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March 19, 2010

A Tale of Unemployment and Wages: The Stubborn Index

Do We Wants Jobs or Fair Wages?


The left has been fairly quite lately on the idea of “fair wages,” but the unions sure haven’t.  Whether it’s through state minimum wage laws, a federal minimum wage, or future collective bargaining talks with the UAW, the government feels it know what’s best for the labor markets.  Back in 2004 when the minimum wage was $5.15 per hour, few, if any Americans were making that low an hourly wage.
When the government and various state governments raised the minimum wage over $7 per hour, people were still making more than that, however, I felt that when jobs became scarce, the government was going to wish it didn’t raise the floor on the minimum wage.  Five years later, unemployment is high, but unemployed workers in some parts of the country are still demanding higher wages, even if it means prolonged unemployment. 
In order to illustrate where this issue is, I’ve decided to create a stubborn index.  It combines unemployment rates, minimum wages, average wages, and unemployment benefits by state.  The higher your state scores, the more stubborn people in that state are to realizing wages and labor costs must come down to create jobs.
To illustrate, I’ve created maps that show each statistic by itself and the stubborn index together.


Can we conclude anything from this analysis?  While the results are preliminary, states with higher wages seem to have more employment issues?  I'd like to do further analysis on state employment and regulation.  I bet if we look at the number of employment regulations on the books per state and unemployment, we would also find a mild correlation. 

1 comment:

davesemail said...

I had a sobering conversation yesterday with a head hunter.
We were discussing the job market and wages.
I mentioned when I left the market about a year ago I was making about $72k a year.
Before I could even ask my question he replied “those jobs are not there anymore”.
He also went on to say that a number of companies don’t want anybody with more than 2 years experience, and that he has encouraged some with high degrees to leave them out of there resumes.
How did becoming educated and having experience become “self detrimental”.
I find it so hard at times to comprehend how society has become so backwards.
The Grain of Salt w/ a Splash of Vinegar
The gentleman I spoke with went on to say that he has seen a spike in hiring or call backs in the last 6 weeks or so (I live in Ohio).
NOTE: These are mostly technical and engineering/design type positions.
At a large corporation where I once worked we had a North American group, a European group, and a Military group.
When the housing bubble in the US broke people in the N. American group were let go.
About a year later the European housing market tanked and people in the European group (me) were let go.
To the best of my knowledge the military group is still there and they have called back a few contractors to help out.

From my limited perspective it does appear that the manufacturing sector of corporate America is sustained on a socialistic economy.
These are interesting times we live in.

Subsequent to the original writing of this article, I was discussing these subjects with my wife.
She made the comment that…
“if it were not for the fact we are in so many wars those people would probably not have jobs either”.
Sadly I believe she is correct.

Your Friend in Freedom
Federal Farmer

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