> What you propose would reduce output; if it was optimal for firms to hire the unemployed, in place of those already employed, then they would do so - unless they are prevented from doing so by labour legislation, which doesn't seem to be the case the U.S.
Payroll taxes definitely do work in that way (not as an outright barrier, but by acting as a market distortion which encourages investing in expanding production through expanding capital rather than doing so by expanding employment rolls when, before considering payroll tax costs, it would be equally or more efficient to expand production by expanding employment.)
Payroll taxes definitely do work in that way (not as an outright barrier, but by acting as a market distortion which encourages investing in expanding production through expanding capital rather than doing so by expanding employment rolls when, before considering payroll tax costs, it would be equally or more efficient to expand production by expanding employment.)