12/14/09

WaPo: Obama cultivates Job-Killers

Obamanomics: Hike union dues for Dem-P2P politics

With unemployment stuck around 10 percent, President Obama has pledged "to take every responsible step to accelerate the pace of job growth." Here's a thought: Instead of trying to "create" jobs by tweaking this tax break or increasing that spending program, why not stop doing things that destroy jobs?

-- Repeal the Davis-Bacon Act. Passed in the 1930s to "stabilize" the construction industry (in part by protecting white workers in the North against competition from migrating Southern blacks), this law requires employers to pay the "prevailing" local wage on federally funded projects. Today, Davis-Bacon applies to about a third of all public construction spending.

A large staff at the Labor Department calculates prevailing wages using a formula skewed to reflect union pay rates. This inflates the cost of labor on public construction by an average of about 10 percent, according to a 2008 study by the Beacon Hill Institute of Suffolk University in Boston. The added cost to taxpayers was $8.6 billion in 2007, the study found.

Repealing Davis-Bacon would enhance the employment impact of Obama's proposed infrastructure spending. In fact, the president has the power to suspend the law by declaring a national emergency. If the job crisis doesn't qualify, what does?

-- Reduce the federal minimum wage. In 2007, Congress enacted a three-step increase in the minimum wage, which was then $5.15 per hour. The final installment took effect in July, raising the rate to $7.25 per hour. In the meantime, unemployment climbed from 4.7 percent to 9.5 percent.

Economist David Neumark, co-author of a definitive book on minimum wages, said in a June Wall Street Journal op-ed that the July increase probably killed 300,000 jobs that would have otherwise gone to teenagers and young adults.

We are experiencing the worst unemployment since 1982 (when Congress enacted the sugar program), and the second-worst unemployment since the Great Depression (when we got Davis-Bacon and the federal minimum wage). Yet these outmoded, job-killing policies linger on the books.

Our politicians would get rid of them if they're really serious about putting America back to work.

(from washingtonpost.com)

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