Minimum wage cut for youth seen as early Reagan-labor confrontation

Labor's first confrontation with the Reagan administration and a more conservative Congress could come early in 1981. At issue: allowing employers to hire young workers at less than the minimum wage.

Although unions will oppose it stubbornly, approval of a lower "youth opportunity wage" now appears likely. In 1977, proposals to lower the minimum for teen-agers lost by one vote in the US House of Representatives and by five in the US Senate.

President-elect Ronald Reagan and a majority in the new 97th Congress favor lowing the minimum wage for young people as a way to relieve the high youth employment rate, now slightly more than 18 percent.

Business strongly supports a differential, arguing that employers would be willing to hire more young, inexperienced workers if they did not have to pay the full minimum rate. The minimum wage now stands at $3.10 an hour but rises on Jan. 1 to $3.35 an hour. Some have suggested that rate would be reduced to between $2.50 and $2.75 an hour.

But organized labor objects to a subminimum for the young. It challenges the effectiveness of "legal pay discrimination" against teen-agers as a way of putting a significant number to work. To the extent that it does, says the AFL-CIO, youth employment gains would be made "by substituting cheaper teen-agers for older workers."

"The only beneficiary of a subminimum wage for the young would be the employer," Ray Denison, the federation's legislative director, is telling hold-over and newly elected members of Congress.

The youth rate would be only a first step in a general attack on the Fair Labor Standards Act of 1938, the minimum wage law, says Clara Schloss, research consultant on the minimum wage for the AFL-CIO.

"If you single out teen-agers, who is next --pitting one group of workers against another. A youth subminimum could be a beginning of the end of the law, " she argues.

The US Chamber of Commerce and other business and conservative groups advocate broad changes in the minimum wage law. But they likely will concentrate on the youth wage differential "to open the labor market to thousands of unskilled or inexperienced workers, particularly young minority workers," who are losing jobs now because of the high cost of employing them.

When the minimum wage law was adopted 42 years ago, the act set a minimum wage of 25 cents an hour. It has been amended six times to increase the minimum and to broaden the law's coverage. The last amendment, in 1977, provided for annual increases in the minimum over a four-year period.

Prior to the Nov. 4 election, liberals in the 96th Congress were set to propose increases in the minimum wage to $4 or more over the next several years. But a number of the principal sponsors of the proposals were defeated. As a result, chances of a new drive for higher rates are now considered slight.

Instead, business is readying a campaign "to hold the line on inflationary increases in the minimum wage and to provide practical alternatives that will encourage rather than discourage, employment of workers on the low economic rung ," in the words of the Chamber of Commerce.

Mr. Reagan earlier this year appeared to back a full review of the Fair Labor Standards Act, as proposed by business interests. He said last January that the 1938 law "has caused more misery and unemployment than anything since the Great Depression." Later, bidding for blue-collar votes, he modified his position and urged only revisions that would set lower minimum standards for teen-agers.

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