“The results indicate that these regulations, especially minimum wage policy, contribute to higher unemployment rates and constraint formalization in Morocco, especially for youth and women.”
For anyone who still thinks minimum wage laws help people get ahead or climb the economic ladder… first you must actually be able to reach the first rung on the ladder!
While economists are famous for their disagreements (and their incompetent forecasts), there is universal consensus in the profession that demand curves slope downward. That may be meaningless
And this is why it makes no senseto impose minimum wage requirements, or to increase mandated wages where such laws already exist.
If you don’t understand this, just do a thought experiment and imagine what would happen if the minimum wage was $100 per hour. The answer is terrible unemployment, of course, which means it’s a very bad idea.
So why, then, is it okay to throw a “modest” number of people into the unemployment line with a “small” increase in the minimum wage?
The entire video was very concise, lasting less than four minutes, so it only scratched the surface. For those seeking more information on the topic, I would add the following points.
- Businesses will never create jobs unless they expect that new employees will generate enough revenue to cover not only their wages, but also the cost of taxes, regulations, and mandates. This is why policies that sometimes sound nice (higher minimum wages, health insurance mandates, etc) actually are very harmful.
- Redistribution programs make leisure more attractive than labor. This is not only bad for the overall economy because of lower labor force participation. This is why policies that sometime sound nice (unemployment benefits,food stamps, health subsidies, etc) actually are very harmful.
The American economy is in the doldrums. And has been for most this century thanks to bad policy under both Obama and Bush. So what’s needed to boost growth and create jobs? A new video from …
Government insurance for the elderly is invariably run like a Ponzi scheme. Payroll taxes paid by workers are not invested for future benefits. Those tax revenues are spent the very day, the very hour, the very minute they arrive in the Treasury’s bank account. The U S experience is not unique. Social insurance is run like a Ponzi scheme in most countries around the world.
In the United States, the Social Security Actuaries publish an annual accounting of the unfunded liability in Social Security and Medicare. Looking indefinitely into the future, the unfunded liability in Social Security is almost $28 trillion. That’s the difference between the promised benefits for future generations of retirees minus expected taxes dedicated to fund those benefits. That’s more than twice the size of the official outstanding debt of the U.S. government…
…In 1960, nearly two-thirds of the families in the bottom fifth of the income distributions were headed by someone who worked. By 1991, only one-third of these households were headed by someone who worked and only 11% worked full time. Early on in the War on Poverty, the federal government’s own studies showed the devastating effects it was having. In the guaranteed income experiments of the 1970s, for every $1 of extra welfare given to low-income persons, they reduced their labor earnings by 80 cents.
With regard to public schools, the same story seems to repeat itself again and again across the country.
The D.C. Opportunity Scholarship Program has so far funded private-school tuition for nearly 5,000 students, 95% of whom are African-American. They attend religious schools, music and arts schools, even elite college-prep schools, writes Stephen Moore in the Wall Street Journal. And the results are impressive:
An Education Department-funded study at the University of Arkansas recently found that graduation rates rose 21 percentage points—to 91%, from 70%—for students awarded the scholarship vouchers through a lottery, compared with a control group of those who applied for, but didn’t get the scholarships. For all D.C. public schools, the high-school graduation rate is closer to an abysmal 56%.
So who could be opposed to success like this? President Obama for one. He has proposed eliminating the paltry $20 million scholarship fund from the federal government’s $4 trillion budget. Whereas President Bush invited several of the parents of these children to the White House, President Obama refuses to even meet with them. In addition, the program is:
opposed by almost every liberal group, even the NAACP, and nearly every Democrat in Congress—including Eleanor Holmes Norton, who represents the District of Columbia in Congress but opposes a program that benefits her own constituents.
FDR’s New Deal was the dawn of belief that jobs flow from government. FDR didn’t seem to care whether jobs people did were productive or sustainable. He just wanted something done about the “armies” of unemployed. If they weren’t given jobs, they might become a real army and revolt.
Now that government has lots of power, people look to it to create jobs. Communist countries had five-year plans. They didn’t work.
That’s because jobs come from government getting out of the way and letting employers produce goods.
Every new layer of regulations sounds nice — protecting the environment, providing more health care, forbidding discrimination against disabled people — but most rules do more harm than good.
Humans have needs and desires. Entrepreneurs see those needs as opportunity. They hire people not out of generosity or because government told them to — but because it’s profitable to employ people if they produce valuable goods.
If it’s not profitable, that means those people would be better employed doing something else. The prices customers are willing to pay and the wages workers accept are the best indication of which jobs can be done profitably and therefore ought to be done.
I’ve periodically cited the great 19th-century French economist, Frederic Bastiat, for his very wise words about the importance of looking at both the seen and the unseen when analyzing public policy.
Those that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” fallacy.
Read more via The Wisdom of Bastiat, as Revealed by Great Moments in Federal, State, and Local Government – Daniel J. Mitchell – Townhall Finance Conservative Columnists and Financial Commentary – Page full.
A recent Congressional Budget Office report shows that when you measure federal taxes paid minus federal transfers received welfare, food stamps, Social Security, etc., the top 20 percent of earners pay an average of $46,500. The next 20 percent pay an average of $700. The bottom three-fifths get back more than they pay. Plus, the U.S. already relies more heavily on the income tax for revenues than any other advanced economy nation.
In other words, America already has lots of economic redistribution. American voters evidently sense that more redistribution would sap economic growth. They’re willing to throw a little to minimum wage earners, but they don’t want to kill the geese laying the golden eggs.
Americans are not alone in feeling that way. You don’t see much demand for Piketty policies in other countries either.