The Underside of the Economy

The jobless rate for people aged 16-24 (and who are not students) is over 50%. With minimum wage increases the past three years, it may come as a surprise that this group of people has been hardest hit by the economic downturn we've experienced. The minimum wage (set currently at $7.25) deters the hiring of young inexperienced workers. Over the past 3 years the minimum wage has increased 23% while there has only been an 8% increase due to inflation. The government has required businesses to increase pay at about three times the market rate. While this is beneficial for people who are employed, it makes it more difficult (fiscally) for companies to hire people without there being an increase in the amount of money made by a company. Raising the minimum wage during an economic slump, while a nice idea, really only makes the problem worse for those who are seeking jobs and do not have much experience.

To remedy this businesses must be encouraged to hire people. The theory was that tax incentives would get businesses hiring. Tax incentives that are effective get companies hiring. The current incentives are not worth the cost of hiring. Companies are trying to make money. Small tax credits in an economy where everyone is spending less have little effect. A significant change in the way government handles business needs to take place. Unfortunately, I do not see either side rushing significant aid to anything but banks and car manufacturers. Cars, lending, and taxes do not an economy make.