Strangling Entrepreneurship and Job Creation with $1.75 Trillion of Regulation and Red Tape

A new study from the Small Business Administration's Office of Advocacy concludes that annual regulatory costs jumped by nearly $600 billion between 2005 and 2008. Thanks to the Obama Administration's big-government agenda, the burden of red tape today doubtlessly is much higher, but the 2008 estimate is enough to generate some very sobering numbers. A $1.75 trillion regulatory cost works out to be more than $15,500 for every household and more than $8,000 for every employee in the country. Red tape is especially challenging for smaller firms, as noted in these key findings from the summary:

The research finds that the total costs of federal regulations have further increased from the level established in the 2005 study, as have the costs per employee. More specifically, the total cost of federal regulations has increased to $1.75 trillion, while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts).

To be sure, some forms of regulation, such as environmental protection, generate benefits. There generally are not good estimates needed to produce cost-benefit analyses, but it is quite likely that the costs are much higher than necessary - particularly for economic regulation, the burden of which is more than three times larger than the costs of environmental regulation.

Creating Jobs: The Real World vs. Obamanomics

Michael Fleischer is a brave man. He exposed himself and his company to retribution and attack by explaining how Obama's policies are discouraging job creation in a column for the Wall Street Journal. Let's hope he doesn't mysteriously get audited, because he provides valuable real-world insight into how taxes and other forms of government intervention hinder job creation (and reduce take-home pay for those lucky enough to still have jobs).

Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay. Health insurance is a big, added cost: While Sally pays nearly $2,400 for coverage, my company pays the rest—$9,561 for employee/spouse medical and dental. We also provide company-paid life and other insurance premiums amounting to $153. Altogether, company-paid benefits add $9,714 to the cost of employing Sally. Then the federal and state governments want a little something extra. They take $56 for federal unemployment coverage, $149 for disability insurance, $300 for workers' comp and $505 for state unemployment insurance. Finally, the feds make me pay $856 for Sally's Medicare and $3,661 for her Social Security. When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally's job each year. Because my company has been conscripted by the government and forced to serve as a tax collector, we have lost control of a big chunk of our cost structure. Tax increases, whether cloaked as changes in unemployment or disability insurance, Medicare increases or in any other form can dramatically alter our financial situation. With government spending and deficits growing as fast as they have been, you know that more tax increases are coming—for my company, and even for Sally too. Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare. Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%. To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales—something unlikely in this "summer of recovery." We can't pass the additional costs onto our customers, because the market is too tight and we'd lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences. And even if the economic outlook were more encouraging, increasing revenues is always uncertain and expensive. As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment. A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government's message is unmistakable: Creating a new job carries a punishing price.

Responding to Paul Krugman and Ezra Klein

I seem to have touched a raw nerve with my post earlier today comparing Reagan and Obama on how well the economy performed coming out of recession. Both Ezra Klein and Paul Krugman have denounced my analysis (actually, they denounced me approving of Richard Rahn's analysis, but that's a trivial detail). Krugman responded by asserting that Reaganomics was irrelevant (I'm not kidding) to what happened in the 1980s. Klein's response was more substantive, so let's focus on his argument. He begins by stating that the recent recession and the downturn of the early 1980s were different creatures. My argument was about how strongly the economy rebounded, however, not the length, severity, causes, and characteristics of each recession. But Klein then cites Rogoff and Reinhardt to argue that recoveries from financial crises tend to be less impressive than recoveries from normal recessions.

That's certainly a fair argument. I haven't read the Rogoff-Reinhardt book, but their hypothesis seems reasonable, so let's accept it for purposes of this discussion. Should we therefore grade Obama on a curve? Perhaps, but it's also true that deep recessions usually are followed by more robust recoveries. And since the recent downturn was more severe than the the one in the early 1980s, shouldn't we be experiencing some additional growth to offset the tepidness associated with a financial crisis?

I doubt we'll ever know how to appropriately measure all of these factors, but I don't think that matters. I suspect Krugman and Klein are not particularly upset about Richard Rahn's comparisons of recessions and recoveries. The real argument is whether Reagan did the right thing by reducing the burden of government and whether Obama is doing the wrong thing by heading in the opposite direction and making America more like France or Greece. In other words, the fundamental issue is whether we should have big government or small government. I think the Obama Administration, by making government bigger, is repeating many of the mistakes of the Bush Administration. Krugman and Klein almost certainly disagree.

