Welcome to the April Business of Wine issue of NorthBay biz. This rather new cover theme has become a staple for the magazine. In it, we explore some of the aspects of the wine industry (beyond vineyards and tasting rooms) that are so vital to the region’s economic strength. We hope this issue provides some insights and broadens your knowledge of the agricultural juggernaut chugging along in our midst every day. So please enjoy all the stories, special features and columns in the North Bay’s only locally owned, glossy business publication—NorthBay biz.
“Want more people to work? Stop paying them not to.” A simple, straightforward idea that many would agree with if it didn’t sound so damn heartless—but is it really? Because of the recession and the lingering poor economic conditions, unemployment benefits were extended to an all-time high of 99 weeks. Those opposed to this extension of benefits argued the extended length would actually discourage recipients from looking for a job. And the debate raged on.
Now we have an actual test case that, at least, begins to answer the question in real time. State lawmakers in North Carolina, facing an empty treasury, cut unemployment benefits by 30 percent and began work requirements. Once the state did that, it found it no longer qualified for the extended federal unemployment benefits. Guess what happened? As reported in the Wall Street Journal, “The Tar Heel State’s unemployment rate since then has plunged, as people cut off from benefits scrambled to find jobs. Employers reported a flood of applicants.”
The actual North Carolina unemployment rate decreased from 9.5 to 6.9 percent. When cut off from government benefits, people actively pursued employment. Before this change, it certainly looks like many were choosing taxpayer benefits over a paycheck.
And you know what? I can understand why so many make that choice. It seems government policy, whether intended or not, is designed to create a permanent underclass dependent on the largesse of elected officials.
The federal government’s “War on Poverty” began 50 years ago and currently embraces no less than 92 separate programs that cost taxpayers $799 billion in fiscal year 2012. And there’s more poverty today than there was then. There’s no question that some of these programs provide necessary relief to families in need, but in doing so, they create what’s now being called the “poverty trap.”
Here’s how the poverty trap works. If you go out and get a job and start to earn a decent wage, your benefits decrease. Earn too much and they disappear altogether. The loss of these benefits, as earned income rises, can make the effective burden of every dollar earned approach 100 percent. When that happens, there’s absolutely no incentive to get a job. Why drag your butt out of bed every day, arrange for child care, fight traffic and pay the high transportation and additional costs associated with going to work, if at the end of the week, you’re no better off than you were when you slept in? A study done here in California postulated that a single mother with a couple of kids could go from a salary of $10,000 to $40,000 annually with no discernible change to her disposable income or standard of living due to the loss of benefits and higher taxes. Once a person is out of a job and collecting benefits, it’s easy to see how the path to long-term unemployment is a very slippery slope. Packaging dependency as compassion in government programs is an insidious gambit, and too many otherwise innocent Americans are paying a heavy price in terms of their future prospects.
I’ll close with a few witticisms shared with me recently by a couple of my smart-ass friends: “Why is it we’re constantly hearing warning cries about how Social Security will soon be running out of money, but we never hear any warnings that any of the welfare programs are in danger of running out of money?” Both are funded by taxpayer dollars!
And finally, while attending a business meeting recently, the conversation turned briefly to politics. Someone began mildly criticizing the president’s health care program, only to be interrupted by another person at the meeting who admonished the first guy saying, “Hey, lighten up. How can you possibly expect the president to keep his campaign promises; after all, he’s been pretty busy fulfilling his opponents’ campaign warnings.”
That’s it for now. Enjoy this month’s magazine.
