Saturday, February 01, 2014

State of the Union feel good throw aways

The president’s SOTU list—pre-K education; “equal pay”, raising the minimum wage or extending unemployment benefits--is not going to address the real drivers of upwardly mobility--marriage before parenthood and a high school education. Head Start after 50 years shows no discernible advantage in learning, behavior, parenting practices, or health outcomes (at $8,000 per child it does supply a lot of jobs) so why add compulsory pre-k education?  Marriage of her parents is a child's best hope to stay out of poverty, but welfare programs discourage mothers from marrying. Raising the minimum wage won't help people who haven't finished high school--it just decreases their employment opportunities. 92% of black teenagers in Chicago can’t find employment; how will raising the minimum wage help them? And the $10.10 minimum for government workers was a throw away since it is a tiny minority with few at that level.

And that new retirement vehicle? That’s puzzled everyone.  Don't look at MYRA if you have a 401-K or IRA. It's government backed securities. The rate of return this past year would have been about 1.4%. If you need more to open an IRA, just save it in your piggy bank and then invest. On your worst day, you'll get more than 1.4%.  The stock market has been going like gang busters since 2010. If there had been a MYRA, the return would have been dismal.

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