POLITICAL ISSUE #501: EXCESSIVE UNEMPLOYMENT

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ISSUE STATEMENT AND OPTIONS FOR ISSUE #501

SOLUTION DEFINITIONS AND OPTIONS FOR:

501.1 Hourly Wage Assistance Program
501.2 Corporate Apprenticeship Programs
501.3 Unemployment Loans Not Grants
501.4 Tax Deductible "Do It Yourself" Labor

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ISSUE STATEMENT FOR #501: EXCESSIVE UNEMPLOYMENT

PRESENT CONDITION: America's unemployment rate is high and the rate among certain segments of the population is very high. These published rates do not include people who have given up looking for work and/or become state supported through our mushrooming social programs.

IDEAL CONDITIONS: American society should provide every citizen who is willing to provide an honest day's work with the opportunity for a job that pays a living wage.

ISSUE JUSTIFICATION: The prosperity of America requires the productive use of all of America's material and human resources. Whereas underutilization of capital is an economic issue, forced unemployment is both a more severe economic issue and a moral issue. Since the unemployed must be supported, unemployment is a double economic loss. Human liberty and achievement of the highest human potential are basic ideals of American society; forced unemployment represents a serious failure to live up to those ideals.

AUTHOR: UWSA SANTA CLARA CO EMAIL:humphrey@aimnet.com

OPTIONS FOR ISSUE # 501: EXCESSIVE UNEMPLOYMENT

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SOLUTION DEFINITION STATEMENT
FOR
SOLUTION # 501.1 HOURLY WAGE ASSISTANCE PROGRAM

BRIEF DESCRIPTION: Rather than having people unable to find jobs or unwilling to work at the wages their skills can command in the free market, the United States shall offer an hourly wage assistance program for low income workers. The object of this program shall be to expand the market for low skill jobs by lowering the wage paid by employers while at the same time maintaining the wage received by employees above the minimum wage to encourage people to work. The following is an example of the implimentation of this program.

The minimum employer wage would be set at $2/hr. However the American people would supplement this by an additional $4/hr for a total of $6/hr minimum employee wage. For each $1/hr in employer wage, the "helping hand subsidy" would decrease by 50.

Employeer paid wage . . .$2 . . $4 . . .$6 . . .$8 . . .$10
Helping Hand Subsidy . . .$4 . .$3 . . . $2 . . .$1 . . .$ 0
Employee wage . . . . . . . $6 . . $7 . . .$8 . . .$9 . . . $10

Reducing the employer wage will make many more jobs available that currently do not justify the present minimum wage. Paying low income workers a living wage, especially when most of that wage is a helping hand from their fellow citizens to supplement the wages that the worker's skills really command in a free market will (along with the termination of welfare) motivate people to work.

JUSTIFICATION: We have only two choices, we can devise a system that both makes jobs available to everyone and motivates people to work or we can continue the present system that both denys people jobs (by setting a minimum employer wage) and encourages people not to work even when jobs are available by making welfare and unemployment too readily available. In the first system everyone contributes to society and fewer people are idle and getting into trouble while in the current system the unemployed are both an economic and social drain on American society.

AUTHOR: UWSA SANTA CLARA CO EMAIL: humphrey@aimnet.com

OPTIONS FOR SOLUTION # 501.1 HOURLY WAGE ASSISTANCE PROGRAM

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SOLUTION DEFINITION STATEMENT
FOR
SOLUTION # 501.2 CORPORATE APPRENTICESHIP PROGRAMS

BRIEF DESCRIPTION: Corporate apprenticeship programs shall be encourged through a combination of tax encentives, modified wage rules to allow reduced wages or even tuition and labor rules that treat the apprenticeship as a probationary period that does not guarantee permanent employment. These programs may be combined with high school or vocational school training.

JUSTIFICATION: We have become so "school" focused that we have forgotten that the work place is often the best teacher for career skills. Historically workers learned their career skills on the job under an apprenticeship program. Under the present system, employers simply accept public school/ vocational school graduates who then expect to paid a living wage while they receive additional on the job training. Clearly this program will require safeguards so employers don't use apprentice students as revolving door cheap labor. Employers engaging in such practices would be dropped from the program. However removing the requirement to offer permanent employment, will enable employers to offer apprenticeships to potentially marginal candidates that otherwise would not be considered.

AUTHOR: UWSA SANTA CLARA CO EMAIL: humphrey@aimnet.com

OPTIONS FOR SOLUTION # 501.2 CORPORATE APPRENTICESHIP PROGRAMS

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SOLUTION DEFINITION STATEMENT
FOR
SOLUTION # 501.3 UNEMPLOYMENT LOANS NOT GRANTS

BRIEF DESCRIPTION: Unemployment payments shall be treated as a loan and not as a grant. State governments shall track such payments and then recover them as additional state income taxes when the individual becomes reemployed. The present employer contributions which vary with their history of employee turnover shall be retained to fund training programs. If an individual moves to another state, the original state shall turn the account over to the IRS who shall collect the balance as additional federal taxes and reimburse the original state.

JUSTIFICATION: Social services must balance the expenditure of public funds to people in need with the realization that human beings will take full advantage of any system of social support provided. The proposed system provides support to workers that are unemployed, but requires those workers to reimburse the system at a rate based on their income when they again find employment. This discourages "vacation" unemployment and encourages a diligent search for new work.

AUTHOR: UWSA SANTA CLARA CO EMAIL: humphrey@aimnet.com

OPTIONS FOR SOLUTION #501.3 UNEMPLOYMENT LOANS NOT GRANTS

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SOLUTION DEFINITION STATEMENT
FOR
SOLUTION # 501.4 TAX DEDUCTIBLE "DO IT YOURSELF" LABOR

BRIEF DESCRIPTION: Individual citizens shall be permitted to deduct the cost of selected personal services on their tax return. Congress shall direct the IRS to define services that are frequently preformed by individuals on a "do it yourself" basis. This list of services would for example likely include the labor for automobile oil changes, but not major engine work. Businesses performing these services for the public would note the tax deductible labor portion on the customer's bill and provide a year end statement similar to present charitable contribution statements.

JUSTIFICATION: We need to promote employment in America, especially low skill employment, by removing the double taxation incentive for "do it yourself" labor. Unfortunately the present individual income tax system inadvertently imposes a strong disincentive for individuals to hire other people to perform services that the individual can potentially do himself. If a homeowner hires a gardener or a housecleaner or pays to have basic servicing done on his car, he has to earn 150% of the cost (at a 33% marginal tax rate) and 240% of the cost (at a 58% marginal rate, = 39% Federal, 11% State and 8% Sales) to have enough after tax income to afford to pay for the service. A business can deduct the full cost of their subcontracted services. We should allow individuals to deduct the cost of labor for services that they might reasonably be expected to perform on a "do it yourself basis". This will expand employment, and in particular expand low skill employment, by encouraging individuals to work at their chosen profession where they are most productive and then to hire other individuals to perform work that was formerly done on a "do it yourself" basis.

AUTHOR: John M. Humphrey EMAIL: humphrey@aimnet.com

OPTIONS FOR SOLUTION #501.4 TAX DEDUCTIBLE "DO IT YOURSELF" LABOR

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