Kevin Hassett: Your fat paycheck keeps your neighbor unemployed

Daily Chronicle ^ | September 9, 2010 | Kevin Hassett

[USALiberty]

Some observations perfectly at home in economics textbooks can be so beastly in practice that nobody is willing to mention them.

Ignoring the facts, though, leads to bad policies, and with the unemployment rate at a stubborn 9.6 percent, we don’t need more of those.

The biggest problem with the labor market right now is that wages are too high. As Washington again turns to government spending as a cure for unemployment, some against-the-grain thinking is in order.

Economics teaches that full employment would be reached if wages adjust downward, to a level that better reflects current circumstances. At lower wages, employers would desire more workers. Labor markets generate persistent unemployment only if wages are sticky, failing to fall as demand declines. A number of reasons help explain why wages don’t and won’t drop, beginning with federal and state minimum-wage laws.

[mo]

Hey..if I'm a guy creating jobs....and I need to fund one spot with 4 million vs five spots...it stands to reason if the return on 5 justifies the investment, I will do so.

There is no return today. Says more about hidden regulatory and potential liability costs-of which your argument concerning bennies is a relevant part of. I happen to be an employer...10years ago with 17-currently with 5...and I only see potentially going lower.

The employer has a bullseye on their back.

[TopQuark]

"The employer has a bullseye on their back. "

And it was placed there by the government.

My original post was in support of people like you. The article's author makes it sound like the problem is with employers. The problem lies with the government: it created the mess with housing, the mess with credit, and now with hiring --- by making hiring too expensive for employers.