Tag Archives: Economics

News

How Obama’s plan to raise the minimum wage will hurt young black men

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Government Spending Vs Jobs
Government Spending Vs Jobs

From Investors Business Daily.

Excerpt:

How amusing to watch Democrats wring their hands over what they can do to get businesses to create jobs, when one of the biggest job killers is the minimum wage they keep hiking.

Recall that it was Democrats who raised the federal wage floor a whopping $2.10 an hour in the middle of the recession. The record 41% increase has led to record unemployment among young people, especially black teens.

Congress started ratcheting up the minimum wage from $5.15 an hour in mid-2007, arguing it would help abate poverty. But retailers looking to slash costs eliminated low-skilled, entry-level jobs rather than pay the mandated increases.

Now 1.5 million fewer teens are working. Last year’s unemployment rate for workers ages 16 to 19 shot up to 26% from 2007’s 15%.

As for black teens, their joblessness soared to a record 43% after the final raise to $7.25 took effect in mid-2009. It helped put more than half of young black men out of work — a first.

The president proposes cranking the minimum wage even higher to $9.50. Then he wants to raise it every year thereafter as a “living wage” indexed to inflation.

Yes, this is the problem that happens when you elect someone who knows nothing whatsoever about economics. And when I say nothing, I mean he is in disagreement with virtually all economists across the ideological spectrum.

Moderate economist Gregory Mankiw of Harvard University lists the policies that are accepted by virtually all economists.

Here’s Greg’s list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

From CNBC, we get this article showing that any increase in the minimum wage will raise the unemployment rate for young people.

Excerpt:

A quarter of teenagers were jobless in March, representing a surprising increase from February, even as the unemployment rate for the rest of the population decreased.

This figure may only get worse if budget-strapped states raise the minimum wage, and it could also be a sign of greater structural damage underlying our economy, analysts said.

The unemployment rate for 16- to 19-year olds jumped back up to 24.5 percent in March, up from 23.9 percent the prior month, according to the latest jobs data from the Labor Department.

[…]“Even when comprehending that teen employment is volatile in nature, the data that exists serves up some shock and awe,” said Brian Sozzi, a retail research analyst with Wall Street Strategies, in a note Wednesday. “If these (wage) increases do go through, the prospect for teen employment will remain grim as employers search for workers with advanced skills to fill positions.”

Twelve states, including Illinois and Pennsylvania, are considering a hike in the minimum wage. While this has been the subject of a long-running debate, many economists and analysts say raising this pay bar may cause more teen layoffs, even as it helps teens who manage to stay employed make more.

“Minimum wage increases over the past few years has definitely made it worse,” said Peter Boockvar, chief equities strategist at Miller Tabak. “In fact, there should be zero minimum wage for teenagers, or at most, something much less than the current rate.”

Teens typically are the first to be fired and the last to be hired back in a normal economic cycle, so this rate can be considered a kind of leading indicator of employment.

A new study shows that only 25% of teens will be able to find jobs this summer. And Obama thinks that this number is apparently too high. He wants to lower it by raising the price that must be paid by employers who would like to hire younger workers.

You can find out more about how raising the minimum wage increases unemployment from this comprehensive, 50-year, government study.

Excerpt:

Summary of Research on the Minimum Wage

* The minimum wage reduces employment.

Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), Peterson and Stewart (1969).

* The minimum wage reduces employment more among teenagers than adults.

Adie (1973); Brown, Gilroy and Kohen (1981a, 1981b); Fleisher (1981); Hammermesh (1982); Meyer and Wise (1981, 1983a); Minimum Wage Study Commission (1981); Neumark and Wascher (1992); Ragan (1977); Vandenbrink (1987); Welch (1974, 1978); Welch and Cunningham (1978).

* The minimum wage reduces employment most among black teenage males.

Al-Salam, Quester, and Welch (1981), Iden (1980), Mincer (1976), Moore (1971), Ragan (1977), Williams (1977a, 1977b).

* The minimum wage helped South African whites at the expense of blacks.

Bauer (1959).

* The minimum wage hurts blacks generally.

Behrman, Sickles and Taubman (1983); Linneman (1982).

* The minimum wage hurts the unskilled.

Krumm (1981).

* The minimum wage hurts low wage workers.

Brozen (1962), Cox and Oaxaca (1986), Gordon (1981).

* The minimum wage hurts low wage workers particularly during cyclical downturns.

Kosters and Welch (1972), Welch (1974).

* The minimum wage reduces average earnings of young workers.Meyer and Wise (1983b).

* The minimum wage reduces employment in low-wage industries, such as retailing.Cotterman (1981), Douty (1960), Fleisher (1981), Hammermesh (1981), Peterson (1981).

* The minimum wage causes employers to cut back on training.Hashimoto (1981, 1982), Leighton and Mincer (1981), Ragan (1981).

* The minimum wage encourages employers to install labor-saving devices.Trapani and Moroney (1981).

* The minimum wage increases the number of people on welfare.Brandon (1995), Leffler (1978).

* The minimum wage hurts the poor generally.

Stigler (1946).

* The minimum wage does little to reduce poverty.

Bonilla (1992), Brown (1988), Johnson and Browning (1983), Kohen and Gilroy (1981), Parsons (1980), Smith and Vavrichek (1987).

* The minimum wage helps unions.Linneman (1982), Cox and Oaxaca (1982).

