We all know the trouble today.  Unemployment, unemployment and unemployment.  But really, truly is the problem today is that we have government regulation.

See, in a world without it, we would have zero, I mean NONE, involuntary unemployment.  Think back to the pioneer days.  Do you think that there was ever a time when those folks had nothing to do, even when they wanted to do something, for months, or weeks or even days at a time?  Nope.  Not once.

Now a days, of course, that happens all the time.  And why?  Because people are not free to negotiate an agreeable wage and, AND, because the marginal value of having a job does not always surpass the marginal value of getting paid.

I see this all the time:

But we can't compete with Uncle Sam!

How in the name of all that’s holy can there be a gabillion people out of work and this sign standing for more than even 5 minutes on the street?  I’ll tell ya:

1.  They have to pay more than the typical person who would take this job brings in value to the company.  Typically the entry level retail worker brings next to zero experience.  Additionally, they have no expertise in the core business of the store; really, how many high school kids know ANYTHING about Bed Bath and Beyond products.  Last, the folks that would carry that sign through the door have almost no ability to interact with the clientele on a reasonable level.   In short, the value this candidate would bring to the table is minimal; and they should be paid appropriately.

2.  Consider, even having to pay the minimum wage of $7.75 or so, the most they will bring home is $310 a week.  If they are getting unemployment of $200 a week, the marginal return on that 40 hours labor is $110 a week, or $2.75 an hour.  I don’t blame someone for choosing to stay home for $200 rather than work in a thankless job for $310.

In short, the combination of higher wages and continued unemployment benefits is directly CONTRIBUTING to our unemployment.

One response to “Economics

  1. Pingback: Minimum Wage « Tarheel Red

Leave a Reply