Monday, July 19, 2010

Four Obama Policies that Have Increased Unemployment

There are at least four major specific ways United States President Barak Obama has increased unemployment in the United States:

1) Obama increased the minimum wage. Increasing the cost of labor makes it more expensive to employ workers, especially younger workers. Naturally, the unemployment rate has risen among young workers, especially minorities.

2) He closed thousands of automobile dealerships when the federal government took over much of General Motors and Chrysler corporations, which caused a loss of tens of thousands of jobs. A recent study concluded that the closings unnecessarily harmed the economy.

3) Obama has extended unemployment compensation. The surest way to increase something, including unemployment, is to subsidize it. Some unemployed workers wait until their unemployment benefits are about to expire in order to search seriously for work, while others eschew temporary work for fear of losing their benefits or part-time work because it is more worthwhile to earn the unemployment compensation instead.

4) His moratorium on offshore oil drilling is causing oil companies to move rigs overseas, at the loss of American jobs.

The ripple effect of these job losses is that these unemployed workers have less disposable income in order to consume (i.e. purchase goods or services), which leads to more unemployment. These Obama policies are in addition to the uncertainty and pessimism his fiscal and regulatory policies are causing. He has already significantly increased government regulation, both of health insurance and banks, for example, the full effects of which will be unknown for years, while proposing costly energy regulation and higher taxes. Additionally, Obama is causing economic pessimism because of his massive increase in the debt from his spending spree. Indeed, the only major area where he has increased employment is in government. The prospect of these significant changes causes a climate of uncertainty and fear. Fear and pessimism discourage investors to invest, lenders to lend and employers to hire.

I invite you to suggest other major Obama policies that are significantly increasing unemployment.

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