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On Sunday, the Chicago Tribune reported that Democratic Presidential candidate John F. Kerry was seeking a whopping $1.85 increase in the minimum wage rate, pushing the hourly minimum rate up to seven dollars by 2007.  Blatant political profiteering is expected from liberals in an election year.  After all, Kerry’s fellow senator from Massachusetts, Ted Kennedy, typically proposes increasing the minimum wage every other year to coincide with the elections in his efforts to portray the Republican party as uncompassionate.  A look at minimum wage with common sense reveals which party is actually less compassionate.

Kerry’s proposal is unsurprising, and it shows the desperate lengths he will go to in order to garner any additional vote from the lower- or middle-class citizenry.  He insists that increasing minimum wages wouldn’t hurt small businesses, but such a supposition is impossible to support with any modicum of common sense.

Let us imagine that we own a small business and employ and number of minimum wage earners to do the necessary production work.  In order to break even – that is, not even make a profit – our budget per week allots $5,000 for non-salaried, non-managerial workers.  This doesn’t include medical nor retirement benefits, but is strictly their salary.  These numbers also assume that all of our workers are still at minimum wage, regardless of their time of service, which is wholly impractical, but necessary for the purposes of this thought-process.  With $5,000 per week budgeted, we have enough money to pay for 970.9 hours, or 24.3 full-time employees.  If we increase minimum wage by just fifty cents an hour, the available number of hours would drop to 885, about ten percent.  Increasing minimum wage by Kerry’s proposed amount would mean enough money budgeted for 714.3 hours, or 17.9 full-timers – a loss of 6.4 employees, or a quarter of the work force!

Kerry’s defense of this proposal is ludicrous and it demonstrates the detached idiocy of his entire campaign.  “If a president can go out and fight for four years to provide over a trillion in tax cuts to the wealthiest people in America,” he says, “we can fight for a few months to raise the minimum wage for the poorest people in America.”  It sounds nice, but it demonstrates his incapacity to comprehend how capitalism and businesses function.  Liberals like to denounce and scoff at supply-side economics, deriding it as “Reaganomics,” while ignoring the tangible and obvious benefits of them.  Reagan’s cutting of taxes for the upper tax brackets directly resulting in unprecedented growth for the economy for more than a decade.  Regardless of what liberals want you to believe, Clinton’s double-term is a direct result of Reagan’s tax policies pushing the economy along.  In fact, the only time since Reagan that our economy has seen such significant one-quarter growth in our nation’s economy was in the last quarter of 2003, after Bush pushed his own sizable and historic tax cuts through Congress.

Syndicated radio host Sean Hannity observes that when rich people have more money, those who build and maintain the things they purchase will see their own increase in business and prosperity.  Liberals scoff at phrases like “a rising tide lifts all boats,” but consider the evidence to support it.  Let’s go back to our fictional company.  Instead of raising minimum wage, instead taxes are cut.  This means that our business suddenly finds itself with an extra $3,500 per week to use in whatever way we desire.  Liberals assume that you and I, the greedy business owners, will simply pocket the $3,500, but this isn’t a good business practice.  In fact, very few business would consider pocketing the entire thing if they are interested in continual growth.  Liberals look at multi-billionaires like MoveOn.org benefactor George Soros, who has pledged millions to defeat President Bush, and ignore his blatant profiteering on market speculation and his known attempts to collapse the economies of nations through currency buying strictly for his own personal gain.  Yet, they think that Soros’ dastardly behavior is reflective of the average business owner who simply wants to stay alive.

The fact is, if the average business had $3,500 extra per week, they’re going to reinvest at least half of it into the company in order to further their business and increase their profits.  Small business owners want to make more money, and the smart ones know that in order to make money you must spend some.  That leaves us with $1,750 after reinvesting.  Assume that we take three-quarters of this and dole it out in bonuses for the workers of the company, a reasonable supposition since they helped the company get to where it is.  Furthermore, it is cheaper to retain employees and keep them happy than to watch them quit and have to train replacements.  That leave us with $437.50 to use for raises or to hire additional employees.  Under current minimum wage rates, it would mean an additional 2.1 employees.  Under Kerry, just 1.6 new jobs.  That’s a big difference.

Like too many other liberal “solutions,” Kerry’s proposed minimum wage increase only appears useful on the surface.  Increasing the minimum wage resulted in a loss of a quarter of our workforce for our sample company in order to maintain profitability.  What do you think it would do nationwide?

The answer, of course, is increase unemployment and simultaneously increasing the welfare roles.  This gives liberals a terrible double-edged sword to use against conservatives and business owners, those who are truly trying to help the lower- and middle-class.

This chart is not to prove or disprove that minimum wage increasing causes unemployment, but it certainly does offer evidence that unemployment is exacerbated by it.  In part because of Carter’s increases to minimum wage, unemployment increased by 1.2% in Reagan’s first year and another 1.1% in his second year.  Once the market recovered, and in part thanks to Reagan’s tax cuts, unemployment began to drop and continued to drop until Bush 41 raised minimum wage and raised taxes, a terrible double-whammy to unemployment.  There is evidence that the last time minimum wage was increased that it didn’t affect unemployment, but this can be similarly discounted by the welfare reform proposals pushed through by the House during Clinton’s second term.

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