Greg Mankiw makes this same point.
It may salvage Obama's popularity, or it may harm it. Since with nominal rigidity, real wages go up, this tax cut will draw more people into the labor market, raising the measured unemployment rate. I'm not saying it will cause less employment, only that the rate reported in newspapers will be higher than it otherwise would be.
How does your analysis change if your economic model is that profits are bad and employers are evil? Does the policy make more sense then?
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