Earlier this week, Pajamas Media spotlighted a Labor Department report on just how bad unemployment is among teenagers. And as I read the account, an idea crystallized in my head — a possible way to help not only these teens, but the unemployment situation in general.
And I owe the solution to President Obama — he spelled it out almost two years ago.
There are multitudes of causes of high unemployment, but two of them are easily addressed: the FUD factor among employers and the minimum wage.
The FUD factor — Fear, Uncertainty, Doubt — refers to employers not knowing just how much an employee will cost them. The Obama administration is running up huge deficits while piling on more and more spending, and that all has to be paid for — which means new taxes, fees, licenses, and all the rest of the ways the government takes our money. They simply don’t know what their taxes are going to be like. Toss in ObamaCare, which may or may not cost them even more piles of money for health care plans for their employees, and it’s incredibly tempting to make current employees work harder, postpone or cancel plans to expand, and just stick the money in a safe place to cover government expenses.
And then there’s the minimum wage. it’s gone up by about a third in the past few years, and quite frankly a lot of minimum-wage jobs aren’t worth $7.20 an hour. So, again, instead of hiring more people, businesses just ask their existing employees to work a bit harder.
Further, with the economy in the dumpster, the competition for jobs — any jobs — is fiercer. If given a choice between an untrained, inexperienced kid and an older, experienced, more mature worker, why take a chance on the kid?
It’s an ugly situation, and my solution is drawn from President Obama, during his infamous meet-up with Joe The Plumber. At that unguarded moment, Obama let his economic philosophy slip and he spoke not from the TelePrompter, but from his heart:
“I think when you spread the wealth around, it’s good for everybody.”
So let’s cut the minimum wage.
We will now pause for our resident leftists to howl in rage about how I hate the poor and want them to starve. Get it out of your system, folks, then come back and talk like grown-ups.
First up, it will not send anyone into starvation. According to a study, only about 450,000 people work for minimum wage for an entire year. The rest get raises and earn more. Also, many of them are not the sole support for their family — they are children or spouses of other workers, students, and the like.
Second, a lot of those jobs — let’s be blunt — aren’t worth $7.25 an hour (or more, in some states). Take the classic example of pushing a broom at Wal-Mart (never mind that I’ve never seen a Wal-Mart list a job for minimum wage) — is that really worth $7.25 an hour to the company? Of course not. So when the minimum wage went up, they just decided that their sweepers could work just a little harder.
In some states, it’s even worse. California’s minimum wage is $9.25. Washington state sets it at $8.55. In Oregon, it’s $8.40.
Third, there’s a cascade effect from the minimum wage that has nothing to do with the poorest-paid workers. A lot of employment contracts — especially union-negotiated ones — link their base pay to a multiple of the minimum wage. Suppose a carpentry union says that new hires have to start at twice the minimum wage. When that went up from $5.85 an hour in 2007 to $7.25 in 2009 (with a stop at $6.55 in 2008), that meant that starting pay for carpenters went up from $11.70 to $14.50 in that same time. Which made new carpenters cost over a hundred dollars more a week.
Cut the minimum wage, and suddenly it’s a lot less risky and costly to hire new broom-pushers. The unemployed will have more opportunities to get their feet back in the door, and we’ll give Obama’s “trickle-up” theory of economics a chance to prove itself.
Plus, there’s the intangible — but all too real — effect on the morale of the workers. There’s something spirit-crushing about being unemployed, about having to depend on handouts and good will and charity to survive. Having a job — even if it doesn’t completely remove the need for assistance — does a soul good. There’s a sense of pride, of independence, of self-esteem in earning one’s way, one that we sorely need and have been sorely lacking.
I’ve been there, and it sucks. I don’t talk about my Day Job much, but it’s really, really gone downhill in the past few years. I frequent a forum set up for us drones (no, no link — I have to keep these two parts of my life separate), and I’m not alone in growing more and more dispirited. But I — we — stick it out because it’s still better than being dependent on others.
So let’s cut the minimum wage. Say, just back to $6.55. That will not cause much harm to individuals, but will have a very widespread effect across the nation. It will get more people back to work (not at the greatest of jobs, but hey — a job’s a job, and a paycheck’s a paycheck). With more people on private payrolls, that will cut back on the demand for social spending and aid to the poorest.
No, it won’t fix everything, and it won’t make everything better (and might make things worse for some), but I believe it will help more than it will hurt.