The minimum wage is losing its earning power. In fact, it has lost so much earning power in the last six years that legislators say the time may be ripe to increase it. Both Senate majority leader Robert Byrd and House majority leader Thomas Foley said Monday that prospects were fair for a boost in the minimum wage. ``I would not be surprised'' at an increase, said Representative Foley, a Democrat from Washington.
The administration, which has opposed an increase in the past, has not established its position this time around. ``We have just begun discussions,'' said Labor Secretary William Brock.
All three men were in Bal Harbour to meet with labor leaders at the winter meeting of the AFL-CIO.
The labor federation has long supported federally mandated minimum wages, but it has special reason to be sanguine about passage this year, with control of the Senate now in Democratic hands. Sen. Edward Kennedy (D) of Massachusetts, the new chairman of the Labor and Human Resources Committee, has made raising the minimum wage his top labor goal.
The last legislation to raise the minimum wage was passed under a Democratic-controlled Congress in 1977. The problem with the current minimum, which has remained at $3.35 since 1981, is that it has not kept up with the cost of living, according to several studies. The current minimum now buys less than at any time since 1955, when measured in constant 1986 dollars, according to an analysis by the George Washington University Center for Social Policy Studies. To restore the purchasing power to the 1978 level, for example, would require raising the minimum wage to $4.61, says Lane Kirkland, president of the AFL-CIO. The labor federation wants to index the minimum to other wages, so that it will adjust automatically.
Any significant rise in the minimum wage carries risks with it, economists say. Several employers groups argue that a higher minimum wage raises their costs and forces them to hire fewer workers. ``We're not comfortable with slamming the door on new entrants,'' said Robert Martin, manager of human-resources development at the United States Chamber of Commerce. From 1978 through 1981, when the minimum wage was increased by steps, some 600,000 jobs were lost, he added, while inflation rose by more than 6 percent.
But several labor experts argue that the benefits of raising the minimum wage outweigh the disadvantages. ``I think an increase in the minimum wage would be a good idea,'' said Paul Osterman, a professor of human resources in the management school at the Massachusetts Institute of Technology.
Altogether some 7.4 million workers were employed at the minimum wage in 1985, and a raise in the minimum wage would affect them in different ways. Teen-age workers would be hurt the most. For every 10 percent rise in the minimum wage, teen-agers see a 1 percent decline in the number of jobs, Professor Osterman said. Adults, on the other hand, pick up most of those jobs and experience a small job decline overall.
``It will be a very tough fight,'' said Mr. Martin, who concedes that supporters of raising the minimum wage have the upper hand so far.