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Feldsteins on Minimum Wage

April 26, 1988

Politicians are at it again--trying to boost voter turnout for themselves by boosting the minimum wage law! Unfortunately, a boost in minimum pay scales from $3.35 per hour to $4.25 to $4.65 to $5.05 by Dec. 31, 1991, may bring a boost in pay for some but may also bring a loss of jobs for many other workers. Remember, some manufacturers with intensive labor needs in the garment manufacturing or with tedious electronic or industrial small assembly work, etc. may be facing intensive competition from other manufacturers in Mexico or the Far East where pay scales may run from 15 cents to 50 cents per hour. A U.S. manufacturer may then face two options--close down part or all of his operations or move to Taiwan, South Korea, Mexico, etc.

Also let's remember that all business concerns have some odd jobs, maintenance work, etc. where they can use casual or part-time help--high school or college students, etc. but if they are obliged to pay $4.25 to $5.05 per hour, they may merely postpone the work.

For young people a part-time job paying only $1 per hour is certainly a better investment in time than loafing around street corners and pot shops. At least they can be learning some work habits, job skills, building a reference file, and preparing for the next step up the ladder.

And why do these minimum-wage laws and poverty-level computations have to be nationwide? Cost of food, housing, etc. varies perhaps 50% in many states, being much lower in small towns in the Midwest and South. I just returned from a trip to some farming towns in Missouri and Illinois and found this to be very true. Also I secured a good hair cut for only $2.50--from the best barber in town!

Sorry, a pay-increase law may sound good but it may be a job killer! Politicians may gain votes on this idea, but many workers will lose jobs.

RALPH S. LITTRELL

West Los Angeles

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