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Lifting Workers Out of Poverty Proves Difficult : Income: Without an increase in the minimum wage, keeping some employed families from being poor is impossible, the White House says.

September 03, 1993|JAMES RISEN | TIMES STAFF WRITER

WASHINGTON — Lifting working families out of grinding poverty has been a central objective of President Clinton's domestic agenda since last year's political campaign, yet the White House appears to be finding it increasingly difficult to live up to that pledge.

In an effort to win conservative support for his anti-poverty agenda, Clinton has focused on Americans who work full time but make so little that they still fall below the government's poverty level.

Clinton's first budget, which narrowly passed Congress last month, contains expanded tax breaks that will boost the incomes of low-wage workers with families. But the Administration appears to have placed an equally important element of Clinton's anti-poverty plan--a proposed increase in the minimum wage--on the back burner. And Congress scaled back by nearly two-thirds the President's proposal to significantly expand the food stamp program, a third component of his program to aid the working poor.

Although it has not abandoned the fight, the Administration concedes that, without the minimum wage increase, its objective of guaranteeing all working families that they will stay above the poverty level cannot be achieved.

Administration sources said Thursday that Clinton is not likely to push for an increase in the minimum wage until next year at the earliest. The White House is already overloaded with policy initiatives that it must sell to Congress this fall, most notably health care reform, the North American Free Trade Agreement and Vice President Al Gore's National Performance Review, which is intended to "reinvent government."

With so much on its plate, Administration and congressional officials, along with industry lobbyists, said they think it is very unlikely that the White House will be able to push for a higher minimum wage before the end of 1993.

Attempting to raise the minimum wage during debate over the Administration's new mandates on employers to finance health care reform would also be politically dangerous, officials acknowledged.

"You could think of health care reform as a sizable increase in the minimum wage for people who don't have it now," a White House official said. That would appear to give businesses even more reason to fight the White House health care plan, which clearly has a higher priority with Clinton.

Still, Labor Secretary Robert B. Reich, a leading voice on economic policy in the Administration, is fully behind the plan to raise the minimum wage. In a July 22 memo to the White House that was leaked to the media, Reich suggested that he would support an increase in the minimum wage from $4.25 to $4.50 and that he believes it should be indexed to rise with inflation. His memo said he would make a formal proposal by October that could be reviewed by the Administration's National Economic Council. Yet that proposal would have to be approved by the White House and would almost certainly come too late for any action this year. What's more, a proposal to index the wage level would be highly controversial and face a much tougher battle in Congress than the 25-cent increase.

"I think indexing would be a big, big mistake, I don't think it would even pass," Senate Minority Leader Bob Dole (R-Kan.) said recently. "I hate indexing. It will lead to more inflation," said David Wyss, an economist at DRI-McGraw Hill, an economic consulting firm in Lexington, Mass.

One complaint raised by conservatives about indexing the minimum wage is that wage levels have been rising more slowly in recent years than the general level of inflation. Tying the minimum wage to the consumer price index would thus mean that the minium wage would begin to rise at a faster rate than average wages and salaries.

In response, Administration officials said they are studying ways to index the minimum wage to the overall rise in wage levels instead of the consumer price index.

Without indexing, the Clinton goal of raising a working family of four out of poverty will not be achieved, said Ellen Nissenbaum, legislative director of the Center on Budget and Policy Priorities, a liberal Washington research group that has been working to keep Clinton focused on his goals.

By 1994, she noted, the government's official poverty level for a family of four will be $15,170. The Administration's new expansion of the earned income tax credit will provide a maximum credit of $3,370 for a family of four with one full-time worker in the household, and the new expansion of the food stamp program would provide the same family with a maximum benefit of $3,150.

But to get that family over the poverty level, the minimum wage would have to be raised to at least $4.50 and kept at the same relative level through indexing.

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