A Slam-Dunk Comparison

Both Ronald Reagan and Barack Obama entered office during periods of economic misery. But they adopted dramatically different solutions. Reagan reduced the burden of government and Obama increased the burden of government. So which approach worked best? In his Washington Times column, Richard Rahn compares the economy's "recovery" performance under both Presidents. As you can see, Reaganomics is much better than Obamanomics.

Bush, Pelosi, and Reid Deserve Scorn for Destroying Jobs for Teenagers

Anybody with an IQ above room temperature understands that companies only hire workers when they expect to generate net revenue (i.e., the total receipts associated with a new worker are expected to be higher than the total costs). That's why it was so reprehensible for Congress to approve a 40-percent hike in the minimum wage - a step that was guaranteed to kill jobs. The Wall Street Journal's editorial page reports on new research showing 100,000-plus jobs were wiped out. This awful legislation was approved in 2007, and all politicians associated with that choice should be ashamed of themselves.

Economic slowdowns are tough on many job-seekers, but they're especially hard on the young and inexperienced, whose job prospects have suffered tremendously from Washington's ill-advised attempts to put a floor under wages. In a new paper published by the Employment Policies Institute, labor economists William Even of Miami University in Ohio and David Macpherson of Trinity University in Texas find a significant drop in teen employment as a direct result of the minimum wage hikes. The wage hikes were implemented in three stages between 2007 and 2009, and not all states were affected because some already mandated a minimum wage above the federal requirement. But for the 19 states affected by all three stages of the federal wage increase, "there was a 6.9% decline in employment for teens aged 16 to 19," write the authors. And for those who had not completed high school, "we estimated that the hikes reduced employment by 12.4%," which translates to about 98,000 fewer teens in the work force. After isolating for other economic factors and broadening their analysis to include all 32 states affected by any stage of the federal wage increase, the authors conclude that "the federal minimum-wage hikes reduced teen employment by 2.5% translating to approximately 114,400 fewer employed teens."

Obama's Jobs Fantasy

In a column in today's New York Post, I mock White House unemployment calculations and then explain why companies are not anxious to hire more workers.

The White House last year released a supposedly scientific analysis that claimed to show that adopting the "stimulus" bill would cut unemployment. Indeed, the report specifically estimated that the unemployment rate today would be down to 7.5 percent. Something obviously went wrong. The actual unemployment rate is 9.5 percent, a statistic that doesn't include the millions who've given up looking for work or can only find part-time jobs. What were President Obama's biggest mistakes? ...the bigger stumbling block is the folks in the White House seem to have no clue how the real-world economy works. Critics have noted that the Obama Cabinet sets the record for the lowest-ever level of private-sector experience. That doesn't necessarily mean people who don't understand how and why jobs are created -- but that seems to be the case with this administration. Let's start with two common- sense observations. First, businesses are not charities. They only create jobs when they think that the total revenue generated by new workers will exceed the total cost of employing those workers. In other words, if it's not profitable to hire workers, it's not going to happen. ...Unfortunately, almost everything Washington's done the last 18 months has sent the opposite message. The "stimulus" boosted federal spending, thus draining funds from private-capital markets and diverting resources from the productive sector of the economy. The main jobs that it "saved" were employees of state and local governments -- shielding the public sector from pain even as it inflicted more agony on the private sector. ...The health-care law is a cornucopia of new taxes, mandates and regulations -- directly increasing the cost of hiring new employees (as well as of keeping old ones on). By telling employers that the cost of hiring is set to rise sharply in the years ahead, it makes them far more cautious about hiring. ...Investors, entrepreneurs and other job creators also look into the future. If they think economic conditions will improve and that they can make money by expanding employment, they're more likely to take that risk. But what's happening in Washington gives them little reason to feel optimistic. A big challenge is that tax rates are going to rise. The 2001 and 2003 tax cuts are scheduled to expire as the ball drops in Times Square on New Year's Eve. This means higher income-tax rates, higher dividend-tax rates, more double-taxation of capital gains and a reinvigorated death tax. Each provision will increase the cost of productive behavior and specifically make it more expensive to provide the capital needed for job creation. ...The good news is that the economy is creating some jobs. This is to be expected -- the private sector is naturally self-correcting and capable of withstanding lots of bad policy. It takes a lot of missteps in Washington to keep an economy in recession. The bad news is that the United States is gradually becoming a European-style welfare state. This means that we'll have growth in most years, but it will be tepid growth. It means jobs will be created -- but probably not enough to move the unemployment rate from its unacceptably high level. To get truly robust job creation, we need to stop growing government and start getting it out of the way.

