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New efforts surface to raise minimum wage

By David R. Francis / September 15, 2003



Democratic Sen. Ted Kennedy hopes to put his Republican colleagues in the Senate in an awkward spot. Any day now he intends to attach a raise in the national minimum wage to a must-pass appropriations bill.

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If it reaches the floor, senators will have to register their vote on a measure popular with a large majority of Americans - but opposed by groups representing restaurants, hotels, retail stores, health services, and other major employers of low-wage workers.

The question, as put by proponents, is: Are conservatives really compassionate or just saying they are?

The minimum wage has been frozen at $5.15 an hour since 1997. The Massachusetts senator's amendment would raise the hourly rate 75 cents six months after passage, and another 75 cents a year after that.

It may be affixed to an appropriations bill that contains a hike in pay for members of Congress. "That seems to be a likely candidate," says Jim Manley, press secretary to Mr. Kennedy.

Since 1997, Congress has raised its own pay five times for a total $21,000 increase. That's nearly twice what a minimum-wage employee makes working 40 hours a week, 52 weeks a year. The minimum wage, in real terms, is worth 24.5 percent less than 24 years ago. And it's $4,300 below the official poverty line for a family of three.

"No one who works for a living should have to live in poverty," Kennedy says in a press release.

Chances for passage of a minimum-wage hike are considered slimmer in the House than the Senate. The Republican House leadership is opposed, says Mr. Manley. And it has more disciplinary might than the Senate leadership. But with an election next year, pressures for passage may build.

In the past, Republicans held a minimum-wage boost hostage to a tax cut or some other measure they sought.

But, as Manley notes, the Republicans "have shot their wad" as far as tax cuts go. President Bush says he will not seek further tax reductions.

With a minimum-wage hike blocked in Congress for the past several years, proponents have turned with considerable success to obtaining "living wage" requirements in states and municipalities. Since the

last federal increase in 1997, the number of states setting a higher minimum wage rose from six (plus the District of Columbia) to 12.

In addition, 110 local governments have living-wage provisions, most for their own workers plus employees of firms with contracts with the cities, towns, and counties. Some require employees to be paid about $10 an hour. Sixty university and colleges have also instituted living wages for workers.

The drive to get living-wage laws or ordinances will continue "no matter what the federal government does," says Jen Kern, director of the living wage resource center of ACORN (Association of Community Organizations for Reform Now), the leading campaigner for living wages across the country.

Economists always note that nothing is free in economics. If wages are raised by law, the extra costs must be covered somehow. It could be that prices of goods and services rise, or that profits diminish, or that fewer minimum-wage workers are hired. Possibly, some cost could be covered by lower turnover of low-wage workers and by greater productivity.

The Employment Policies Institute (EPI) in Washington, sponsored by industries heavily using low-wage workers, has in the past argued that minimum-wage hikes destroy jobs.

But economists have had a difficult time detecting detrimental effects from moderate boosts in the minimum wage.

A study of all 50 states and D.C. over a period of 19 years could find "no statistically significant relationship between the value of the minimum wage and employment growth in industries reliant on low-wage workers."

The study, by economists at the Center for Urban Economic Development, University of Illinois, Chicago, was aimed at the Illinois General Assembly. This summer, the legislative body passed a law creating a state minimum wage of $5.50 next June and $6.50 a year later.

"There was intense opposition to the legislation by the hotel and restaurant industries," says Ron Baiman, one author of the economic-impact study.

But low-wage workers, packed into a committee room and chanting, "We can't survive on five-one-five," won the vote.

The EPI now maintains that if the minimum wage is raised, it attracts more skilled, better-educated workers to take over those now better-paying jobs.

"Low-skilled workers are pushed out of the market," says Craig Garthwait, EPI's director of research. Since single mothers and others moving out of welfare often take minimum-wage jobs, they may face fewer job openings. "All the success we have seen in welfare reform could disappear," Mr. Garthwait adds.

Kern counters that she sees no evidence of major job shifting.

At the moment, ACORN is campaigning in San Francisco for an initiative that would raise the minimum wage in the city to $8.50 and gathering signatures in Florida to get a proposal for a state minimum wage as an amendment to the state constitution on the ballot in 2004.

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