AMERICAN ISSUES PROJECT

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience." -- C.S. Lewis

Despite promising in January to halt unemployment at 8 percent if the stimulus bill were passed, the unemployment rate in America stands at a 26 year high 9.5 percent. In June, the U.S. economy lost 467,000 jobs. While that number is down from the January high of 741,000, it is far from over. The Obama administration and the legislators in Washington, D.C. are about to make the situation a lot worse.

In 2007, the Congress passed and then president George W. Bush signed into law the first minimum wage increase in a decade. It goes into effect at the end of this month, raising the salaries of many workers across America. How is this going to help increase employment? Simple, it won't.

In fact, there is fifty years of research that shows:

• The minimum wage reduces employment.
• The minimum wage reduces employment more among teenagers than adults.
• The minimum wage reduces employment most among black teenage males.
• The minimum wage hurts blacks generally.
• The minimum wage hurts low wage workers.
• The minimum wage hurts small businesses generally.
• The minimum wage hurts the poor generally.
• The minimum wage does little to reduce poverty.

So in the infinite wisdom of the ruling class, they have passed legislation that will hurt the poor, who they claim they fight for, hurt the small business, who they say drives the economy, and will reduce employment when we are already hemorrhaging jobs.  It's truly astounding how much damage the good will of "moral busybodies" can have on a people.

What makes this even more astounding is the fact that each state sets it's own minimum wage, and most were already higher than the federal minimum wage.  So wages were never "unconscionably frozen for the last decade" as Rep. David R. Obey, Democrat from Wisconsin, claimed.  It wasn't "10 years of indifference," as Speaker of the House Pelosi said.  Wages were being set by each state when they weren't being set by those who should decide:  the employer and the employee.

If this wasn't bad enough, President Obama has said he will raise the minimum wage again before 2011, to $9.50 an hour. 

Another example of Washington making a bad situation worse is the suggested mandates on health insurance.  Sens. Chris Dodd and Ted Kennedy have proposed a "pay or play" provision for employers.  Companies will either provide health insurance for each of their employees, or they will pay the government $750 for each full time employee, $375 for each part time employee.

Warren Meyer of Coyote Blog describes what a huge impact this will have on his small business:

I run a recreation business with about 500 part-time, seasonal employees. Most of them work for the equivilent of about 1/4 of a year, or about 500 hours. Almost all are over 70, and already on Medicare and Social Security, so we have no health plan (no way to get a reasonable plan anyway for a bunch of 70 year olds).

Adding up the numbers, this turns into $187,500 bill I would have to pay to the government for not providing health care to people who already mostly have health care. I will pay 1/2 the full time rate despite my employees working far less than 1/2 of the year.

One thing you can be sure of — this may be the final death of my current human resources model. We typically hire more people, working fewer than 40 hours, because retired folks don’t generally want to (or can’t) work a full week. That’s been OK, because 4 people working 10 hours a week has always cost me the same as 1 person working 40 hours. But if I am getting charged $375 per worker whether she/he works 1 hour or 1000, you can bet I am going to hire fewer workers for longer hours.

In very clear terms, this idea will put people out of work. Not only that, but it will increase the cost of almost everything.

As President Obama has said, corporations are going to pass those costs down to the customer. So now they are out of work and everything they bought before costs more.

We are to believe that the green initiative is the solution. The injection of stimulus funds into green energy will cause an uptick in employment. However, it hasn't been the case in Spain.

Every “green job” created with government money in Spain over the last eight years came at the cost of 2.2 regular jobs, and only one in 10 of the newly created green jobs became a permanent job, says a new study released this month. The study draws parallels with the green jobs programs of the Obama administration.

President Obama, in fact, has used Spain’s green initiative as a blueprint for how the United States should use federal funds to stimulate the economy.

This is the equivalent of the classic one-two punch, but then kicking the fighter when they are down.

Now there is talk of another stimulus bill. Paul Krugman says it needs to be bigger. It's the classic thinking error of failing to learn from past mistakes. When the Obama administration started down this Keynesian path, there was a mountain of evidence they had to ignore in order to believe it was the right path.

This is the classic definition of insanity, to do the same thing over and over again, expecting different results.  The difference is the American worker pays the price for the ruling class's "tyranny exercised for the good of its victims."

Duane Lester is a former Navy journalist turned blogger and podcaster. He also writes at All American Blogger and hosts All American Radio on RFC Radio . You can follow him on Twitter at @bodhi1 .

Posted 07-06-2009 8:14 AM

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