Kevin Price
Why you can expect a July jump in unemployment
By Kevin Price
July 12, 2009

Unemployment is about to experience another significant jump in the next few weeks. This isn't the speculation of an Obama critic, but the simple observation of someone who has been watching economics for years. The contributing factor to the next jump is the increase of minimum wage from $6.55 (an increase we had in July of 2008) to $7.25 in July of this year.

We are all familiar with the high unemployment that we have experienced over the last year. We can discuss the economic collapse of financial institutions all day long, but the first big jump that we had seen in years began in June of 2008. According to the Bureau of Labor Statistics, unemployment had largely been below 5 percent for years until the summer of 2008. What happened then? The Congress had raised the largest increase in the minimum wage in 16 years. In July of 2009, that minimum wage will jump again to over $7 an hour.

These incremental increases were passed in May of 2007. At that time we had near full employment (considering seasonal, new entrepreneurs, and other factors) as unemployment was only 4.5 percent. Today, it is doubtful the economy can sustain such an increase and as a result, the federal government should consider an alternative approach, which is to eliminate the federal minimum wage entirely because it is an obvious drag on job creation. Our current unemployment is more than twice the rate it was when the increase passed (current unemployment is 9.4 percent). Unemployment has changed and so should the policy.

The federal government should immediately mandate the states to have its own minimum wage without a mandated basement...let the state determine the level. Smart states should, in turn, let cities have minimum wages at a lower level if they desire (which would be particularly helpful to cities like Detroit, Camden, and East St. Louis). There is an old saying, "when your neighbor loses his job it is a recession, when you lose your job it is a depression." The number in the latter category has doubled in just two years. This is urgent and unlike many policies from Washington today, this is an action that won't cost the taxpayer a penny.

© Kevin Price


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Kevin Price

Kevin Price is Publisher and Editor in Chief of

His background is eclectic and includes years of experience in both business and public policy, as well as two decades of experience in broadcast journalism. He was an aide to U.S. Senator Gordon Humphrey (R-NH) and later went on to work in policy areas with some of the nation's leading think tanks including the National Center for Public Policy Research and was part of the Heritage Foundation's Annual Guide to Public Policy Experts... (more)


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