Food For Thought on Wage Hike
The debate over an increase in minimum wage centers around the issue: Will higher earnings keep an underclass from swelling or restrict the number of jobs?
WASHINGTON — MARCELINO GUEVARA, who started out in the restaurant business as a dishwasher 25 years ago, today manages an establishment in northwest Washington.
He makes a point of paying his employees more than what he first earned -- minimum wage. ''Otherwise these people just wouldn't make it,'' he says.
Restaurants, from fast-food chains to more upscale eateries, employ more than a fourth of the nation's workers who receive the $4.25 an hour. Almost 5 million Americans earn minimum wage or less. And according to the latest federal census, 20 percent of that group lives in poverty -- many receiving supplementary aid, such as food stamps or subsidized housing.
Behind these statistics lies a central debate emerging in the fight over whether to raise the nation's minimum wage: Is the current rate so low that it is adding to the nation's underclass -- and thus to the number of people on the public dole? Or does an increased minimum wage reduce the number of jobs available?
The debate arises at a time when Congress, in its drive to reform welfare, is looking for ways to move more Americans away from dependency on federal assistance.
Not surprisingly, President Clinton's call for a 90-cent hike in minimum wage -- to $5.15 an hour -- has drawn the strongest support from the lowest tier of the work force, including those who pump gasoline and flip hamburgers. The average minimum wage earner is over 20 years old and brings home half the family's earnings -- $8,500 a year.
Yet they are not alone in their support: The latest poll by the Times Mirror Center for the People and the Press found that 79 percent of respondents favored the idea.
Hike could slow hiring
But there is also plenty of opposition. The National Restaurant Association (NRA), for one, is lobbying against what it calls ''raising wages by government fiat.'' It argues a high rate would impinge on the food service industry's ability to hire workers.
''In our industry, minimum wage is a starting point,'' says NRA presdient Herman Cain. ''It allows restaurateurs to hire millions of people and give them the opportunity to acquire work skills and help them climb a clearly delineated career ladder.'' He cites a Congressional Budget Office study that found 63 percent of those earning minimum wage will earn higher wages within a year.
The White House is worried about growing GOP opposition to its plan. To Rep. Jim Saxton (R) of New Jersey, vice chairman of Congress's Joint Economic Committee, Mr. Clinton's call smacks of politics.
He accuses the president of trying to ''to reap political gain from an issue that affects the economic well-being of many young people who are seeking first-time job opportunties.'' The bottom line for him: While a higher minimum wage may increase the number of job seekers, ''it will stifle the number of job opportunities.''
Like many others in his party, Sen. Richard Lugar (R) of Indiana, a 1996 presidential candidate, says the higher rate would be a burden on employers and would make the entry in the nation's work force ''more difficult'' because higher wages would increase competition for jobs.
Some Republicans, though, are looking for alternatives. ''It's simply inconceivable to survive on minimum wage in high-cost areas,'' says Rep. Rick Lazio of New York, a young Republican in his second term.
''There is a strong argument to increase the minimum wage, but an even stronger argument to increase take-home pay by decreasing these workers' contributions to Social Security, Medicare, and taxes.''
Mr. Lazio, who chairs the House Banking subcommittee on housing and community opportunity, says the broader long-term issue is ''how do we build skills for people -- especially those in the inner city's poverty pockets -- so they are earning better than the minimum wage?''
While restaurant manager Mr. Guevara and other employers use the national minimum wage as a benchmark for paying workers, Clinton and many lawmakers view the minimum wage as a way to lift workers ''from the underclass.''
Minimum wage, a government mandate since the 1930s, has not kept up with inflation, and has ebbed by a third since the 1970s. The administration's proposed increase -- to be phased in with two 45-cent hikes over a year -- is just making up for lost time, he says.
A growing underclass?
Guevara's depiction of workers' situation in Washington is mirrored in many urban and even rural areas across the country. The average minimum wage earner in his industry, he says, ''is working very hard, often supporting two or three children.'' They lack training and are too poorly educated for higher-paying employment.
Greg West, a local social worker, sees many people who have full-time jobs paying minimum wage, who are able to rent a room. ''But they still have to get in soup lines,'' he says.
Others are living in shelters, says Mr. West, who works for Health Care for the Homeless, a mobile unit that cruises to shelters, churches, and other points in this city. ''There are people who have jobs and still can't make it.'' he says.
Washington restaurateur Constantino Bazekis says, ''If you take away the government help, you have to push the minimum wage higher.''
Concern about a growing underclass is prompting some lawmakers to push for an even higher minimum wage. Rep. Martin Sabo (D) of Minnesota, whose district is heavily populated by minimum wage earners -- the Midwest and the South are home to 70 percent of the country's minimum wage workers -- introduced legislation this year that would raise the minimum wage to $6.50.
The boost is essential to prevent hourly wage earners from slipping into the underclass, says Mr. Sabo's chief of staff Michael Erlandson. He points to experiences in Washington and the nine states across the country where the minimum wage is higher than the federal level.
''In many instances, the higher pay increases the number of people who are willing to work at minimum wage,'' he says, which has pushed ''more people into the economy, not a fall off.''