A subminimum wage?
With teenage unemployment reaching 24.5 percent in December - the highest level ever recorded by the US Labor Department - there is a strong case for not rejecting out of hand the notion of a subminimum wage for young people. The Reagan administration is studying just such a proposal.Skip to next paragraph
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Imposing a wage differential between young and adult workers raises concern among organized labor and its congressional allies that this would merely be a ''Trojan horse,'' designed to substitutem younger workers for older workers currently earning the $3.35-an-hour minimum wage. Yet a substantial body of analysis has been developed over the past decade suggesting that a subminimum wage - if restricted to young people in short-term, i.e. summer, jobs - could actually create new jobs. Thus, a national commission in 1981 estimated that a 25 percent decrease in the minimum wage would create up to half a million jobs for youth.
In weighing this issue, it is important to recognize that wage differentials now exist. Federal laws allow full-time students, students in vocational programs, and some handicapped persons to work at 85 percent of the official minimum. In fiscal 1982 the Labor Department approved requests for some 432,000 persons in these categories to be paid less than the minimum wage. Nor is such a differential limited to the US. West Germany, Austria, and Switzerland have a youth differential. The US Congress itself came close to enacting such a provision back in 1977.
The Reagan administration is known to be considering a plan that would involve the following elements: The youth differential would apply only to summer jobs and to persons between 16 and 22 years of age. The differential would be pegged at 75 percent of the current wage, or $2.50 an hour.
To avoid charges that it was seeking to undercut the minimum wage, the administration might consider adopting elements of a proposal made by Senator Percy in 1981. The Percy plan was not just a summer program. It was a carefully balanced plan that sought to prevent adult displacement. It restricted a differential to youths between 16 and 19 years of age, as many persons in their 20s have family or financial obligations. The lower wage (pegged at 85 percent of the minimum wage) would only apply during the first six months of employment. At the same time, the Percy plan - which would have been a three-year experimental program - would have penalized employers who fired older workers in order to substitute younger persons.
Congress should examine the issue with utmost care. The minimum wage, one of the most enduring legacies of the New Deal, has ensured a modest safety net for millions of Americans. At the same time, because of the high unemployment affecting young people, especially minority youth, it seems reasonable to consider whether the present minimum wage is not too high for thousands of teen-agers who find themselves locked out of the employment stream altogether - and would be able to find at least summer jobs if the wage were lowered.