The corona virus outbreak now seems likely to trigger a recession. But an senior economist in Kalamazoo says there are ways to reduce the long-term impact.
Tim Bartik at the W.E. Upjon Institute for Employment Research says one apprach is what's known as "labor hoarding." He says it encourages businesses to keep people on the payroll during the pandemic.
"What I'm trying to add to the mix is some discussion of maybe giving employers a credit for those companies that do, in fact, maintain employment and payroll at about the level they had prior to this disease hitting the economy."
Bartik took the idea to Twitter recently. He says tax credits could have positive, long-term effects.
"Hopefully that would encourage some employers to maintain their payroll rather than laying people off. And even encourage some employers to consider hiring people now. Or maybe not now but hiring people in a month or two."
But Bartik says making that happen will require flexibility in Washington and at the state level.
"Hopefully, there are enough people willing to say, 'Look, you know, this an unusual situation. Maybe it requires that I rethink what I find acceptable as a government intervention.'"
Bartik says the goal should be to have the nation's economic curve look like the letter "V." He says that means helping it recover as quickly as it fell when the coronavirus hit. But Bartik admits that there are limits on what can be done.
"The devil's in the details. You want to design this so that, hopefully, the cost-per-job you save is of a reasonable level. You don't want to bankrupt the country in the course of doing this."
Other ways to stimulate the economy and blunt the effects of a recession include having the federal government send checks to adult Americans. President Donald Trump's $1 trillion stimulus plan announced Tuesday. March 17, includes direct payments. But Congress must still approve it.
