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Since you are the one that put forth that example, why don't you explain precisely what the moral hazard is.
The moral hazard is that companies will pay too many workers a non-living wage because the government can just pick up the rest of the tab. They have little incentive to pay more if the employees can accept the low pay. The end result is that the taxpayers subsidize the big business.
The moral hazard is that companies will pay too many workers a non-living wage because the government can just pick up the rest of the tab. They have little incentive to pay more if the employees can accept the low pay. The end result is that the taxpayers subsidize the big business.
The ready availability of assistance programs results in higher wages being paid, not lower. The opportunity cost for a no-skill worker to go to work is pretty high, and it can take a lot to tempt them off the couch and away from their video games.
The only way that there would be a moral hazard in the situation being discussed is if employers were somehow able to pay their workers less than market wages, while compelling taxpayers to pick up the difference.
Given that workers are paid market wages, there is NO subsidization of business by taxpayers (in the case of wages).
The ready availability of assistance programs results in higher wages being paid, not lower. The opportunity cost for a no-skill worker to go to work is pretty high, and it can take a lot to tempt them off the couch and away from their video games.
The only way that there would be a moral hazard in the situation being discussed is if employers were somehow able to pay their workers less than market wages, while compelling taxpayers to pick up the difference.
Given that workers are paid market wages, there is NO subsidization of business by taxpayers (in the case of wages).
This makes no sense at all. Without the assistance, these employees would be homeless. And who will hire someone who is homeless?
The employers would either have to be willing to hire homeless, or pay more, if there were no benefits.
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