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A Recipe For Recovery

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.


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Comments (17)

If you cut the minimum wage... (Below threshold)
epador:

If you cut the minimum wage you'll have to cut legislators and executive branch salaries a similar proportion, just to be fair, doncha know.

"you'll have to cut legisla... (Below threshold)
GarandFan:

"you'll have to cut legislators and executive branch salaries a similar proportion"

If we paid them what they're actually 'worth', given the current economy; they should be PAYING us!

You are a brave man JT, and... (Below threshold)
ChiefMinion:

You are a brave man JT, and right as rain.

Every first year econ student knows that raising the minimum wage cuts the number employed and creates an economic "loss" to the overall economy. (At least they had to know it to pass out of my class.) As an economic argument, this is indisputable in both theory and data. Even the whacked out socialist professors couldn't argue otherwise without a bright student laying them low.

I also think there is a social argument to be made for lowering the minimum wage. The leftists always trot out some poor sap trying to survive on a full time minimum wage job when peddling their nonsense. They grab the moral high ground (or so they think) and make it difficult to argue against yet another increase. Someone with stones would trot out a cadre of teens who can't get a job or people who are going to lose their job due to the increase to answer the argument. (The dirty little secret is that a lot of the jobs at the artificially high minimum wage would keep most if not all of their current wage because they require more than the most minimal of skills. Employers will also "compete" for the best of the unskilled with wage as their carrot.)

The right in their rush to be "compassionate" always cedes this high ground to the left. We need to be brave enough to ask whether it is better to have more people employed at a lower wage or fewer employed at the artificially high wage. The American public instinctively knows the answer to this. The left doesn't. They just scream louder.

Where is the true compassion? Certainly on the right in this issue. Giving more teens an opportunity to work teaches life lessons that will serve them for the duration. These are lessons that aren't learned on an allowance from the parents.

I also think you could make a good argument that this would help with our illegal problem. Instead of hiring illegals and paying them an artificially low wage under the table, you could make legitimate hires of Americans.

Gird your loins and propose lowering the minimum wage. The antique media and leftists will howl with rage. We must remain calm. For every sob story they trot out, we can trot out ten people who will be better off with a job. If Americans were ever in a mood to see the logic and truth of this argument, it is now.

half right. Reducing the m... (Below threshold)
steve:

half right. Reducing the minimum wage won't do much until the FUD factor diminishes. It's akin to increasing the business write off on equipment purchases; while it makes it cheaper to buy something, getting an accelerated deduction won't help if businesses are sitting on the sidelines waiting for the rebound recession, trying to figure out how much Obamacare is going to cost them, etc.

The real recipe for recovery? Have Obama stop scaring the s**t of of people and reverse his so-called accomplishments (Obamacare, financial reform, having taxpayers finance programs that allow deadbeats to stay in their homes).

After you remove the fear, then it is time for some positive stimulative moves such as cutting the minimum wage.

I think that the minimum wa... (Below threshold)
Eric:

I think that the minimum wage rate should be indexed to the inflation rate. Every time the Democrats come into power the minimum wage war starts all over again. The Democrats play all their class warfare cards, in the end the Republicans fold and Minimum Wage gets raised a couple dollars an hour.

For businesses the biggest problem that this is an unplanned government forced hit to their payroll costs. By indexing Min Wage to inflation then yes the Minimum Wage goes up each year but businesses can plan ahead because their payroll costs are more predictable.

You also strip away one of the Democrats key issues. How do they fight against a plan where the Minimum Wage rate goes up every year?

And of course we can't forg... (Below threshold)
SCSIwuzzy:

And of course we can't forget all of the union contracts (and a few non-union workers) that have their pay tied to MW.

That´s right!Our e... (Below threshold)
Myronhalo:

That´s right!

Our economic recession started when the Democrats gained control of congress in 2006 and the first thing they did was raise the minimum wage. Any economist worth his salt needs to admit that that is what tripped up the economy. Fannie May and Freddie Mac and snobs like Barnie Frank did their part by making government insist that banks make risky loans to undependable people. Add to that the get rich quit schemes on Wall Street and you have a fine recipe for economic disaster.
If you want to make a jobs bill, just put the minimum wage back where it was. It won´t cost the government (taxpayer) anything, but it will put hundreds of thousands of people to work. Instead of more food stamps and unemployment extensions, let people work for what they receive. It dignifies the person when he/she knows he/she is pulling a share of the load and not just riding on the wagon.
I´ve worked for minimum wage quite a few times as a student and that´s how I made it threw college and post grad degrees. I never would have made it without those jobs.

