Labor Department $100 Million Giveaway to Stop State Layoffs

$100 million sounds like a lot of money, but it does not go very far these days. It is less than .01% of the deficit.

The problem with such thinking is government programs start out “small” then end up costing tens of billions of dollars as each party tries to outdo the other in an attempt to buy voters.

Please consider Labor Dept. Attempts to Stop Layoffs by Giving $100 Million to States to Subsidize Payrolls

The Labor Department announced on Monday that it will be awarding almost $100 million in grant funding to states to prevent layoffs by allowing businesses to pay employees as part-time workers and the federal government will pick up the tab for the cost of a full-time paycheck.

The “work-sharing” program was passed as part of a Republican-led bill in the House, H.R. 3630, and Senate Amendment 1465 to extend the payroll tax deduction and unemployment benefits. In February 2012, President Barack Obama signed the bill into law, which included the $100 million in funding.

The work-sharing programs “allows employees to keep their jobs and helps employers to avoid laying off their trained workforces during economic downturns by reducing the hours of work for an entire group of affected workers,” according to the Labor Department.

The grants will be given to states that apply and meet certain requirements, including having short-term compensation programs in place that meet federal guidelines. Workers will have “wages compensated with a portion of their weekly unemployment compensation payments,” according to the Labor Department.

The largest pot is available to California, with $11,593,587 in grant funding listed. New York and Florida can get around $6 million, with Illinois and Pennsylvania eligible for more than $4 million each.

Reader Andrew who sent me the link, writes …

1. A $100 million program for all 50 states is clearly just a political token to say that they have done something about the problem.
2. The money will probably go to those companies that have close connections to the politicians in power (i.e., those who make sizable campaign contributions).

Andrew is correct on both counts. The problem with #1 is politicians are likely to want to do “more” as soon as this program kicks off.

The idea that government should be supplementing anyone this way is of course ludicrous.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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