# John Kerry and the minimum wage



## Bobm (Aug 26, 2003)

How many low-wage workers does John Kerry want to throw out of work?

John Kerry says he wants to raise the minimum wage to $7 an hour from $5.15, and his proposal should have us thinking: *Why stop there? Why not $10 an hour, or $20, or for that matter whatever a U.S. Senator makes? *If Mr. Kerry thinks government is obliged to guarantee Americans a certain level of income, *why not simply elevate everyone at least into the middle class?*
The reason, as Mr. Kerry well knows, is that wage floors aren't manna from heaven. Here on Earth, they tend to price certain kinds of labor out of the job market. Businesses hire and pay workers what they think their skills are worth relative to other ways they can spend their capital. Force the price of labor too high, and suddenly businesses hire fewer workers, especially those at the lower rungs of the skill ladder.

*This is one of the most settled propositions in economics, second only perhaps to free trade. *Sure, Mr. Kerry has found a few economists willing to lend their credibility to his proposal, but even they don't deny that some people may lose their jobs--which is why they don't want to raise the minimum too high. *The debate is over how many poor people Mr. Kerry would throw out of work.* 

To answer this question, you first have to look at who earns the minimum wage. The Labor Department believes that 1.5% of the work force, or 2.1 million people, earn $5.15 an hour or less. More than half of them are under the age of 25, meaning they are likely working a temporary or entry-level job. Three-fifths are in the leisure and hospitality industry, which means in jobs that often come with tips in addition to wages. Studies have also shown that most people earning the minimum wage are not poor--more than one-third live with a parent or relative. Only 15% are the sole breadwinner in a family with children.

These low-paying jobs are important because they are a gateway into the world of work for people who lack experience and skills. One study showed that, of a sample of workers earning minimum wage, fully 63% were already making more a year later.
The truly unfortunate are those who cannot find work at all. These tend to be the least skilled Americans, which means the young, or the poorly educated. *It's no accident that under current minimum wage levels the unemployment rate for teenagers is 17.2%, three times the national average.* For black teenagers it is a scandalously high 32.5%.

How much worse does Senator Kerry want to make it? *Bill Clinton's Small Business Administration followed a group of workers after the last increase in the minimum wage, in 1997, and found it slowed wage growth at small businesses and more than doubled the likelihood that low-wage workers at large firms would be unemployed.* And that was at a time when the national jobless rate was falling rapidly and hamburger flippers in some places were earning $8 an hour.

One reason employment and productivity are so much higher in the U.S. compared to Europe is that we have switched from trying to alleviate poverty with a high minimum wage to the Earned Income Tax Credit. This scheme, along with the Child Tax Credit and other assistance programs, pay cash and benefits to supplement the incomes of the working poor.

These programs have incentive problems of their own, and the EITC in particular has been subject to abuse. But at least it preserves the incentive to take up low-paying jobs, and in combination with welfare reform discourages the growth in dependency seen in the 1970s and '80s when the minimum wage was higher in inflation-adjusted terms. The success of this gradual shift will be undermined if these lower-wage jobs disappear.

The minimum wage gambit sends a bad signal about the direction of Mr. Kerry's economic policy. It is one of the mustier items in the liberal playbook and suggests a candidate who dances to the tune of unions rather than thinks creatively about how to reduce poverty. If Mr. Kerry really wants to raise take-home pay, he could help raise American skills by challenging the catastrophe of inner-city public education. But that's politically hard; it's so much easier to pose as the champion of the poor and worry about the consequences later. uke:


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## Militant_Tiger (Feb 23, 2004)

you know minimum wage has been in effect since 1938, every president has agreed with it including your dear bush's. as you stated in the gas price thread, with inflation we are paying regular prices that we did in the past. minimum wage however has not been changed to account for inflation...


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## Bobm (Aug 26, 2003)

Tiger, Minimum wage was raised about 500% in the last 35 years when I was your age it was about $1.50 per hour a new truck was about $5000.00 and now they are $25000.00 so it must be pretty close....


