WASHINGTON — More than anything, the "chump change" calculation bedevils welfare policy. Namely: Being on public assistance can be a better deal than work. If you give up welfare to labor 40 hours at the minimum wage, you may end up worse off than if you'd stayed home and drawn the dole-- making you a chump for working.

The "chump change" dilemma is often spoken of as somehow immutable to the welfare structure. But it is not. Rather, it is a phenomenon of the eroding value of the minimum wage. This aspect of wage policy has been entirely overlooked in reaction to President Bill Clinton's proposal to raise the federal minimum to $5.15 an hour. Raising the minimum wage is not just a means to promote fair pay. It is a means to get people working by abolishing chump change.

In the 1960s, the minimum wage was worth about $6.40 an hour in 1994 dollars, versus the current minimum wage of $4.25 an hour. That meant that in the 1960s, if you left the dole to work 40 hours at minimum wage, you came out ahead--even after paying taxes. Beginning in the late 1960s, Congress let the minimum wage decline relative to inflation. During the same period, public-assistance benefits began to rise.

In the 1970s, the lines crossed: Starting work became less rewarding than drawing the government check. In the past two decades, as increases in the federal minimum wage consistently lagged behind inflation, for those eligible for welfare, in most states, entry-level labor has grown less appealing, economically, than idleness. This can be the case even when the newly expanded Earned Income Tax Credit--special payments to assist the working poor--is taken into account.

Work, being hard, is supposed to offer rewards, including money. All but chronic welfare recipients generally wish to work, if rewarded. "Studies are very clear," says Rebecca M. Blank, an economist at Northwestern University, "that anything that makes work more attractive improves the likelihood people will get off AFDC (Aid to Families with Dependent Children)." But in the current minimum-wage regime, some work penalizes welfare recipients rather than reward them.

Discussion of the link between entry-level pay and welfare dependency has been absent from reaction to Clinton's proposal to raise the minimum wage to ensure, in Clinton's words, that "work must pay." Many politicians and pundits who pronounce themselves (with considerable justification) horrified by the welfare culture nonetheless oppose federal wage policy--not seeming to realize how the two feed off each other.