Say Anything Blog

James Pethokoukis has the list.

One thing I didn’t see on the list, though, is the continued rigidity in labor markets created by the huge expansion in the minimum wage over the last couple of years and the expansion of unemployment entitlements.

For years now, since Democrats made a minimum wage hike their first act upon taking power in Congress, people such as myself have been saying that a minimum wage is little more than a tax on low-wage, low-skill labor and as with any tax it will result in fewer low-wage, low-skill jobs.

Now, after three consecutive minimum wage hikes over the last two years that has inflated the wage $2.00 an hour we’re looking at some of the worst unemployment numbers for young and low-skill workers since we started keeping track of such numbers.

And expanded unemployment benefits are problematic as well.  The problem with expanding unemployment entitlements is that it makes it easier to be unemployed.  As long as there is a cushy government “safety net” to fall back on a lot of people who are out of work have no impetus to find work again.  So not only do these expanded entitlements represent an additional burden to the individuals and businesses who we want to be creating jobs, we’re making it easier for the people we want to go back to work to stay unemployed.

And you don’t have to take my word for it.  The Institute for the Study of Labor in Bonn, Germany (hardly a bastion of right-wing conservative thought) concluded in a study in 2008:

The evidence suggests that benefit generosity increases unemployment. We view this evidence as fairly robust since the estimates are similar across alternative specifications.  The magnitudes involved are rather substantial and appear to be relatively high compared to estimates available elsewhere in the literature.

Expanding unemployment benefits expands unemployment.

Now, these factors aren’t the only causes of unemployment, but to deny that they’re exacerbating the problem - making unemployment much worse than it had to be - is to deny reality.