Federally-Funded Job-Training Programs Don't Work

Kudos to the New York Times for actually looking at the evidence and publishing a story exposing the costly failure of job-training programs financed by the federal government. I also couldn't help but note that the Obama Administration is claiming that the programs are a success. Not because lots of people are getting jobs, but because many more people are signed up for the program. That kind of upside-down thinking is typical of Washington, where success is defined by the number of people lured into government dependency.

Hundreds of thousands of Americans have enrolled in federally financed training programs in recent years, only to remain out of work. That has intensified skepticism about training as a cure for unemployment. Even before the recession created the bleakest job market in more than a quarter-century, job training was already producing disappointing results. A study conducted for the Labor Department tracking the experience of 160,000 laid-off workers in 12 states from mid-2003 to mid-2005 — a time of economic expansion — found that those who went through training wound up earning little more than those who did not, even three and four years later. “Over all, it appears possible that ultimate gains from participation are small or nonexistent,” the study concluded. ...Labor economists and work force development experts say the frustration that frequently results from job training reflects the dubious quality of many programs. Most last only a few months, providing general skills without conferring useful credentials in specialized fields. Programs rarely involve potential employers and are typically too modest to enable cast-off workers to begin new careers. Most job training is financed through the federal Workforce Investment Act, which was written in 1998 — a time when hiring was extraordinarily robust. ...The Obama administration argues that expanded job training has already delivered success. ...Last year, the number of laid-off workers in job training reached 241,000, up from about 124,000 the year before, according to the Labor Department. ...Experts harbor doubts about the reliability of Labor Department numbers, which are derived from reports by state agencies that collect data from community colleges and employment offices whose training funds are dependent upon reaching benchmarks. Twice the Labor Department had to correct the data it supplied for this article.

Obamanomics and my Seven Steamy Nights with the Gals from Victoria's Secret

The White House is claiming that the so-called stimulus created between 2.5 million and 3.6 million jobs even though total employment has dropped by more than 2.3 million since Obama took office. The Administration justifies this legerdemain by asserting that the economy actually would have lost about 5 million jobs without the new government spending.

I've decided to adopt this clever strategy to spice up my social life. Next time I see my buddies, I'm going to claim that I enjoyed a week of debauchery with the Victoria's Secret models. And if any of them are rude enough to point out that I'm lying, I'll simply explain that I started with an assumption of spending -7 nights with the supermodels. And since I actually spent zero nights with them, that means a net of +7. Some of you may be wondering whether it makes sense to begin with an assumption of "-7 nights," but I figure that's okay since Keynesians begin with the assumption that you can increase your prosperity by transferring money from your left pocket to your right pocket.

Since I'm a gentleman, I'm not going to share any of the intimate details of my escapades, but I will include an excerpt from an editorial in today's Wall Street Journal about the Obama Administration's make-believe jobs.

President Obama's chief economist announced that the plan had "created or saved" between 2.5 million and 3.6 million jobs and raised GDP by 2.7% to 3.2% through June 30. Don't you feel better already? Christina Romer went so far as to claim that the 3.5 million new jobs that she promised while the stimulus was being debated in Congress will arrive "two quarters earlier than anticipated." Yup, the official White House line is that the plan is working better than even they had hoped. We almost feel sorry for Ms. Romer having to make this argument given that since February 2009 the U.S. economy has lost a net 2.35 million jobs. Using the White House "created or saved" measure means that even if there were only three million Americans left with jobs today, the White House could claim that every one was saved by the stimulus. ...White House economists...said the unemployment rate would peak at 9% without the stimulus (there's your counterfactual) and that with the stimulus the rate would stay at 8% or below. In other words, today there are 700,000 fewer jobs than Ms. Romer predicted we would have if we had done nothing at all. If this is a job creation success, what does failure look like? ...All of these White House jobs estimates are based on the increasingly discredited Keynesian spending "multiplier," which according to White House economist Larry Summers means that every $1 of government spending will yield roughly $1.50 in higher GDP. Ms. Romer thus plugs her spending data into the Keynesian computer models and, presto, out come 2.5 million to 3.6 million jobs, even if the real economy has lost jobs. To adapt Groucho Marx: Who are you going to believe, the White House computer models, or your own eyes?

