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Why a Jobless Recovery?

By Doug Bandow on 11.11.09 @ 9:00AM

Government economic meddling doesn't help. University of Chicago economist Casey Mulligan explains how government gets in the way:

Labor market distortions are a collection of factors that hold back employment, even when employees are creating a lot of value.

These distortions include difficulties in job search, income taxes, minimum-wage laws and incentives that are eroded by means-tested government benefits (determining whether someone should receive benefits based on things like the person's income). These factors can be difficult to quantify individually, but we know from the poor employment results that at least some of them are important.

Labor market distortions have gotten progressively worse during this recession. The federal minimum wage, for example, was increased once shortly before the recession began, a second time in the summer of 2008, and yet again this summer. The housing collapse has also had multiple harmful effects, such as impeding families who might want to move out of some of the hardest-hit regions toward areas where the economy is doing better.

These types of factors can make a bad labor market much worse.

Some distortions may at least stabilize in coming months, but he adds:

Congress appears poised to further erode incentives to earn income as an accidental byproduct of its plans reforming health care. Nor do consumers seem to be spending in anticipation of a grand employment recovery.

Rather a helping hand we have the unhelpful foot of government, giving job-seekers an unpleasant kick in the rear.

View all comments (4) | Leave a comment

Jim Hlavac| 11.11.09 @ 10:00AM

Never before have so few done so much to screw over so many in our country. They have seen the enemy and it is us. They are like the captain of the Titanic requiring us to sit in the deck chairs as they plow the ship of state into the iceberg. They hope we don't notice. And they have the audacity to tell us to accept their changes while proving they are inept and corrupt in every way. Utterly amazing.

Indiana Alex| 11.11.09 @ 10:24AM

It's not only what they have done, but what they have yet to do. How many businesses will put off hiring or expansion decisions until they know what they are on the hook for with health care, and cap and trade, or even tax rates for that matter?

For now, they have to fear the worst, and the worst is pretty bad.

Lazy Jack| 11.11.09 @ 10:42AM

No matter the ample lessons of history, we allow our elected leaders to tread further down the road of socialist solutions. Lincoln would have called their siren song of free healthcare, stimulus, and government generated prosperity a lullaby, distracting us from the cost in freedom and livelihood. Please read the following advertisement for just a few of the ideologues we can thank:

Keynes, Kerry, and Krugman: bringing the torches and the hemp hangin’-rope to a free market near you.

For more, please see:

http://thanksforthelaughs.word.....n-bondage/

Philosopher| 11.11.09 @ 12:32PM

Is it really that hard to figure out why our ‘economic recovery’ has ‘mysteriously’ produced no jobs? Obama wonders, Pundits and the Media wonder, and Leftists and Democrats (but I repeat myself) wonder.

The only ones that don’t wonder are the bulk of normal Americans that are involved in business and the free market economy...

http://pracphilosblog.wordpres.....istration/