* The minimum wage increases teenage crime rates.Hashimoto (1987), Phillips (1981).

* The minimum wage encourages employers to hire illegal aliens.

Beranek (1982).

* Few workers are permanently stuck at the minimum wage.

Brozen (1969), Smith and Vavrichek (1992).

* The minimum wage has reduced employment in foreign countries.Canada: Forrest (1982); Chile: Corbo (1981); Costa Rica: Gregory (1981); France: Rosa (1981).

This is why it is important for voters to understand economics. When you raise the price of labor, fewer employers will purchase labor. Supply and demand.

Videos

Are universities teaching students how to think critically?

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Unionized teachers view the public school system as a way to indoctrinate children in anti-Americanism, socialism, moral relativism, pacifism, postmodernism, feminism, promiscuity and a host of other doctrines of the secular left. Professors collect the money taken from working parents through compulsory taxation, and then refuse to do what is best for the children’s future careers. Instead of educating children to be logical, open-minded critical thinkers, public schools indoctrinate children with the views of the secular leftist teachers.

And you can see the results of this left-wing indoctrination process in the videos below. (H/T Tina)

Affirmative Action

Redistribution of Wealth

Keynesian deficit spending

Free speech and fair debate

The only good thing about this sad turn of events is that the high unemployment rate for youth will help them to learn the way the world really is quite rapidly, after their exit from the Never-Never-Land of public school. A new study shows that only 25% of teens will be able to find jobs this summer. Imagine their surprise when everything enacted by the Obama administration, which they overwhelmingly supported, is shown to have failed to create economic growth. Who knew? They will learn that capitalism and corporations are good, and that lower taxes and less regulation are essential to job creation.

Eventually, young people will eventually realize that they have been played for suckers by the secular leftist academics. They will start to think critically about the Jon Stewart show, the Stephen Colbert show, the Rachel Maddow show, and the Ed Schulz show. They will realize that hatred and mockery are not arguments. They will learn that businessmen and economists know more about business and economics than comedians and opinion journalists. They will have to start from the bottom and unlearn everything they learned in the public schools. Unfortunately for them, that should be about the time that the austerity measures kick in to pay for the multi-trillion dollar national debt that the Obama administration ran up, thanks to their votes.

But these growing pains are only going to get worse as liberal government programs break up traditional families more and more. But again, it will be self-inflicted misery since the young people are big supporters of marriage-killing feminist, socialist and gay-rights policies. Fewer and fewer of them will grow up in traditional homes, with mothers and fathers who stick around to raise them. Won’t they be surprised to find out how much the traditional marriages they rejected as “sexist” and “intolerant” matter so much to their success. But by then it will be too late, and their meager salaries, should they be lucky enough to find a job that hasn’t been outsourced to a capitalist nation, will be automatically taxed to pay for the subsidized pensions of their wordsmithing professors. Naturally, those very entitlement programs will be bankrupt by the time they are ready to retire – too bad they opposed the privatization of those programs when they had the chance to vote to save their own futures.

News

Obama spent $80 billion dollars on green jobs so where are the jobs?

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Government Spending Vs Jobs
Government Spending Vs Jobs

From left-wing Politico, an evaluation of Barack Obama’s green jobs stimulus spending.

Excerpt:

President Barack Obama heads to an energy plant in North Carolina on Monday to talk once again about the job-creating power of a green economy.

The catch? Nearly three years into Obama’s presidency, the White House can’t point to much solid evidence that significant numbers of Americans are scoring the green jobs the president has been touting.

Monthly Labor Department employment reports say nothing about the new clean energy workforce, while an effort to document how many Americans actually make a living in the “green collar” field may not be done by November 2012.

Obama’s Council of Economic Advisers suggests 225,000 clean energy jobs were either created or preserved through the third quarter of 2010 thanks to more than $80 billion in the economic stimulus package. But those are estimates at best.

White House officials say asking about the connection between the 9.1 percent unemployment rate and the administration’s concerted green jobs campaign is the wrong question.

And we should not have tried this, because Spain tried spending money on green jobs and it raised unemployment.

Excerpt:

Pajamas Media has received a leaked internal assessment produced by Spain’s Zapatero administration. The assessment confirms the key charges previously made by non-governmental Spanish experts in a damning report exposing the catastrophic economic failure of Spain’s “green economy” initiatives.

[…]Unsurprisingly for a governmental take on a flagship program, the report takes pains to minimize the extent of the economic harm. Yet despite the soft-pedaling, the document reveals exactly why electricity rates “necessarily skyrocketed” in Spain, as did the public debt needed to underwrite the disaster. This internal assessment preceded the Zapatero administration’s recent acknowledgement that the “green economy” stunt must be abandoned, lest the experiment risk Spain becoming Greece.

The government report does not expressly confirm the highest-profile finding of the non-governmental report: that Spain’s “green economy” program cost the country 2.2 jobs for every job “created” by the state. However, the figures published in the government document indicate they arrived at a job-loss number even worse than the 2.2 figure from the independent study.

Green jobs programs don’t work. They haven’t worked anywhere.

Does Obama look around the world and evaluate what policies work and what policies don’t work? Or does he just decide how to spend private sector money based on what makes him feel good, and what makes him look good? Is that what being President is about? Wasting tons of taxpayer money and bankrupting the country so that you can feel good about yourself because people think you are doing something good?