Yesterday it was reported that the Obama Administration would be "unrelenting" in putting Americans back to work. Indeed, Congress has named this its "top priority."
However, our elected representatives (never known for their economic knowledge) don't understand that there are, in fact, countless jobs in an economy. Don't believe me? Let me break it down using my own house as an example. Just where I live, I can think of dozens of different jobs available: someone could paint the walls, mow the grass, do the laundry, trim the bushes, wash my car, etc. I would be willing to pay $1 for each of those chores. If you're interested, please contact me.
The point here is simple; the amount of jobs are endless, what's up for discussion is how much someone is willing to pay for that job and how much someone else is willing to do it for. This is known as "supply and demand."
The best thing Congress could do if it really cared about job creation would be to lower or eliminate the minimum wage. A high minimum wage prices low-income and low-skilled workers out of the job market. When an employer is forced to pay more, and doesn't believe an employee is worth that amount, the job is eliminated. Frankly, this often hits minority workers (particularly in Detroit) at a much higher rate and is often the cause of the disproportionate amount of unemployed blacks. In 1970, the late, great economist Paul Samuelson commented on a proposal to raise the minimum wage from $1.45 an hour, writing, "What good does it do a black youth to know that an employer must pay him $2.00 an hour if the fact that he must be paid that amount is what keeps him from getting a job?"
Economists are in near-universal agreement: Raising the minimum wage, as Congress has done repeatedly the past few years, almost always causes higher unemployment and more harm than good. As I've pointed out before, if higher wages were all that mattered, Detroit would be a shining city on a hill and not the economic basket case that it is. When thinking about helping the poor and the jobless, Congress should remember the old adage: Actions speak louder than words.
And pay attention in Econ 101.
Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.
Permission to reprint any comments below is granted only for those comments written by Mackinac Center policy staff.