More on the GOP Plan to Raise Employment by Cutting Wages

Karl Smith followed up on the The GOP Plan to Raise Employment by Cutting Wages.

"We can imagine a human story to see how this works. The government fires a bunch of people. Many of them have a hard time finding work. However, one of them is a great statictian who the private sector would have loved to have, but she preferred the work she was doing at NOAA. Perhaps, the private sector could have lured her away with a multimillion dollar contract but it wasn’t willing to do that.

Now she is unemployed, needs to pay her mortgage and the private sector can snap her up at more or less market rate. This increases private sector employment, private sector productivity and private sector profits all in one swoop.

However, it does it both at the expense of this worker’s desired employment, the quality of the work done at NOAA and at the expense of other workers who are now on the unemployment line. The undertone in the commentary brushes aside but does not seem to deny these effects."

Still he points out that the report admits that Keynesian effects occur which he thinks is progress.

I still don't buy the analysis. There are people unemployed now, if the company wanted a statistician it could find one at a cheap rate. My experience as a manager was that we got "reqs" when the finances allowed and then we rushed to fill them before they were taken away because of budget reasons. There was an occasion when I knew of a very skilled person I wanted to hire but I couldn't find a way to do it because there was no money. I guess the argument is that while unemployment is high corporate profits are currently okay, so maybe companies do have money to hire good people, but I don't see it turning into reqs because they're waiting for government workers to become available cheap. They're not hiring because they are already at capacity because people aren't buying.