Conservative job plan? Cut ... (Below threshold)
dane:

Conservative job plan? Cut taxes for the rich and cut the wages of the working poor.

Pure genius.

It matches the peace plan of throwing gasoline on any Muslim you come across.

Let's see... Part ... (Below threshold)

Let's see...

Part 1: keep money out of the government's hands, and in the hands of individuals. Works for me.

Part 2: Spread money around more poor people. Works for me.

Part 3: Doesn't ring a bell, but as a general principle, "kill the bad people who kill innocents" works for me, too.

Poor Dane... so close, yet you can't quite grasp how right you are.

J.

But...but..these teenagers ... (Below threshold)
Sir Toby Belch:

But...but..these teenagers will be perfect
conscripts for Obama's Citizen Army.....
whatever the hell that is.......

My own experience is that s... (Below threshold)
Paul Hooson:

My own experience is that some workers aren't even worth a minimum age, while others are real valuable employees. On the other hand, everyone needs money in their pocket to spend to keep the economy running.

"It matches the peace plan ... (Below threshold)
914:

"It matches the peace plan of throwing gasoline on any Muslim you come across."


? WTF ? nUtCaSe

Dane:"Conservative job plan... (Below threshold)
Drago:

Dane:"Conservative job plan? Cut taxes for the rich and cut the wages of the working poor."

Liberal job plan? Crush businesses (large and small); promise unemployment will never get above 8% and see it soar to nearly 10% and leveling at 9.5+% for the long term AFTER passing all your moronic lefty plans and even after claiming the moronic left plans worked "better than anyone could have dreamed" (sheriff and field marshall li'l joey biden)!

Hey Dane! WHERE. ARE. THE. JOBS?

Seriously, your side got everything they wanted and said they needed.

Everything.

SO WHERE ARE THE JOBS?

More hilarity from Dane: "It matches the peace plan of throwing gasoline on any Muslim you come across."

Only a dhimmi lefty like Dane would offer up this comment on the same day that authorities in Britain arrested 6 islamis pals of Dane for plotting to kill the Pope and the Dutch police arrested another of Danes political allies for terrorist related activity.

So, again, when murderous islamist radicals are caught, thats the time when Dane (and ALL lefties) pipe up with the usual "watch out for those right-wing extremist" comments.

And "gasoline"?? The only people burning anyone anywhere are Danes political islamist radical allies.

Jay, I assume you still hav... (Below threshold)
John S:

Jay, I assume you still have a job. I spend 4 months this summer looking, had 30 companies refuse to interview me because I wasn't 22 years old, and finally talked a restaurant manager to give a chance to work as a cook for $9.75 hr. (A little less than the $106K I was making in 2008.) If the minimum wage was lower, I'd be starting at MUCH less. (You try working 13 hour shifts every weekend on your feet for a $225 weekly paycheck. No one who pays minimum wage offers more than 25 hours a week.) And if the new Republican Congress decides it should lower the minimum wage, I'd suggest they Google "Storming of the Bastille." There's 35 million un- and under-employed people out here with very little to lose. Don't piss us off, we're armed.

The minimum wage isn't goin... (Below threshold)
wtfo:

The minimum wage isn't going down or going away until people are hanging from lamp posts. That's just a political reality - and John S above provides a great example as to why.

You can jack up the minimum wage all you want, and you can borrow and spend all you want, but it simply will not be able to create jobs or wealth fast enough to offset the negative consequences of those actions.

The real purchasing power of your $9.75, today, is about the same purchasing power as the minimum wage had 10 years ago, regardless of the nominal increase. The minimum wage increases and other government actions don't make up for the inflation, they help DRIVE the inflation. That inflation is the only thing keeping the government balance sheets from imploding entirely, although they like to fiddle with the CPI so they can pretend it isn't there.

You've been had.

.... So let's cut the minim... (Below threshold)

.... So let's cut the minimum wage. Say, just back to $6.55 ....

That's great for any whose potential employer values his time at Six Dollars and Sixty-Six Cents. But is as much use as are tits on boars, to those worth only Five Bucks.

A bit like attempting to cure appendicitis with codeine.

.... the minimum wage (has)... (Below threshold)

.... the minimum wage (has) "gone up" by about a third in the past few years ....

Nope. The United States Dollar, thanks to taxation in its most insidious form, deliberately feral-gummint/Fed manipulated/created) Inflation, has "gone down."




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