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Black Unemployment and Enterprise Zones

unemploymentIt’s a well-known fact that the unemployment rate among black Americans is higher than other groups. According to the Economic Policy Institute, the rate is now 2.2 times higher. The explanation?

“Since the Bureau of Labor Statistics calculates the unemployment rate based only on people who say they are are continuously looking for jobs, the rate for African Americans is twice as high.”

Blacks are now more than twice as likely to be unemployed as whites because they don’t give up looking for work? I’d wager members of other groups would dispute the implication that they’re not being “resilient” enough. Beyond that, illegal immigration and off-shore jobs play larger roles in the high rates of unemployment (and the disparities), as well as burdensome taxation and regulation, which leads owners to lay off workers and freeze hiring. A $15 minimum wage law would make matters worse. “Resilience” is definitely a novel, and dare I say, politically correct, idea.

Any effort to reduce national unemployment in this economy will be tough. Where to start? Read Star Parker’s take on “enterprise zones.”

[Economist Arthur] Laffer revived an idea first championed a quarter century ago by the late New York GOP Rep. Jack Kemp: enterprise zones. These are geographic areas of high unemployment that would qualify for special tax and regulatory relief to encourage investment and establishment of businesses.

The version Laffer proposes has four key elements that would operate in these areas:

First, no payroll tax on the employee or employer.

Second, suspend federal and state minimum wage.

Third, eliminate regulatory impediments to construction and setting up businesses.

Fourth, profits on businesses operating in these zones would be taxed at one-third the regular rate.

I would add two other elements to Laffer’s proposal.

Dollar for dollar tax credits for all charitable contributions going into these areas. And school vouchers for all children in these areas to attend the school of their choice.

Photo credit: Bernard Pollack (Creative Commons) — Some rights reserved

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