More Unemployment Is the Key to Stimulus!

Nancy Pelosi is being appropriately mocked for her strange assertion that subsidizing unemployment is a great way to "stimulate" the economy, but keep in mind that this she is just mindlessly regurgitating standard Keynesian theory. Here are two videos. The first is Pelosi's ramblings and the second is my analysis of Keynesian economics. I hope my words are more convincing.

Video Explains Why Government-Imposed Minimum Wages Are Wrong

A former intern of mine does a very good job of showing how minimum wage laws cause joblessness in this new video from the Center for Freedom and Prosperity.

Producers on Strike

The Wall Street Journal wisely warns against drawing too many conclusions from one month's job data, but they also point out that the economy is much weaker than the White House claimed - in large part because of a series of public policy decisions that have rewarded sloth and punished production. Is anyone surprised that the economy's performance has been tepid?

The private economy—that is, the wealth creation part, not the wealth redistribution part—gained only 41,000 jobs, down sharply from the encouraging 218,000 in April, and 158,000 in March. The unemployment rate did fall to 9.7% from 9.9%, but that was mainly because the labor force contracted by 322,000. Millions of Americans, beyond the 15 million Americans officially counted as unemployed, have given up looking for work. Worst of all, nearly half of all unemployed workers in America today (a record 46%) have been out of work for six months or more. ...Whatever happened to the great neo-Keynesian "multiplier," in which $1 in government spending was supposed to produce 1.5 times that in economic output? ...The multiplier is an illusion because that Keynesian $1 has to come from somewhere in the private economy, either in higher taxes or borrowing. Its net economic impact was probably negative because so much of the stimulus was handed out in transfer payments (jobless benefits, Medicaid expansions, welfare) that did nothing to change incentives to invest or take risks. Meanwhile, that $862 billion was taken out of the more productive private economy. Almost everything Congress has done in recent months has made private businesses less inclined to hire new workers. ObamaCare imposes new taxes and mandates on private employers. Even with record unemployment, Congress raised the minimum wage to $7.25, pricing more workers out of jobs. ...The "jobs" bill that the House passed last week expands jobless insurance to 99 weeks, while raising taxes by $80 billion on small employers and U.S-based corporations. On January 1, Congress is set to let taxes rise on capital gains, dividends and small businesses. None of these are incentives to hire more Americans. Ms. Romer said yesterday that to "ensure a more rapid, widespread recovery," the White House supports "tax incentives for clean energy," and "extensions of unemployment insurance and other key income support programs, a fund to encourage small business lending, and fiscal relief for state and local governments." Hello? This is the failed 2009 stimulus in miniature.

Obamacare Kills a Company and Puts 50 More People on the Unemployment Rolls

In the real world, government policies that raise the cost of doing business often lead to crippling - and sometimes even fatal - results. Here's a story, which I saw via Instapundit and Megan McArdle, about an insurance company that is closing its doors because "federal healthcare legislation made the two-year old company's business model unsustainable." In her commentary, Megan displays an appropriate level of skepticism about whether bad policy deserves all the blame whenever a company goes under, but this does seem to be one of those instances since Obamacare forces health insurance companies to follow bad business practices such as allowing people to get sick before getting insurance. The loss of 50 jobs is discouraging, as is the loss of a company that was providing very sensible (or at least would be very sensible in the absence of destructive government policies) high-deductible policies that represented genuine insurance rather than inefficient low-deductible policies (i.e., pre-paid, "all you can eat" plans) that dominate the current quasi-private market:

The hotly debated healthcare reform bill signed into law in March has killed a local insurance company. At least that’s according to a brief letter Richmond-based nHealth sent to insurance agents explaining the reason behind the shuttering of the once promising local startup. “I wanted to share with you the decision by nHealth’s board of directors to exit the health insurance market,” wrote James Slabaugh, executive vice president of the Richmond-based insurance company that employed about 50 people. (Many of those were at an office in Ohio). ...The letter explained that “considerable uncertainties” in the health insurance market caused by the recent federal healthcare legislation made the two year-old company’s business model unsustainable. ...Nezi said nHealth tried to raise additional capital but was unsuccessful. “People got skittish about writing any more checks,” Nezi said. “Because of that uncertainty, would you invest a few more million dollars of your money in a startup if you don’t know what the rules are going to be?” That left company with only one choice. “The most prudent and sensible conclusion for us is to discontinue the sale of healthcare policies and withdraw from the healthcare business,” Slabaugh wrote in the letter. Founded in 2008, nHealth was built around a high deductible insurance plan model that utilized health savings accounts and kept costs down making consumers more involved in their healthcare decisions.