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## Perry Thorvig (Mar 6, 2002)

So, then I guess it is alright to periodically raise the minimum wage. We have been doing it since 1938.


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## Southwest Fisher (May 14, 2004)

Enough with the slippery-slope argument, this isn't junior high, Bob! If I said that by attacking Iraq, "we should all be wondering if next Bush was planning on taking out North Korea, Russia, or even Britain" you'd freak out and probably refer to me with something akin of "the liberal who cried wolf." But your post starts out by comparing a raise to $7 with a raise to $10 or $20. C'mon, after all of these hundred-plus word posts you can't do any better than using the weakest of all persuasive arguments? Tsk Tsk.


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## Bobm (Aug 26, 2003)

You missed the point of the article as the minimum wage increases there are consequences and the biggest one is some kids that would otherwise have jobs will not get them. And the fact is that the vast amount of people that earn minimum wage are highschool kids just entering the job market, living at home and supported by their parents and not experiencing any hardships. How many adults do you know on Minimum wage?? Not many and the ones that are are losers that have made bad decisions about education ect. in their life and are not as important as these kids just starting out establishing work habits, something these kids obviously can't do if they can't even find a job. Would it not be better to employ more of these kids and get the proper work habits and ethics instilled as early as possible?* All these kids need jobs to keep them busy and out of trouble. *Raise it and fewer will. As far as Kerry is concerned its just a typical feel good phony issue that he can make noise about, hes desperate trying to get some traction.


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## Perry Thorvig (Mar 6, 2002)

Raising the minimum wage isn't going to send McDonald's jobs or Wal-Mart jobs off shore . A higher minimum wage will just put more money in the local economy rather than it going to Bentonville, Arkansas and the heirs of Sam Walton.

Quit crying wolf, Bob.


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## Bobm (Aug 26, 2003)

Not if they don't have the jobs available, all companies have a budget for the part time help and when the buget is exhausted there so no more money for addtional jobs. Why do liberals always feel there is no limit to the amount of money available for everything? If you had any concept at all of how a business runs you would not make a comment like that.


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## Perry Thorvig (Mar 6, 2002)

Manufacturing businesses are not typically paying minimum wage. So an increase in the minimum wage does not affect them much.

Most employees making minimum wage are working for McDonald's and Wal-Mart, and similar retail companies. Those jobs can't be outsourced to India. They are going to have the same number of customers regardless of the minimum wage levels - maybe more. They are going to need to service those customers. They aren't likely to make job cuts and not adequately service their customers. If they could get by with less employees right now, they would.

I guess Bob just doesn't want high school kids to be able to save up a little money for college or trade school. Those are positive educational choices that those taking personal responsibility for their lives make. It would be nice if they had a few more bucks to pay for school rather than taking out student loans and being in debt until they are 35 years old!!

P.S. Let's all cut the "liberal" and "righty" name calling crap and stick to the issues. Using those labels is really stupid. Using labels is a poor substitute for good communication skills. I know you'll have withdrawal, Bob, if you can't use the word liberal. But, try it some time.


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## Bobm (Aug 26, 2003)

Politics is a struggle between left and right liberal VS conservative and this is one of many issues that showcase the difference. I guess the crying wolf comment, which is the same type of bs just brought it out of me, sorry about that. 
Perry you said


> They are going to have the same number of customers regardless of the minimum wage levels


that is exactly the point, same number of customers= same amount of dollar profit = same amount of budget for employees. So they can employ 10 kids at 12.00 per hour or 20 kids at 6.00 per hour. My previous post say it would be better to give the 20 kids the jobs and let them establish some work experience and learn about having a job. 
So your comment


> I guess Bob just doesn't want high school kids to be able to save up a little money for college or trade school. Those are positive educational choices that those taking personal responsibility for their lives make.


 Makes no sense at all, again that is exactly the point I was making in the posts above , lower minumum wages result in more kids working.


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