Job Killers, Common Sense and Why Politics Sucks

Things are getting crazier and crazier in Washington these days.


Raising the minimum wage in a weak economy will destroy jobs. Is Economy Too Fragile to Raise the Minimum Wage? has this to say:


"President Barack Obama says a minimum wage boost can help lift low-income workers out of poverty. A new study says a pay increase amid economic uncertainty could damage the job prospects of those the policy intends to help.


In his State of the Union address last week, the president called on Congress to increase the minimum wage to $10.10 per hour, from $7.25. “Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty,” Mr. Obama said.

But Joseph Sabia, an economist at San Diego State University, said minimum-wage increases aren’t the poverty-fighting tool the president thinks. In a newly released study, Mr. Sabia found that minimum-wage increases hit employment for low-skilled workers particularly hard in times of high unemployment.


“There’s never a good time to raise the minimum wage,” Mr. Sabia said during a presentation last week in Washington. “But times of economic uncertainty and recession are the worst times.”


Economists have argued for years about the precise effect of the minimum wage on low-skilled workers. Mr. Sabia tries to shed new light on the topic by focusing his argument on the economy’s health at the time of a minimum wage increase.


Among high-school dropouts under the age of 25, a group that disproportionately earns the lowest pay, a 10% increase in the minimum wage will reduce employment for the group by 2.1% when the overall unemployment rate is less than 5%.


But when the unemployment rate in a state exceeds 8%, that same group sees their employment fall 4.2% when the minimum wage rises by 10%. The president is backing a 39% jump in the wage.


If the new rate were to take effect when a state is entering a period of high unemployment, “that could result in a nearly 16% reduction in low-wage jobs,” Mr. Sabia said . . . .


California, Illinois and five other states had unemployment rates at 8% or higher in December, according to the Labor Department.


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The ObamaCare legislation will enable people to opt not to work and still retain health coverage, thereby destroying more jobs. Notable & Quotable has this to say about that, quoting from the government's report on the effect of ObamaCare on future employment:


"From the Congressional Budget Office report "Budget and Economic Outlook: 2014 to 2024" released Tuesday:

The [Affordable Care Act's] largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level. CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive.

Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked. . . .

CBO's estimate that the ACA will reduce employment reflects some of the inherent trade-offs involved in designing such legislation. Subsidies that help lower-income people purchase an expensive product like health insurance must be relatively large to encourage a significant proportion of eligible people to enroll. If those subsidies are phased out with rising income in order to limit their total costs, the phaseout effectively raises people's marginal tax rates (the tax rates applying to their last dollar of income), thus discouraging work. In addition, if the subsidies are financed at least in part by higher taxes, those taxes will further discourage work or create other economic distortions, depending on how the taxes are designed. Alternatively, if subsidies are not phased out or eliminated with rising income, then the increase in taxes required to finance the subsidies would be much larger.

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The ObamaCare legislation will also  cause employers to convert many full time workers to part time status (30 hour week requirement), thereby destroying more jobs.


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Free trade legislation will expand trade and create more jobs, according to common sense and President Obama as well. Yet in direct opposition to President Obama on this issue, his sidekick in the Senate Harry Reid has vowed to halt trade legislation which would create more jobs, thereby destroying jobs instead.


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Public employee unions are all about limiting productivity, encouraging rich retirement benefits and enabling lots of workers to retire at an early age with full benefits for the rest of their lives, thereby causing government to cost more and take more money from the taxpayers to pay for the ever expanding government sector, thereby destroying more jobs. And this is being done as well with defending unaffordable public employee pension plans at the exclusion of creating new 401(k) offerings, thereby destroying more jobs.
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And then there's the Keystone Pipeline project and its five year and counting delay so far.


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And on and on and on and on ................


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Summing Up


It seems like there's a pattern here encouraging people not to work, and it's a disturbing one.


Productivity gains from existing workers and output gains from having more of our citizens employed have made our country the richest nation on earth.


And the one with the most freedom and opportunity as well. Not guaranteed and equal outcomes, mind you, but something much better than that ---- guaranteed equal opportunity and freedom for one and all to choose our own path to happiness, however we may chose to define or describe it.


Let's hope and trust that more and more of our fellow Americans will soon come to their senses and stop listening to all the progressive and populist nonsense which is so pervasive today.


And stop listening to much of the Republican nonsense being put forward as well.


Politics sucks. We the People deserve better from our public servants, and we'd better start demanding it.


That's my take.


Thanks. Bob.