Shocking News: People Are Less Likely to Work When Government Subsidizes Joblessness

Kudos to the Detroit News for a great story revealing that people are refusing to accept jobs because of government unemployment benefits. None of this should be surprising to people who understand that if you subsidize something, you get more of it. Alan Reynolds has been beating this drum for quite some time, but the message doesn't seem to get through to politicians who think it is compassionate to lure workers into lives of dependency. But perhaps this excerpt from the Detroit News report will help (In a perverse way, I admire the one guy who admits that he doesn't plan to find work until the government stops sending him checks):

In a state with the nation's highest jobless rate, landscaping companies are finding some job applicants are rejecting work offers so they can continue collecting unemployment benefits. It is unclear whether this trend is affecting other seasonal industries. But the fact that some seasonal landscaping workers choose to stay home and collect a check from the state, rather than work outside for a full week and spend money for gas, taxes and other expenses, raises questions about whether extended unemployment benefits give the jobless an incentive to avoid work. ...Chris Pompeo, vice president of operations for Landscape America in Warren, said he has had about a dozen offers declined. One applicant, who had eight weeks to go until his state unemployment benefits ran out, asked for a deferred start date. ...Some job applicants are asking to be paid in cash so they can collect unemployment illegally, said Gayle Younglove, vice president at Outdoor Experts Inc. in Romulus. "Unfortunately, we feel the economy is promoting more and more people and companies to play the system and get paid or collect cash money so they don't have to pay taxes," Younglove said. ...A full-time landscaping employee would make $225 more a week working than from an unemployment check of $255. But after federal and state taxes are deducted, a full-time landscaper would earn $350 a week, or $95 more than a jobless check. ...The federal jobless benefits extension "is the most generous safety net we've ever offered nationally," said David Littmann, senior economist of the Mackinac Center for Public Policy, a free-market-oriented research group in Midland. The extra protection reduces the incentive to find work, he said. It's impossible to know exactly how many workers are illegally declining employment, but 15 percent of Michigan's economy is underground, where people trade services, barter or exchange cash without reporting it to the government, Littmann said. One former landscaper, who has been on unemployment for a year, said he will search for work when the benefits expire, but he estimates he earns about $50 to $60 less a week than he would if he were working. "It's crazy," he said. "They keep doing all of these extensions."

Bush's Minimum Wage Increase Killed Jobs

In addition to being in favor of more spending, increased regulation, bailouts, and protectionism, President Bush also saddled the economy with a big minimum wage increase. A new study shows that this pernicious policy has destroyed more than 500,000 part-time jobs. One of the most interesting insights in the report is that the economy (prior to Bush's awful law) had reached a point where the minimum wage wasn't doing much damage because the competitive wage for entry-level work had risen about the government-mandated minimum. But by boosting the required wage by 14, 12, and 11 percent over three years, that is no longer the case. As a result, hundreds of thousand of people have been priced out of the job market.

Economic theory is clear in its understanding of the minimum wage – it unambiguously reduces the demand for labor, but only if the minimum wage is above the market wage for unskilled entry level labor. In practice, the minimum wage has been far beneath the going wage for unskilled, entry level workers. Increasing the minimum wage at these levels would have no effect on employment or wages. As a consequence, research findings have ranged from zero to modest job losses as the minimum wage increases. Unfortunately, the latest round of minimum wage increases, which occurred in late July 2007, 2008 and 2009, occurred from the peak through the trough of the recession. These increases were, at 14, 12 and 11 percent respectively, the largest since 1978 and the largest three-year percentage change since 1950. ...the minimum wage increase accounts for roughly 550,000 fewer part-time jobs now than would otherwise be the case without the most recent three minimum wage increases. ...Abandoning the minimum wage would have little or no adverse economic effects. Indeed, it would most likely boost employment.

