The US Labor Department has released its most recent data; jobless rates are rising and unemployment is at least 10% in 16 states. Michigan seems to be taking it on the chin the most as the state unemployment is now at 15.2%, the highest in that state since 1982 and this is the first time any state has reached 15% unemployment since West Virgina did it in 1984.
Some analysts think that we will have nationwide unemployment of 10% by the end of the year, I think that’s going to happen much sooner, possibly even by September. On July 24th the federal minimum wage will increase to $7.25 an hour. This will represent the end of a 3 step process that started in 2007 (when we had only 4.5% unemployment) and represents a 41% increase in the national floor for wages.
While the debate still rages, many economists believe that as you increase mandated wages the effect of that is a loss of jobs because it becomes too expensive for employers to hire that extra hand. The Wall Street Journal reports:
. . . calculates that the 70-cent per-hour minimum wage hike this month would kill “about 300,000 jobs for those between the ages of 16-24.” Single working mothers would also be among those most hurt.
In fact, there are many arguments that say minimum wage hikes actually hurt single-wage earners in this bracket because there are programs like the EITC that actually boost the real earning power of the employee. From The Journal as well:
For example, consider a single mom with two kids who earns the current $6.55 minimum at a full-time, year-round job. In 2009 she receives a $5,028 EITC cash payment from Uncle Sam — or about an extra $2.50 per hour worked. Other federal income supplements, such as the refundable child tax credit, add another $1,900 or so. Thus at a wage of $6.55 an hour, her actual pay becomes $10.02 an hour — more than a 50% increase from the current minimum.
However, the single mom can’t collect anything if she is unemployed. So, enjoy 9.5% unemployment while you can, we might be longing for these days soon. Oh, I’m also glad Congress rushed into passing a 2000 page bill that no one even read in like 3 days so that we could “stimulate” the economy. How’s that working out?