Why the Labor Market Isn’t Recovering


This graph is from Casey Mulligan, who explains:

Between 2007 and 2012, there had been little net change in the tax rate on full-time work because the 2011-12 payroll tax holiday largely offset the increases from SNAP and mortgage modification. I think this is an important reason that weekly work hours recovered from the recession much more quickly than employment has.

But a year ago the payroll tax holiday expired and, more important, beginning this week incomes earned will reduce the subsidies that families might hope to receive as part of the new insurance plans created by the Affordable Care Act.

For these reasons, the recovery of the workweek from the recession cannot be taken for granted.

Comments (15)

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  1. Buster says:

    That, and nearly 10 million applied for disability benefits, one-third of which were granted.

  2. Rudolph says:

    Government loves punishing people for working.

  3. Walter says:

    “All together, it looks like many of the jobs in the new year will involve less work.”

    Well nothing says recession recovery quite like “less work.”

  4. Stewart T. says:

    Sure, blame the government for the private sector’s refusal to hire people when they have to treat them better than slaves.

  5. Kevin says:

    “But a year ago the payroll tax holiday expired”

    A lot of interns, like myself, are now forced to pay 15% of all our income in payroll taxes.