To solve the problem of unemployment in the U.S., the government must end statist intervention. Lot's can be done (more accurately, undone). Here are some modest proposals -- not completely free-market ideas for the Federal government, but transitional steps.
- Abolish the Federal minimum wage rate of $7.25 per hour. With exquisitely bad timing, Congress increased this at the peak of the housing bubble in 2007, from the previous minimum of $5.15 per hour. At some level the rate becomes academic; so, lowering it enough would be almost as good as abolishing it.
Here's an even more modest proposal: every 6 months, this minimum wage will be reduced by another 50 cents if the youth (16-19 years) unemployment rate has not fallen by at least 1% during the previous 6 months.
An, even more modest: a multi-year moratorium from the minimum wage.
Many states have minimum-wages higher than the federal rate. Lowering the Federal rate will increase the wage-differential between such states and others. That is a good thing.
- Phase out "Emergency Unemployment Compensation" and "Extended Benefits" and return to pre-recession rules regarding Unemployment Insurance payments.
- Repeal the Bacon-Davis Act. The government should attempt to get the best deal in every contract it negotiates even if that means negotiating for a deal that implies paying lower than prevailing wages.
- Repeal the cuts in payroll taxes, and return to pre-recession rates. The cuts have the effect of increasing nominal wages at a time when there is no reason to do so. As long as the spending remains unchanged, tax-cuts are not tax-cuts at all. They merely push the tax-collection into the future. These tax cuts without changes in spending add to the debt, and that imply more tax has to be collected in the future.