Our Congress-managed economy

Earlier today I wrote how Congress can’t even manage their own dining system on Capitol Hill. Now I find this at Liberty Pundit (who, by the way, named us his “Blog of the Day“);

He has a point:

Ask yourself a few questions: Why did unemployment surge at a time when unemployment compensation claims are historically low? More to the point, how could unemployment spike this much without a coinciding spike in corporate lay-offs?

The answer to all of these questions is same: because very few people lost jobs last month. This huge jump in the size of the unemployed comes from new entrants to the economy – hundreds of thousands of them. In short, well over 600,000 people who were not job seekers in April became job seekers in May. And who starts looking for work at the end of Spring? That’s right – students. Hundreds of thousands of students are looking for work right now, and they’re not finding it.

Congress is to blame. Last year Congressional Democrats (along with some Stockholm-Syndromed Republicans) passed the Fair Minimum Wage Act of 2007, which started a phased hike of the minimum wage from $5.15 an hour to $7.25. Free market economists warned them that this would increase unemployment – that rapid increases in unemployment compensation hit teens and minorities the hardest. But the class-warriors are running the people’s house now, and they would hear none of that, so they took to the floor, let loose the dogs of demagoguery, and saddled America’s pizza parlors, municipal swimming pools, house painting businesses and lawn mowing services with a huge cost increase.

We were pooh-poohed when we suggested this might happen. In fact, nearly a year ago, I wrote about the demographics of minimum wage earners and predicted the same outcome;

So who are those 1.7 million low-income workers scheduled to be rolling in dough in a few weeks? Well, according to the Bureau of Labor Statistics, in 2006, the number is actually 1.692 million out of the total workforce of 76.517 million workers – 2.2% of the workforce earn minimum wage or less. 1.2 million of that 1.6 number (3/4) earn less than minimum wage now – so how’s a minimum wage increase going to help them?

866,000 of them (over half) are between 16 and 24 years old – high school and college kids. 1.24 million of the total work in service related industries, the largest occupational group of minimum wage workers, out of that number, 880,000 are in food service and preparation (um, MacDonald’s), 24,000 are security guards, 52,000 are janitors. Only 340,000 work 40+ hours every week (less than 1 in 5 minimum wage earners) at the job for which they’re paid minimum wage.

477,000 have less than a high school diploma, 127,000 have college degrees (how many of those are grad students I wonder). 8,000 have master’s degrees, but there are no Phds making minimum wage – some kind of correlation there?

Oh, yeah, you want to blame Bush for gas prices, too? British Petroleum’s Tony Hayward says (what we’ve been saying here for years) that the reason prices of gasoline has soared is because there’s been no investment in production capacity is what drives the price up (Times of London link);

“Producers are being hampered by 25 years of low investments, because of low prices,” Mr Hayward told the Asia Oil and Gas Conference in Kuala Lumpur today. “The result is a supply chain being stretched to breaking point.”

And why has there been no investment in production capacity in the US? because Congress and environmentalists have blocked expanding refinery capacity and exploration – claiming that “alternate sources” are right around the corner. Of course the only reason there hasn’t been a clean alternate source of fuel is because we haven’t thrown more money at the problem, yet.

Why isn’t the media holding the Democrat Congress responsible for their missteps in this election year?

Category: Economy, Media, Politics