If the So-Called Stimulus Was an Unsung Hero, I'd Hate to Meet a Singing Enemy

The White House recently released the Economic Report of the President. In a post at the White House blog, Christina Romer brags that the stimulus legislation was a big success.

This Act is the great unsung hero of the past year. It has provided a tax cut to 95 percent of America’s working families and thousands of small businesses. It has meant the difference between hanging on and destitution for millions of unemployed workers who had exhausted their conventional unemployment insurance benefits. It has kept hundreds of thousands of teachers, police, and firefighters employed by helping to fill the yawning hole in state and local budgets. And, it has made crucial long-run investments in our country’s infrastructure and jump-started the transition to the clean energy economy. All told, the Recovery Act has saved or created some 1½ to 2 million jobs so far, and is on track to have raised employment relative to what it otherwise would have been by 3.5 million by the end of this year.

Let's set aside some of the disingenuous components of her post, such as categorizing income redistribution as tax relief, and focus on her claim that the legislation created at least 1.5 million new jobs when total employment has dropped by 3 million. Romer is not bad at math. Instead, she is saying that the economy would have lost 4.5 without the $787 billion increase in government spending. This what-might-have-been analysis is completely legitimate, assuming that there is good theory and evidence to back the assertion. Unfortunately (at least for the White House's credibility), Ms. Romer and another colleague last year prepared a supposedly rigorous what-might-have-been report, where they estimated that the so-called stimulus would keep the unemployment rate at 8 percent and that failure to increase the burden of government spending would drive the unemployment rate to 9 percent. Yet as this chart from their paper indicates, when we add in the data for what actually has happened, in turns out that bigger government is not only theoretically misguided, but it also doesn't work in the real world.

Real Story on Minimum Wage Is that Unions Are Intentionally Harming Teenagers

The Wall Street Journal rightfully complains about government-imposed minimum wage laws, which are causing higher levels of teenage unemployment. But an underappreciated aspect of this story is the role of union bosses. The unions are big advocates of higher minimum wages, ostensibly because they want to help the working poor, but the real reason is that unions want to somehow acheive above-market wages for their members, and it is difficult to achieve that goal if employers have other options. But if unions can increase the cost of hiriing other workers - or if they can price them out of the market with minimum-wage laws, then that helps the union bosses negotiate favorable deals. Regardless, the real victims are the hundreds of thousands of teenagers who are now jobless:

Yesterday's September labor market report was lousy by any measure, with 263,000 lost jobs and the jobless rate climbing to 9.8%. But for one group of Americans it was especially awful: the least skilled, especially young workers. Washington will deny the reality, and the media won't make the connection, but one reason for these job losses is the rising minimum wage. Earlier this year, economist David Neumark of the University of California, Irvine, wrote on these pages that the 70-cent-an-hour increase in the minimum wage would cost some 300,000 jobs. Sure enough, the mandated increase to $7.25 took effect in July, and right on cue the August and September jobless numbers confirm the rapid disappearance of jobs for teenagers. The September teen unemployment rate hit 25.9%, the highest rate since World War II and up from 23.8% in July. Some 330,000 teen jobs have vanished in two months. Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July. The biggest explanation is of course the bad economy. But it's precisely when the economy is down and businesses are slashing costs that raising the minimum wage is so destructive to job creation. ...The current Congress has spent billions of dollars—including $1.5 billion in the stimulus bill—on summer youth employment programs and job training. Yet the jobless numbers suggest that the minimum wage destroyed far more jobs than the government programs helped to create. Congress and the Obama Administration simply ignore the economic consensus that has long linked higher minimum wages with higher unemployment. Two years ago Mr. Neumark and William Wascher, a Federal Reserve economist, reviewed more than 100 academic studies on the impact of the minimum wage. They found "overwhelming" evidence that the least skilled and the young suffer a loss of employment when the minimum wage is increased. ...State lawmakers are also at fault. At least 10 states have raised their minimum wages above the federal level in the last decade, largely in response to union lobbying and in the name of helping the working poor. Four states with among the highest wage rates are California, Massachusetts, Michigan and New York. Studies have shown in each case that their wage policies killed jobs for teens. The Massachusetts teen employment rate sank by one-third when the minimum wage rose by 88% between 1995 and 2008.