Tuesday, April 13, 2010

A recent article in the WSJ outlined the woes felt in Europe at the high levels of youth unemployment. The article asked, is the United States headed in the same direction?

Let's see. The minimum wage increased from $5.55 or so, to $7.50 or so, over the past couple of years. Higher minimum wages increase unemployment among the young. The federal government is increasing taxes on the wealthiest households, which will hit many small business owners and restrict new investment and hiring. The federal government is running up large amounts of debt, and increasing the yields required on two and ten year treasury notes, which will increase the rates at which investors can borrow funds.

Despite the current administration's stated goals to decrease unemployment, so far their actions seem designed to promote long-term high unemployment.

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