Minimum Wages and the Economy

I didn’t know this sort of thing actually happened. I thought it was a threat from business to labor that never really happened. Or, at the very least, businesses just hired less and no one ever got fired as a result:

The study of part-time workers monitored by the U.S. Bureau of Labor Statistics from 1999 to 2009 found that raising the minimum wage to $7.25 during the recession caused some businesses to scale back on filling vacant positions or eliminate jobs altogether, said Michael Hicks, director of Ball State’s Center for Business and Economic Research.

Increasing the minimum wage was meant to raise the living standards of millions of Americans holding unskilled, entry-level positions.But it may have led to the elimination of 550,000 jobs — opening the possibility that such wage levels should be revised, a new study from Ball State University shows.

The businessman in me tells me it makes sense, though.

Unemployment Trauma

The NY Times has an interesting piece on the trauma of unemployment:

Nearly half of the adults surveyed admitted to feeling embarrassed or ashamed most of the time or sometimes as a result of being out of work. Perhaps unsurprisingly, given the traditional image of men as breadwinners, men were significantly more likely than women to report feeling ashamed most of the time.

There was a pervasive sense from the poll that the American dream had been upended for many. Nearly half of those polled said they felt in danger of falling out of their social class, with those out of work six months or more feeling especially vulnerable. Working-class respondents felt at risk in the greatest numbers.

Nearly half of respondents said they did not have health insurance, with the vast majority citing job loss as a reason, a notable finding given the tug of war in Congress over a health care overhaul. The poll offered a glimpse of the potential ripple effect of having no coverage. More than half characterized the cost of basic medical care as a hardship.

Many in the ranks of the unemployed appear to be rethinking their career and life choices. Just over 40 percent said they had moved or considered moving to another part of the state or country where there were more jobs. More than two-thirds of respondents had considered changing their career or field, and 44 percent of those surveyed had pursued job retraining or other educational opportunities.

My Dad and I were discussing his nearly two-year unemployment stint earlier today. I’ve tried for years to get him to go to school and study harder than he thinks he can. My Dad, I believe, is a good benchmark for most other average Americans. Frankly, I think a lot of people looking for work are just looking for something to plop in their hometown and refuse to do much else. Dad does not believe anyone is capable of going to school and working at the same time because he “has to have time to sleep.”

I respected John McCain on the campaign trail last year for telling people their factory jobs aren’t coming back to America. He was right about that and people like my Dad are dragging their feet in adapting to this brave new world. Dad said just today that rather than “helping people go to school or get a degree, the state should just be ‘creating jobs’.” That’s a dangerous kind of reliance on the government that demands the easiest solution for the populous. Not to mention the fact that government doesn’t just “make jobs”. No need to learn something when you can just show up and move boxes for $20 an hour.

For many others, what kind of a boom would we have if healthcare were granted to everyone? The people trapped in their dead-end cubicle jobs could finally be freed to develop new businesses and industries because they wouldn’t be shackled to someplace just for the health insurance. I think businesses know that and want to keep that Ace up their sleeve.

It’s a brave new world.