Rarely does a Democrat go through a presidential campaign without promising to raise the real minimum wage. As with most liberal campaigning traditions, John Kerry has offered no deviation. The senator from Massachusetts embraces this vacuous yet crowd-pleasing idea. If economic policy were food, John Kerry's idea would be cotton candy. And as "studies" report almost daily, Americans are too fat as it is.
John Kerry has been trying his best to convince Americans that they are miserable. This effort has been largely fruitless, but Kerry isn't letting up. He offers on his website a press release that says, "As part of his plan to build a stronger economy for America's families, Democratic Presidential candidate John Kerry today called for raising the minimum wage to $7 by 2007. The increase will impact nearly 15 million workers "
I believe that this plan falls comfortably outside the realm of economic propriety. Kerry's two key goals -- building a stronger economy and raising minimum wage -- are largely mutually exclusive. Setting a price floor on wages exacerbates employment; this is an axiom. That such a floor would hinder the strong economic recovery of the past two years is probable. The current minimum wage is $5.15. Raising it will affect many more laborers than Kerry estimates, and the effect, for many, would come in the form of a pink slip.
We don't have much of an unemployment problem in this country (though Kerry would have you think otherwise), as the rate currently stands at 5.6 percent (the same unemployment rate we had during Bill Clinton's third year). And frictional unemployment -- the number of jobless folks who are simply between positions -- can be estimated anywhere between 4 and 5 percent. Theoretically, only 1.6 percent of Americans are jobless for cyclical or structural reasons.
These types of unemployment refer to the natural business cycle and fundamental changes in the types of skills required or jobs offered in the country. In contrast to our 5.6 percent, the members of the Economic and Social Council within Kerry's beloved United Nations have an average unemployment rate of 14.769 percent. For all the eggs that Kerry lays in the basket of the UN, you might think that he'd take the time to do some investigative work and discover that, sometimes, old-fashioned laissez-faire economics actually works better than forcing wages above their market-determined level.
About 3 percent of all workers are paid the minimum wage or less. Of them, 53 percent are younger than 25 and 63 percent are enrolled in school. Fifty-four percent of minimum wage employees live in households with incomes at least twice the poverty level. The true average minimum wage earner is a teenager with an after-school job in a lower-middle class family. It wouldn't be much of a stretch to say that most dollars paid through minimum wage go to X-Box games and new sneakers. So, what about the Democrats' portrayal of the minimum wage earner? Single poor mothers make up 0.15 percent of the workforce.
The service industry, chiefly restaurants, makes the most use of the minimum wage. Upon looking at the effects of the last increase, which occurred during the cushiony technology boom of the late 1990s, one sees that menu prices rose 34 percent more than the consumer price index. The correlation is indirect, but it's there.
When the minimum wage goes up, businesses are required to pay unnaturally high prices for labor. That money must come from somewhere, and more often than not, it comes from either higher prices or downsizing. In 2001, the Congressional Budget Office estimated that a $1.50 increase in the minimum wage would cost the private sector $30.2 billion. John Kerry (don't worry about him, he married money) wants to raise the wage $1.85.
Truthfully, I don't believe John Kerry would even be able to get it done. Hikes as radical as his generally elicit broad bipartisan remonstration. It is unnecessary and detrimental fiscal policy, two characteristics of which I am sure Kerry is aware. This proposal exists to convince voters that he is "labor-friendly." It is an attempt to further divide the socioeconomic classes in the United States. It is an attempt to paint President Bush as an enemy of the worker. Happily, Kerry's efforts are transparent to many.
When the senator talks about jobs, values and gaining world respect as the pillars of his campaign, I can't help but cringe. Not only at his stunning mis-prioritization but also at the laughable vagueness of his rhetoric. And I concede that John Kerry might be able to convince France to hate the United States a little less, but when it comes to economic policy, his ideas are as unhealthy as cotton candy.
