Speaking of Unemployment

I've been without a job before. It's not very nice. But you do get the chance to watch some soap operas. Today, the Bureau of Labor Statistics announced that unemployment rate rose from 5.7% to 6.1%, an increase of 0.4%. That's a pretty big jump. 0.4%. Let's remember that number. We might see that same number (0.4%) again later in this post. And there will be a quiz at the end, if you get that far. Given what I've read today, I will make a bold prediction. Unemployment will also increase next August. I feel comfortable with this prediction because of what I read on the Department of Labor's website about the Fair Labor Standards Act. Effective July 24th, the federal minimum wage went from $5.85 to $6.55. Next July 24th, it will increase from $6.55 to $7.25. Go ahead and plan which soaps you want to watch. The group that is most hurt by minimum wage increases are actually the minimum wage workers themselves. Any business owner will tell you the easiest way to cut costs is to cut payroll. And who is easier to fire, the experienced and skilled worker (and union member) or the new minimum wage earner (non-union)? Every business in the country will cut loose the new guy, who is usually employed by a temp service anyway. In fact, as unemployment increases so does productivity. When minimum wage earners are sent home, who picks up the slack? Who gets overtime pay? The experienced and skilled union member. Many union contracts also base salary relative to the minimum wage, meaning that an increase in minimum wage also increases those high wage earners under the contract. That happens whether they make $7 per hour or $27. So, union workers get a pay increase and an increase in hours worked while those poor folks who can't earn a living wage get booted to the curb. Let's study the current and relevant statistics in the BLS report. I claim that increases in the minimum wage result in unemployment. But is there anything in the BLS report that would support my claim? Well, the report does mention an increase in hourly earnings during the month of August. It's right there in the first paragraph. In fact, hourly earnings rose during August by 0.4%. Here's your quiz: what else went up by 0.4% in August?