The political exhibitionism of the State of the Union

The president will probably again propose combating inequality with a 23rd increase (since 1938) of the minimum wage. This would have no measurable effect on inequality because few heads of household earn the minimum wage and most such earners are part-time workers from households with an average annual income of $53,000. Twenty percent are from households making $75,000 or more.

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Obama probably also will urge measures to increase college enrollments. For several decades, both parties simply knew that not enough people owned homes. So federal policy — mortgage subsidies, lower lending standards — encouraged more homeownership than market rationality would have produced. One exciting result was the Great Recession. Now the federal government, which simply knows that not enough people are getting college degrees, has fueled a bubble in higher education by funneling billions in subsidies for student tuition aid. To the surprise of no one, except the government, schools have responded by raising their prices — they are up 23 percent since Obama’s first election — to capture the subsidies.

The Center for College Affordability and Productivity (“Why Are Recent College Graduates Underemployed? University Enrollments and Labor-Market Realities”) reports that about 48 percent of those college graduates who are employed are occupying jobs that the Bureau of Labor Statistics suggests require less than a four-year college education.

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