Share this story
Close X
Switch to Desktop Site

One (mostly) good thing about Obama's jobs plan

(Read article summary)
View video

Julie Jacobson/AP

(Read caption) A carpenter balances himself as he walks atop the frame of a home under construction in Las Vegas. A reduction in the payroll tax will reduce labor costs, which could be a huge help in the fight to reduce unemployment.

View photo

I am not exatly enthusiastic about Obama's new job plan, which is mostly just more of the failed policies he has pursued in the past. There was one mostly good part though, in the form of a reduction in the employers payroll tax. Given the fact that due to wage rigidity, labor costs have fallen insufficiently to solve unemployment, a payroll tax reduction that reduces labor costs is just what is needed. The fact that it is limited to the first $5 million could however create some distortions, making even this part less good than it could be. Still, it is despite that a mostly good thing.