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Reduction in Jobs Cited : Base-Pay Hike Will Hurt Poor, More Experts Saying

May 12, 1987|OSWALD JOHNSTON | Times Staff Writer

WASHINGTON — Roland Wesley sees the American job market from the lowest possible vantage point--the Chicago ghetto, where poverty is rampant and unemployment hovers near 30%.

Wesley runs a job placement firm that tries to train and motivate the chronically unemployed to get and hold jobs that typically pay at or near the minimum wage. That, he says, is all his clients--small ghetto businesses--can afford. If they were forced to pay more, they simply would not hire.

"We take young men on welfare, train them to entry-level positions and try to get them started," Wesley said. "We will have difficulty if the minimum wage is raised. If the base pay is higher, it would hurt the very people we try to help."

A growing number of economists is beginning to see the minimum wage from Wesley's perspective. As Gary Burtless, a labor market specialist at the liberal-leaning Brookings Institution, put it: "When you raise the wage, it makes employment of unskilled workers much more difficult."

Yet, an increase in the minimum wage, which despite inflation has remained at $3.35 an hour since 1981, now has its best chance in six years of clearing Congress. Democrats have taken control of the Senate as well as the House, and the AFL-CIO is pushing hard for legislation designed to guarantee more than a subpoverty wage for those on the bottom rungs of the work ladder.

The key committee chairmen--Sen. Edward M. Kennedy (D-Mass.) of the Senate Labor and Human Resources Committee and Rep. Augustus F. Hawkins (D-Los Angeles) of the House Education and Labor Committee--introduced a bill to raise the minimum wage to $4.65 an hour in three annual steps and then keep it at 50% of the nation's average wage.

At today's $3.35 an hour, they point out, the minimum wage will not buy much more than it did at its inception in 1938, when it was pegged at 25 cents. By the end of last year, $3.35 an hour was only 38% of the average hourly wage, down from 59% in 1956 and 48% as recently as 1981. At the minimum wage, a year-round worker would earn less than $7,000--well below the poverty threshold for a family of four.

'Substandard Public Policy'

"A subminimum wage is substandard public policy--for young or old," Kennedy declared when he introduced his minimum wage bill late last month. "The time has come for Congress to redeem the promise of the minimum wage by restoring its value for American workers."

Kennedy's and Hawkins' committees have yet to begin work on minimum wage legislation, and the outlook is cloudy. Even if both houses of Congress approve a bill, they will have to get it through--or around--President Reagan, an ardent foe of the measure.

Proponents of raising the minimum wage emphasize the destructive effects of working for poverty-level wages. AFL-CIO economist John L. Zalusky said that the goal is to "keep people being paid at the minimum wage from being left behind and to raise them from poverty."

There are 5.2 million workers at the minimum wage, according to the Congressional Budget Office. And Sar Levitan, director of George Washington University's Center for Social Policy Studies, points out that raising the minimum wage would also push up the pay of the working poor who make little more than today's legal minimum.

"It's not just a matter of lifting people out of poverty," Levitan said. "It's that we should not, in an affluent society, accept wages that are below minimum standards."

Inefficient Technique

Other experts call a higher minimum wage an extremely inefficient technique for reducing poverty.

The Congressional Budget Office pointed out that only 20% of workers earning the minimum wage are officially classified as poor. Many of the workers are teen-agers from middle-class families, the budget office reported, and nearly 70% are members of households with "incomes well above the poverty line."

Anthony Carnevale, an economist with the Washington-based American Society for Training and Development, which lobbies for training and human resources firms, said that the minimum wage has become a symbolic issue for organized labor.

"You get very marginal returns with a higher minimum wage," he said. "Perhaps this issue is a litmus test for labor and the liberal community. But it's frustrating to see so much energy go into this issue. This is the wrong policy lever. It doesn't connect to anything."

Likewise, Roger Brinner, a vice president of Data Resources Inc. of Lexington, Mass., called the minimum wage a "rather blunt and awkward tool to redistribute income."

Brinner warned of the inflationary impact of a higher minimum wage. "All that happens is that you employ fewer at a higher wage scale," he said, "and everyone's cost of living goes up. I'm willing to believe that, for those at the new level who keep their jobs, their income is higher. But it costs everybody else higher prices."

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