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Gifts for all occasions in the Galleria! Subscribe to the "What is the Deal?" mailing list. The "What is the Deal?" Deal-of-the-Week: Cookie Of The Month Club - Join Now! June 20, 2004 What is the Deal with Kerry and Economics? By Jan A. Larson With the U. S. economy roaring to life, John Kerry's relentless attacks on President Bush's economic policies have died down. This is not surprising since Kerry's official positions on economic matters, higher taxes and income redistribution, are not likely to enhance his chances of finding a new home on Pennsylvania Avenue under any economic conditions, but certainly not in an environment of an expanding economy. When it comes to economic issues, Kerry is left with nothing to complain about other than his insistence that the middle class is being "squeezed," and that the Bush tax cuts have only benefited the "wealthy." I think most would consider my wife and I to be members of the middle class. I don't know about you, but I don't feel "squeezed" economically. Hiring us up. Unemployment is down. Interest rates remain low and inflation is under control. What is Kerry talking about? We're not wealthy (although Kerry and many on the left seem to consider anyone making more than the minimum wage to be "wealthy"), but we definitely benefited from the Bush tax cuts. We got a check for $600 and our 2003 tax bill was significantly lower than 2002. Since Kerry and his wife are unquestionably wealthy and no doubt benefited tremendously from the tax cuts, I guess I can understand how he believes they benefited the wealthy. Kerry has proven that he either doesn't understand economics or his is merely setting aside sound economic policy in an all out effort to appeal to an electorate that also is largely economically ignorant. The latest Kerry appeal to the economically challenged is his ill-advised proposal to increase the minimum wage to $7 per hour. As anyone that has ever studied economics knows, minimum wage increases result in job losses, not job gains. This, of course, would serve to undermine Kerry's stated goal of creating 10 million jobs, but at this point no one should be surprised at Kerry's contradictory positions. Kerry claims that a large majority of minimum wage earners are women and, by extension, they are caretakers. I suppose the strategy here is to somehow impart a sense of guilt in all of us "wealthy" people about how unfair it is that some poor, struggling single mother is working multiple minimum wage jobs while the President's wealthy friends sit back puffing cigars and laughing at the poor unwashed masses. The fact of the matter is that "cigar smokers," that is, business owners, particularly small business owners, are the ones that employ minimum wage earners and those earning considerably more than the minimum wage. A second fact is that few workers earn the minimum wage for very long as they work their way up the employment ladder. Finally, the minimum wage is designed to be an entry-level wage, not for someone with a family to support. That is, the minimum wage largely applies to teenagers and others entering the workforce for the first time. When employers are faced with the prospect of hiring someone with no experience and no particular skills for the job at hand, the idea of paying $7 per hour will lead many to decide to bypass the unskilled and unproven, leaving a potential employee with no job at all. Ask any low wage earner if no job at $7 per hour is preferable to a job at $5.15 an hour. Even if employers don't cut back on the number of entry-level employees, they must necessarily raise the wages of all employees by a proportional amount and, to cover the increased costs, raise prices. Instead of enjoying their windfall, minimum wage earners find that the prices of bread, milk and Big Macs have increased and they are no better off after all. In the end, those that earn the minimum wage will not always earn the minimum wage as they work their way up the employment ladder and those that do earn the minimum wage will be at the bottom of the economic power curve no matter the amount per hour that they earn. If $7 per hour were good, $100 per hour would be better, right? The bottom line is that any increase in the minimum wage will do nothing but hurt those it is designed to help and, in the end, Kerry's proposal proves just how economically challenged he and those in the Democratic party really are. Either that, or John Kerry is willing to sell out entry-level workers in his single-minded goal of winning the Presidency. -- Send feedback to the author. The "What is the Deal?" column will appears weekly on the Pie of Knowledge website. 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