Food for Thought on Wage Hike the Debate over an Increase in Minimum Wage Centers around the Issue: Will Higher Earnings Keep an Underclass from Swelling or Restrict the Number of Jobs?

By Amy Kaslow, writer of The Christian Science Monitor | The Christian Science Monitor, March 14, 1995 | Go to article overview

Food for Thought on Wage Hike the Debate over an Increase in Minimum Wage Centers around the Issue: Will Higher Earnings Keep an Underclass from Swelling or Restrict the Number of Jobs?


Amy Kaslow, writer of The Christian Science Monitor, The Christian Science Monitor


MARCELINO GUEVARA, who started out in the restaurant business as a dishwasher 25 years ago, today manages an establishment in northwest Washington.

He makes a point of paying his employees more than what he first earned -- minimum wage. "Otherwise these people just wouldn't make it," he says.

Restaurants, from fast-food chains to more upscale eateries, employ more than a fourth of the nation's workers who receive the $4.25 an hour. Almost 5 million Americans earn minimum wage or less. And according to the latest federal census, 20 percent of that group lives in poverty -- many receiving supplementary aid, such as food stamps or subsidized housing.

Behind these statistics lies a central debate emerging in the fight over whether to raise the nation's minimum wage: Is the current rate so low that it is adding to the nation's underclass -- and thus to the number of people on the public dole? Or does an increased minimum wage reduce the number of jobs available?

The debate arises at a time when Congress, in its drive to reform welfare, is looking for ways to move more Americans away from dependency on federal assistance.

Not surprisingly, President Clinton's call for a 90-cent hike in minimum wage -- to $5.15 an hour -- has drawn the strongest support from the lowest tier of the work force, including those who pump gasoline and flip hamburgers. The average minimum wage earner is over 20 years old and brings home half the family's earnings -- $8,500 a year.

Yet they are not alone in their support: The latest poll by the Times Mirror Center for the People and the Press found that 79 percent of respondents favored the idea.

Hike could slow hiring

But there is also plenty of opposition. The National Restaurant Association (NRA), for one, is lobbying against what it calls "raising wages by government fiat." It argues a high rate would impinge on the food service industry's ability to hire workers.

"In our industry, minimum wage is a starting point," says NRA presdient Herman Cain. "It allows restaurateurs to hire millions of people and give them the opportunity to acquire work skills and help them climb a clearly delineated career ladder." He cites a Congressional Budget Office study that found 63 percent of those earning minimum wage will earn higher wages within a year.

The White House is worried about growing GOP opposition to its plan. To Rep. Jim Saxton (R) of New Jersey, vice chairman of Congress's Joint Economic Committee, Mr. Clinton's call smacks of politics.

He accuses the president of trying to "to reap political gain from an issue that affects the economic well-being of many young people who are seeking first-time job opportunties." The bottom line for him: While a higher minimum wage may increase the number of job seekers, "it will stifle the number of job opportunities."

Like many others in his party, Sen. Richard Lugar (R) of Indiana, a 1996 presidential candidate, says the higher rate would be a burden on employers and would make the entry in the nation's work force "more difficult" because higher wages would increase competition for jobs. …

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