Remove the Barriers to Work

Most people, and I mean almost everyone, would rather work than receive welfare. Earning your own living is an essential element of happiness and self esteem. These are the well-documented conclusions of Phil Harvey and Lisa Conyers in their new book The Human Cost of Welfare. You can watch their discussion of their book at Cato last month here: http://www.cato.org/events/human-cost-welfare-how-system-hurts-people-its-supposed-help.

Dozens of welfare programs attempt to help the poor and disadvantaged with mixed results. We would do well to replace most of these programs with a guaranteed minimum income (from which the government should deduct funds dedicated to health insurance and old age pensions of the recipients choice) as I proposed several years ago as part of a major tax reform: http://www.compasscayman.com/cfr/2009/07/07/US-federal-tax-policy/

Some of these programs discourage work by imposing financial costs for working as the result of reduced income from lost benefits. These welfare design flaws should be fixed (as the proposed guaranteed minimum income would), but governments have also thrown up many other barriers to getting jobs in the form of regulatory requirements and restrictions. Unnecessary or overly burdensome licensing requirements for many jobs protect incumbents and discourage job seekers.

According to the Washington Post: “Last year, a White House report documented the startling fact that 1 in 4 U.S. workers need a license to do their jobs, a fivefold increase since the 1950s.”

One of thousands of examples is the “license to blow” in Maryland. The state of Maryland has just bravely reduced the amount of training required for a license to wash and dry hair from 1,200 hours to 350 hours. “The new Maryland bill creates a “limited” cosmetology license for workers in blowout salons; it can be obtained after 350 hours of training. Previously, you had to be licensed as a stylist or cosmetologist, which require 1,200 and 1,500 hours of training, respectively” Washington Post May 18, 2016 https://www.washingtonpost.com/opinions/maryland-blows-away-a-hurdle-for-workers/2016/05/17/fc61cb36-1c50-11e6-9c81-4be1c14fb8c8_story.html

Most people want to work and we should make it easier for them to do so.

Author: Warren Coats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon. View all posts by Warren Coats