
http://www.bls.gov/news.release/tenure.nr0.htm
Furthermore, according to the WSJ and BLS, the number of people who voluntarily left their jobs was greater the number of people who were let go by employers last year. Another inconvenient fact that doesn’t jive with your “evil employer” paradigm. I suppose you probably think that employees should have the right to pack up and leave whenever they feel like it, but employers should have no such right.
As for your “friend,” if the initial bait and switch didn’t tip him off that something was amiss, you should have told him that any company advertising on craigslist and offering “wonderful benefits” that only kick in half a year later is probably up to something suspicious. In any case, this type of scam is the remote exception rather than the rule in the business world, I hope that even you can acknowledge that much. Your anecdote is simply an example of cherry picking and confirmation bias. I can give numerous examples from my personal life and those of my friends and family of companies bending over backwards to retain talent in a union-free environment. Not exactly indicative of the zero leverage we hear about from Marxists and progressives here.

Dan
Dan
9 years ago

What is all this “have the last word” nonsense? Is it a Bill O’Reilly meme? If you wish to end a thread, simply stop writing in it. Otherwise, say whatever you wish.

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