Government policy in this area is especially appropriate since government policy has played an important role in pushing in the opposite direction. The vast majority of workers receive their health care insurance through their employer. Because health care insurance is typically paid as a per worker benefit (rather than a per hour benefit), employers have an incentive to try to get the most work out of each worker, rather than hiring more workers.
This pattern of health insurance provision is a direct outgrowth of a series of government policies beginning with wage controls in World War II and including the tax deductibility of employer provided health insurance. A paid time off tax credit would at least temporarily provide an offsetting incentive to push hours per worker in the opposite direction.
Conclusion
* * *
[1] See Baker, Dean. 2009. "The Housing Crash Recession and the Case for a Third Stimulus," Center for Economic and Policy Research Briefing Paper. Available at click here />
[2] The wage of the median worker in 2007 was $15.11 (Mishel, L., J. Bernstein, and H. Shierholz, The State of Working America, 2007-2008, Ithaca, NY: Cornell University Press, Table 3-5). If non-wage compensation is equal to 30 percent of the wage, then the hourly compensation of the median worker would be approximately $20.
[3] This applies the same rule of thumb as President Obama's economic team used in calculating the impact of their stimulus plan. They assumed that a 1.0 percent increase in GDP lead to 1 million addition jobs. A $65 billion increase in GDP would be a bit less than 0.5 percent of GDP (Romer, C. and J. Bernstein, 2009 "The Job Impact of the American Recovery and Reinvestment Plan," President's Council of Economic Advisors, available at click here Therefore, it should be expected to create approximately 500,000 additional jobs.
This Issue Brief can be found online at CEPR's website.
Dean Baker is the Co-director of the Center for Economic and Policy Research. CEPR's Jobs Byte is published each month upon release of the Bureau of Labor Statistics' employment report.
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