Bid to boost minimum wage may test Bush pledge

The "compassionate" conservatism of George W. Bush will soon get a highly visible test.

Soon after the new Congress convenes this week, Sen. Ted Kennedy plans to introduce another bill to raise the minimum wage.

The veteran Massachusetts Democrat has attempted since 1998, without success, to boost the minimum wage by $1 an hour. That federal minimum is now set at $5.15 an hour.

Kennedy has usually sought to attach that provision to a bill desired by the Republican congressional leadership. In 2000, the bill that included a minimum- wage boost was so laden with costly tax provisions that President Clinton vetoed it.

Success would have meant a pay hike for 10 million low-wage Americans, or about 8.7 percent of the workforce. These workers are paid the minimum, or up to $1 an hour above it. If the minimum went up, most likely those earning somewhat more would also get a raise.

With the Senate now evenly divided between Democrats and Republicans, Kennedy hopes for a "clean bill," free from extraneous provisions. He will suggest a hike larger than $1, perhaps spread over three or four years. The amount isn't firmly set.

"Senator Kennedy is concerned that the minimum-wage worker is falling further behind," says spokesman James Manley.

In constant-dollar terms, the minimum wage would need to be raised to $8.05 an hour to match the 1968 level.

"It would be very smart of Bush to look at this quickly and let pass a clean bill," says Jared Bernstein, an economist at the Economic Policy Institute. It would help "pin him" as a compassionate conservative by benefitting many low-wage workers and minorities with concerns about a Bush administration. Mr. Bernstein sees a higher minimum as a way to trim poverty among working Americans.

During the election campaign, then-Governor Bush said he was in favor of a minimum-wage hike, but one that would allow the states to opt out entirely or in part from the federal level. This would permit poorer states to maintain the $5.15 an hour level in an entire state or in just part of a state.

"Most minimum-wage jobs don't flee a state," notes David L. Thompson, a lawyer with the Employment Policies Institute, a Washington research group that generally fights against hikes in the minimum wage or "living wage" that some cities impose.

In other words, the fast-food restaurants, retailers, and other firms with entry-level positions that most often pay the minimum wage can't usually just pick up and shift operations to a state that retains a low minimum wage.

Mr. Thompson maintains that greater flexibility in the federal minimum wage would enable states to set rates "more appropriate" for their economies in general or for some pockets of high unemployment where low wages might create jobs.

Manley calls such arguments a "cop-out" that Senator Kennedy will oppose. "We need a fundamental level of fairness."

In the current economy, with its 4 percent unemployment rate, fewer workers need to accept the minimum wage. They can often get higher-paid jobs or bargain for a better wage.

And the minimum wage "is not particularly burdensome" for most businesses, notes Bernstein, who advocates a higher minimum. Many firms in the low-wage industries already pay more than the minimum.

But with the economy slowing rapidly, the jobless rate could start rising soon - even if it's what economists call a "soft landing" and not a recession.

College graduates today have a 1.5 percent unemployment rate. That rate might go up one- or two-tenths of 1 percent. But minorities, high school dropouts, and other low-wage workers will face jumps in their jobless rate two to three times worse than that facing college grads, Bernstein predicts.

Unemployment for blacks with high school education or less stands at 22.7 percent, despite the nation's prosperity. Hispanics at the same education level have a 10.5 percent jobless rate.

In these recent boom years, with their tight labor markets, less-advantaged workers have seen good gains in their wages after inflation. Bernstein is concerned that this positive impact is already fading and will disappear with an economic slowdown.

The liberal economist argues that moderate increases in the minimum wage, such as those proposed by Kennedy, have "no measurable effect" on unemployment of low-wage workers.

Thompson disagrees. His organization, supported by employers of low-wage workers, reckons that many low-skilled adults could find themselves both out of work, and, with welfare reform, ineligible for government assistance.

If so, President Bush could find his compassion needed.

(c) Copyright 2001. The Christian Science Publishing Society

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