Want more jobs? Stop paying people not to work


July 7, 2014 11:22AM

Do extended unemployment benefits perpetuate joblessness? In theory, this makes sense. If you pay people not to work, they’re incentivized to stay home. After all, as Reagan once said, “If you want more of something, subsidize it.” But our neighbors in North Carolina put this theory to the test in 2013 when the Tar Heel State became the only one in the nation to ditch the federal extended unemployment benefits program. As John Hood, my counterpart at the John Locke Foundation, wrote in this weekend’s Wall Street Journal, the plan worked. Despite ridicule from the indignant Left, North Carolina’s plan put its residents back to work. As Hood notes: 

 “For the last six months of 2013, [North Carolina] was the only state where jobless recipients weren’t eligible for extended benefits. Yet during that period North Carolina had one of the nation’s largest improvements in labor-market performance and overall economic growth.”

Indeed, after its exodus from the stagnant extended benefits program, payroll jobs in North Carolina rose at double the rate of the national average. Fortunately for job seekers and taxpayers alike, the program expired for every state earlier this year, before any other state took note of North Carolina’s foresight. Hopefully next time—when Washington inevitably tries to go back to this failed policy again—more states will take a cue and show D.C. how policy really can changes lives for the better. -Justin Owen