Wages at the Bottom

When Congress was debating in 1996 a hike in the federal minimum wage, an opponent, Richard Berman, charged that it would threaten 621,000 jobs across the United States.

The minimum wage has risen sharply from $4.25 an hour to $5.15 last fall.

But the unemployment rate has dropped far below what was imaginable two years ago. Close to 10 million workers are enjoying the benefit of the 90 cents an hour increase. And if there are negative effects, they are too small to measure easily.

Now President Clinton wants another rise in the minimum wage.

"Because these times are good, we can afford to take one simple, sensible step to help millions of workers struggling to provide for their families," Mr. Clinton said in his State of the Union message.

That proposal may win support- as long as the increase is reasonable. A draft bill would raise it to $6.65 by Sept. 1, 2000. Assuming modest inflation ahead, that amounts to $6.15 in today's dollars. A full-time worker at that rate would earn about $12,800 a year - the official poverty level for a family of three.

Nothing in economics is free. Any raise decreed by Congress has to come from somewhere. It could be higher prices, or lower business profits. Or retailers, fast-food restaurants, and other employers of minimum-wage workers may make more efficient use of labor and lay off some people if they become more expensive.

A new study by Mr. Berman's organization, which is backed by major employers of minimum-wage workers, finds that 380,000 jobs were lost with the first 45 cents of the minimum wage hike. The Economic Policy Institute, a liberal Washington think tank, found no change in employment.

Whatever change occurred was overwhelmed by a payroll growth that averaged 267,000 a month last year. The total labor force has risen to 137 million.

Today's tight labor markets mean that many employers are giving their workers wage hikes to keep them content enough to stay on the job - without any government-imposed edict.

But the minimum wage law does help those at the bottom, especially in the South and parts of the West.

These workers aren't just teenagers from well-off homes. Some 71 percent of minimum-wage workers are adults, 58 percent are female. And 57 percent of the gains from the minimum-wage increase go to working families in the bottom 40 percent of the income scale.

For those, another hike would mean a better sharing of the nation's growing prosperity.

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