PRESIDENT Clinton believes an increase in the minimum wage would provide a needed income boost for millions of hard-pressed workers. But as he pushes the move in the weeks ahead, he will likely encounter strong opposition from Republicans and business executives, who claim minimum-wage hikes in fact constitute a drag on the economy.
``It's in direct conflict with having welfare people find work,'' says New York-based labor economist Audrey Freedman, who does forecasts for the University of California, Los Angeles. ``Every time you raise the minimum wage, you preclude job growth for low-skilled labor'' because higher costs mean employers can afford fewer new hires.
Minimum wage is a starting point in many industries such as the restaurant business, which employs some 9 million people. A hike in that wage could confound the industry's expectations to expand by 3 million jobs over the next decade, says Herman Cain, president of the National Restaurant Association.
``Raising wages by government fiat will inhibit industries'' like his from ``from creating career opportunities for people who already have difficulty finding employment,'' Mr. Cain says, by pricing ``people with no skills or job experience out of the job market.''
While the White House has yet to specify how much of an increase it's seeking, Mr. Clinton has spoken of pushing the hourly earnings of the 2.5 million minimum-wage workers from $4.25 up to $5.00.
Rep. Martin Sabo (D) of Minnesota, the ranking House Budget Committee Democrat, says minimum wage must reach $6.50 an hour to put wage earners above the poverty line. But any amount will likely be too much for Mr. Sabo's Republican colleagues, especially House Leader Richard Armey (R) of Texas, who is working to repeal the minimum wage act.
A senior staff member of the Senate Committee on Labor and Human Resources predicts Clinton will fail to muster the necessary congressional approval. ``Republicans see this as a job killer because most of the impact will be on the small businesses'' that have been responsible for creating most of the jobs during the recovery, the staff member says.
And GOP lawmakers will bristle at the prospect of more government involvement in business decisions. ``They don't want to be ordered what they should pay - it smacks again of big government telling the private sector how to run its affairs,'' the Senate staffer says.