WASHINGTON, November 29, 2014 — In the six years since he took office, President Obama appears to have felt little concern with reducing unemployment or income inequality. Although he continues to say otherwise, his policy priorities say that he really is not concerned with getting people back to work.
The real way to reduce income inequality is to ensure that the lowest income earners are able to find jobs and learn useful skills, which ultimately results in higher wages.
Instead, the President acted to reduce the number of hours low-skilled employees work, increase the number of people willing to work at low wages, and discourage employers from hiring.
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Let’s start with the Affordable Care Act.
Since the ACA defines a full-time employee as anyone working at least 30 hours per week, not the 40 hours that has been the standard for 75 years, employers have cut back on the number of hours offered to workers and made up the difference by hiring more part-time workers. While the national unemployment rate has fallen considerably as a result of this, most of the jobs created are part-time.
So how have these workers been surviving?
The President has also greatly expanded the food-stamp program and relaxed the requirements to receive welfare. Taxpayers are picking up the tab. Workers are screaming for more hours, but employers simply cannot afford to offer them and incur the additional cost required by the ACA. As a result, the number of people receiving welfare and food stamps has exploded
Why doesn’t an increased minimum wage help?
The President raised the minimum wage for Federal workers and wants the national minimum wage raised to $10.10 per hour, up from the current level of $7.25. Some of the President’s advisors want the minimum wage raised even higher, perhaps to $15 per hour.
Regardless of how anyone spins this, the higher wages will result in fewer jobs and an increase in unemployment.
Although the national unemployment rate is 5.8 percent, the unemployment rate for workers paid at minimum wage is more than three times that figure. Teenage unemployment is about 19 percent.
How will amnesty negatively affect unemployment?
The President recently issued executive orders which will give legal status to almost 5 million adults. Obama pointed out that these people will now be able to avoid deportation, come out from the shadows, and be legally hired by employers.
They are not, however, entitled to the benefits offered Americans citizens. This means an employer does not have to offer these workers health care benefits. So who are you going to hire — the American who comes with extra costs, or the amnestied immigrant who you can pay minimum wage?
Starting in January when the employer mandate kicks in, companies will have to offer health care benefits to any employee working more than 30 hours per week, or pay a fine of $2,000 to $3,000 per year per employee. As a result, if the firm hires these new, now-quasilegal immigrants, they can avoid paying for health benefits and avoid paying the fine, since those immigrants are not entitled to this benefit.
In addition, the immigrants will generally work for lower wages, putting downward pressure on all wages. The bottom line is that there will be fewer jobs available to American citizens, leading to higher unemployment of Americans when amnesty gluts the job market.
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President Obama was never really concerned about an economy that provides good jobs and reduces unemployment. Instead, he pushed a stimulus package that spent close to $1 trillion and didn’t stimulate anything, eventually saying that the shovel ready jobs were not as shovel ready as he thought.
He pushed through the disastrous ACA by deceiving the American public. While this act has provided health insurance to about 7 million previously uninsured, it has driven up costs, reduced the quality of healthcare and increased taxes for more than 250 million Americans.
With the new Congress being sworn into office in about a month, the hope is that these policies can be reversed so that the health care system is repaired, the immigration laws revised and wages can be set according to the value of the output of the worker rather than by some artificial floor set by the government.
Most importantly, the new Congress should concentrate on policies to encourage economic growth rather than holding it back. That’s really the only long-term solution to the unemployment problem.