What to Do About High Unemployment? Make Labor More Expensive!


At the American Spectator, Phil Klein explains the dangers of the House health-care reform bill's employer mandate, which requires employers to provide health insurance to their employees:

For full-time workers, business will have to contribute at least 72.5 percent toward individual health insurance policies, and 65 percent for family policies. For part-time workers, the required percentage would be based on a proportion of how many hours they worked relative to the hours worked by a full-time employee. The exact proportion would be determined, once again, by the Health Choices Commissioner, in conjunction with the Secretary of Labor, the Secretary of the Treasury, and the Secretary of Health and Human Services.

Any employer with a total annual payroll of over $500,000 that does not meet these requirements will be subject to a new tax, which reaches as high as 8 percent once payroll reaches over $750,000.

The National Federation of Independent Business has estimated that an employer mandate would cost 1.6 million jobs over the first five years, and cut GDP by $200 billion. Whether or not you choose to believe that estimate, it's clear that taken together, the provision would make it far more costly for businesses to hire new workers and maintain current staffing levels, by raising the price of labor as well as the regulatory burden.

According to this chart from Google's public data, unemployment is currently hovering around 9.5 percent. Yet, in pursuing an employer mandate, House Democrats are pushing a policy that would pretty plainly make labor more expensive.