How Government Hinders Job Creation
Economist Mark Hendrickson has a good piece for The Center for Vision & Values at Grove City College explaining why federal policies aimed at “creating jobs” or even helping workers are actually fostering higher unemployment. While pointing out the flaws of the “jobs created” claims from the stimulus, Hendrickson points to other policies that drive up unemployment.
In June, the minimum wage rate increased 75 cents. This government intervention priced many young Americans out of jobs, with the unemployment rate for black teens rising from an already-too-high 39 percent to an abominable 50 percent. …
Another factor that has aggravated unemployment this year is that Uncle Sam’s enormous budget deficit has consumed virtually all the available credit, crippling the ability of private businesses to hire new workers. …
What about the Obama hype about creating new “green” jobs? Lots of luck! Germany’s government tried this, and every “green” job cost $240,000 and raised the overall unemployment rate. Each solar energy job in sunny Spain resulted in the loss of 2.2 other jobs.
Hendrickson could also have mentioned extending unemployment benefits – which simultaneously encourages workers to stay unemployed (paying them to do so) and discourages companies from higher workers, by driving up their costs for unemployment coverage.
Hendrickson summarize why government “jobs” programs don’t work.
When a job exists only because of a government subsidy (whether in the form of a grant, a tax credit, or any other policy device), then what the job produces is worth less than the worker is being paid. Society as a whole is made poorer by the difference between the value of what the worker produces and what the government pays him, and that wealth is withdrawn from the private sector.