Knight Of The Mind

I'll do my best to present a philosophical and generally conservative look at current events and life, the universe and everything. Readers are invited to take all that's posted herein with a grain of salt. or if they prefer, a grain of salt, a slice of lime and a shot of tequila.

Location: Alexandria, Virginia, United States

Greetings and welcome. My name is Steve, I'm 35 years old and I work for the US Army as an Operations Research Analyst. Hence my blog title Knight Of The Mind.

Saturday, June 19, 2004

The Biggest Benedict Arnold CEO of Them All

The latest economic plank in John F Kerry's platform offers both good news and bad news. The good news involves the fact that John F. Kerry lacks the creative ability to invent new ways to screw up the economy. The bad is that he has no problems with pulling stupid old ideas out of mothballs.

His latest attempt at stirring up popular rebellion involves his proposal to hike the minimum wage to $7.00 per hour. At first blush, this sounds reasonable. The Consumer Price Index (CPI)has risen about 3% this year. This makes it harder to live day to day. The higher minimum wage sounds like an easy quick fix.

This logic holds until The Law of Unintended Consequences engages it in violent combat. A Minimum Wage Law can make an employer pay the workers more, but it can't force an employer to keep all the workers employed. In fact, the raise in wages lowers employer demand for the services of low skill workers.

Studies have projected that a 10% increase in the minimum wage cost destroys approximately 100,000 existing jobs. The current minimum wage is $5.15. A raise to $7.00, comprises about a 40% raise in the floor. This fires 400,000 workers who would otherwise have earned at least a portion of an honest living.

This does not necessarily mean 400,000 people would starve. In fact only 2% of the adult workforce works for the minimum. The real problem occurs when teenagers try and get early work experience and training on how to successfully navigate the working world.

According to the 1981 Report of the Minimum Waqe Study Commission, the 46 percent rise in the minimum wage between 1977 and 1981 destroyed 644,000 jobs among teenagers alone. "The evidence is now in, and the findings of dozens of major economic studies show that the damage done by the minimum wage has been far more severe than even the critics . . . predicted." [8] A 1983 survey, "Time-Series Evidence of the Effect of the Minimum Wage on Youth Employment," found that studies conducted between 1973 and 1983 generally agreed that a 10 percent increase in the minimum wage would result in a 1 to 3 percent reduction in teenage employment.[9] Given these findings, the proposal to raise the minimum wage by nearly 40 percent could result in a 4 to 12 percent drop in the employment of teens. Cato Policy Analysis No. 106

Thus, if John F. Kerry were elceted and then succeeded in passing a $7.00 minimum wage, he would cause more problems than he claims he would solve. Even worse, studies prove the children would bear the brunt of these cold-hearted policies. This would make John F. Kerry the biggest Benedict Arnold CEO that ever was.


As you may or may not already be aware, members of the Watcher's Council hold a vote every week on what they consider to be the most link-worthy pieces of writing around... per the Watcher's instructions, I am submitting one of my own posts for consideration in the upcoming nominations process.
Here is the most recent winning council post, here is the most recent winning non-council post, here is the list of results for the latest vote, and here is the initial posting of all the nominees that were voted on.

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