Publisher's Note: Hold on there
By Jody Reese
While it’s laudable that the New Hampshire legislature wants to help folks out in this bad economy, it needs to be careful not to overreact and create more problems than it solves. Case in point is the effort to extend unemployment benefits.
What possibly could be wrong with helping out those who need it most in our economy?
Sadly, a lot.
Extending unemployment benefits could actually cause unemployment to stay artificially high. It incentivizes the unemployed to stay on the employment sidelines, waiting for a better job to come along. This could extend the recession and blunt new business growth.
Recessions are great incubators for small business. Many new businesses need employees but can’t pay top dollar, so they rely on the lower wages of a recession to get going (wages are lower in a recession because there are more people wanting to work than available work). Extending benefits keeps some people from looking at these lower-wage jobs, so the new small businesses struggle to find workers they can afford and unemployment stays high.
On top of that, the state would have to raise taxes on those new businesses to pay for the added unemployment benefits. It would hurt just the businesses that need the most help at this time.
It’s not the right solution. A tax credit for small businesses would be a much better solution and get people back to work and stimulate the economy.