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Ahead of the President addressing the Nation

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President Obama has already indicated that his address will include the following: increase the minimum wage, extend unemployment insurance and pass comprehensive immigration reform. These are not only problematic but for the most part counterproductive of the goals.

Increasing minimum wage

The standard demand/supply model predicts imposing a minimum wage above the prevailing wage reduces employment, particularly among low-wage workers -the very population it is meant to support. The fact is, when the minimum wage increases, firms have several responses available, only one of which is a reduction in employment. The real problem is companies must earn more than they spend. Workers must produce more than they are paid. As government raises the minimum wage, it prices people out of the market.

Extending unemployment benefits

Extending unemployment makes sense and that's been the thinking since at least 2008; Congress has extended jobless benefits from a maximum of 26 weeks to up to 99 weeks. The problem is giving people money for doing nothing provides a disincentive to going out and ardently seeking a job.

There’s a theory that provides a new and convincing argument against extending unemployment benefits that doesn't come off as harsh and uncaring. It makes a sound argument that extending jobless benefits actually exacerbates the problem of long-term unemployment.

This theory provides strong evidence that a government program intended to help people in need is actually hurting them. The non-partisan National Bureau of Economic Research (NBER) states plainly that the benefit extensions initiated in the wake of the crisis are the primary reason unemployment in the U.S. has remained so high for so long.

"Most of the persistent increase in unemployment during the recent Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility," wrote the authors of the study, Iourii Manovskii and Kurt Mitman, both economists at the University of Pennsylvania, Fatih Karahan with the New York Federal Reserve Bank.

Comprehensive Immigration Reform

Most conservatives believe that legalization absolutely must depend on securing the border first. But the “Gang of Eight” explicitly said that legalization should not be dependent on first securing our border which presents the problem reoccurring.



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