Wage-ing a War

HERE'S a prediction: the first legislative defeat that the new Congress will deal to President-elect George Bush will be an increase in the national minimum wage. Ronald Reagan successfully fought attempts to raise the wage floor, which has languished at $3.35 per hour since 1981, but Bush will not be able to resist the tide.

The minimum wage bill currently before the Congress is sponsored by Rep. Augustus F. Hawkins (D--Cal.) and Sen. Edward M. Kennedy (D--Mass.), a staunch labor supporter and the chair of the Senate labor committee. It would increase the wage incrementally for three years, peaking at $4.65 in 1991, and would afterwards peg the minimum wage at half of the national average wage.

The case for increasing the wage now is strong. never in its 50-year history has the minimum wage remained so long at one level. Since the last increase, the buying power of the minimum wage has declined 20 percent, from $3.35 to $2.68 in 1981 dollars. The minimum wage has sunk to its lowest real level since 1955, and a full-time minimum wage job no longer keeps a family with one child out of poverty.

ALTHOUGH an increase is long overdue, conservatives remain implacably opposed to the Kennedy-Hawkins bill. They trot out tired, flimsy excuses, including some that were used to oppose the Fair Labor Standards Act of 1938, which established the original minimum wage.

The most common of these is the contention that increasing the minimum wage will throw people out of work. Everyone remembers the graph from Ec. 10 that shows how raising wages above the market level causes firms to hire fewer workers. Sounds simple and convincing.

But, like so many other Ec. 10 models, it doesn't work in real life. Of all the increases in the minimum wage since 1938, not one has resulted in increased unemployment. Raising the minimum wage increases the purchasing power of the poorest workers, who tend to spend most of their paychecks. The resulting boost in demand keeps the economy buoyant.

Another common objection is that higher wages mean that American firms will be less competitive in international markets. "America's competitive position could be jeopardized by the minimum wage bill," warns Richard Bernman, chairman of the Minimum Wage Coalition to Save Jobs, a collection of business groups opposed to the bill.

But most firms that pay the minimum wage are not engaged in international competition. Almost two-thirds of minimum wage recipients work in retail or personal and domestic services. Less than 8 percent work in manufacturing.

Conservatives also contend that raising the minimum wage will not really help the poor, but only middle-class teenagers who work at Burger King on the weekends. The facts suggest otherwise. Only 30 percent of minimum wage recipients are teenagers, and 34 percent are full-time workers. Twenty-five percent are spouses, and another 25 percent are heads of households. Clearly, the working poor stand to benefit from an increase in the minimum wage.

EVEN when they concede that point, conservative critics insist that a sub-minimum, or "training wage" is needed so that unskilled teenagers can gain experience in the job market. Businesses, the argument goes, would hire and train more teenagers if only their labor were cheap enough. Of course, as the minimum wage stagnated, the cost of teenage labor declined dramatically in real terms since 1981, but teenage employment rates have not risen.

The argument for permitting firms to "train" teenagers at a penurious wage is equally faulty. Proponents of a training wage would allow a sub-minimum wage for youths aged 16 to 18. Does it really take two years to be "trained" at floor sweeping and cash register banging?

There is no justification for keeping the 7.4 million Americans working at minimum wage jobs in such penury. The benefits of an increased and indexed minimum wage will extend beyond those who earn it, to the more than 10 million Americans who work at near-minimum wages. After eight years of Reaganism running rough-shod over the working poor, it's time to give them a hand.