Have you heard the news? The U.S. unemployment rate increased 0.5% between April and May 2008, going from 5.0% to 5.5%. The immediate result of this report is a flurry of news stories bemoaning unemployment and reaching for their thesauruses to come up with good scare words: jumped, soared, leaps. Here’s a snippet of an MSNBC story:
The nation’s unemployment rate jumped to 5.5 percent in May — the biggest monthly rise since 1986 — as nervous employers cut 49,000 jobs.
The latest snapshot of business conditions showed a deeply troubled economy, with dwindling job opportunities in a time of continuing hardship in the housing, credit and financial sectors.
“Jumped” appeared in the title and first paragraph. “Soared” appears in the fourth paragraph, and “leaps” appears in the RSS feed title for this story. All of this reminds me of something Red Planet Cartoons published in April:
Stocks have taken a dive because of this hand-wringing report, but what does this news story identify as the cause of the “continuing hardship”? “Housing, credit, and financial troubles” all turn out to be the same thing.
Earlier in the decade, the government essentially forced lending companies to offer loans to people who were poor credit risks, or they’d be branded and punished as horrible racists and discriminating goons. Now — surprise, surprise — a number of people who were poor credit risks due to their unstable financial behavior are defaulting on these risky loans. Government stuck its foot in front of the housing, credit, and financial sector, and now government is reporting that this sector has taken a tumble. Well, duh! What do ya expect?
Certain politicians are always talking about government as though it could singlehandedly fix the economy. In truth, there are a few ways our government could have an immediate effect on our economy: namely, if it released the restrictions on ANWR oil drilling, oil refinery building, off-shore oil drilling, and nuclear power plant construction. Those four endeavors would open up thousands of jobs in construction and maintenance alone, not to mention the number of jobs created to support them. As an added bonus, we would be increasing our domestic energy supply at a time when there is an ever-increasing demand. Increasing the supply would mean a decrease in the cost of energy, and that would benefit our economy, and the world’s economy as well. And the increase in supply would most likely lead to decreased prices at the gas pump.
Or you could try electing liberals to government whose only promise is for “change” — what kind, exactly? — and whose actions show they prefer to restrict our energy supply so you have to pay more at the pump. So how, exactly, are liberals for the little guy?
UPDATE (6/9/2008 10:25:27 PM): Jerry Bowyer at TownHall.com posted a reason for the spike in unemployment in May — the minimum wage increase Congress passed last year:
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.
Now, we see the perfectly logical outcome of wage controls – rising unemployment among the most economically vulnerable. The chart above tells the story: Friday’s unemployment spike occurred overwhelmingly among teenagers, and secondarily among African Americans. Just like we said it would. A kid who is at entry level of job skills may be a good deal at 5 bucks an hour, but not at 7. Our anointed leaders gets to glory in their generosity (with other people’s money) and just so long as very few people in the media know that a demand curve slopes downward (a good bet, there), no one calls them on it.
Which makes yet another way the government has caused this problem.