Peter Morici

This Friday the Labor Department is expected to report the economy added 230,000 jobs in August. The pace has picked up a bit but is still far less than needed to reemploy all the prime aged workers displaced in the wake of the financial crisis.

The jobless rate is down to 6.1 percent but that statistic is deceptive. For example, one in six adult males between the ages of 25 and 54 is not working. Many don't show up in the unemployment count, because they are not actively looking for a job.

They spend their days cluttering park benches or watching ESPN, because they are too discouraged to look for work or lack the incentive to make an effort.

Since 2000, Congress has enhanced the earned income tax credit, and expanded or enacted new programs that provide direct benefits to low and middle income workers, including ObamaCare and Medicaid, food stamps, and rent and mortgage assistance.

Generally, benefits phase down as family incomes rise, and this effectively taxes additional income as much as 50 percent. Consequently, government benefits penalize work and skills acquisition, and often encourage one partner in two adult households to be idle.

Many unemployed men combine assistance from wives, relatives and friends with government benefits to avoid work altogether or cling to part-time employment to avoid tripping income thresholds that would result in the loss of benefits.

Similarly, many women with good skills and education, who might enjoy the fulfillment and independence of working, are encouraged to avoid employment.

Also, these programs offer incentives for single people to work only part-time and contribute to skills shortage.

Many Americans are stuck in part-time jobs, because Obamacare subsidies and health insurance regulations raise benefits costs for full time employees.

The whole system encourages retailers and other employers to chop two jobs into three and limit hours to less than 30 per week.

Millions of young college graduates are stuck in dead end jobs that simply do not require the skills imparted by a four-year degree and were filled by high school graduates a generation ago.

Many, encouraged by promiscuous federal student loan policies and unscrupulous university administrators, return to school and borrow heavily to obtain fancy sounding but useless graduate credentials.


Peter Morici

Professor Peter Morici is a recognized expert on economic policy and international economics. He has lectured and offered executive programs at more than 100 institutions including Columbia University, the Harvard Business School and Oxford University.
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