Analysts Doubt Minimum Wage Will Erase Many Jobs; Women at Odds with Law Schools' Teaching Methods

By Elizabeth Schwinn Hearst Newspapers; Emily M. Bernstein N. Y. Times News Service | THE JOURNAL RECORD, June 10, 1996 | Go to article overview

Analysts Doubt Minimum Wage Will Erase Many Jobs; Women at Odds with Law Schools' Teaching Methods


Elizabeth Schwinn Hearst Newspapers; Emily M. Bernstein N. Y. Times News Service, THE JOURNAL RECORD


WASHINGTON -- Whenever Congress considers increasing the federal minimum wage, most Republicans and some Democrats, citing the laws of economics, sternly warn that any boost will cost jobs.

Sen. Frank Murkowski, R-Alaska, explained the theory in a recent debate.

"Common sense tells us we cannot make it more expensive to hire workers and then expect employers to hire the same number of workers," he said.

But that long-held view is changing.

Economists still say that increasing wages will cause fewer jobs to be created but not nearly as many as they once thought.

Many analysts now say that giving the lowest-paid workers the 90- cents-an-hour-over-two-years increase under consideration in Congress would likely have little impact on the number of new jobs created.

The House voted May 23 to boost the current $4.25 minimum by 50 cents on July 1 and 40 cents more on July 1, 1997. The bill is stalled in the Senate.

Until recently, economists routinely cited a 1981 report by the federal Minimum Wage Study Commission, which said a 10 percent increase in the minimum wage would result in a loss of 1 percent to 3 percent of jobs that would otherwise be available for teen- agers.There would be little effect on adults in low-wage jobs, the report said. Teens now account for a third of minimum-wage workers.

The commission, which had been created in 1977, largely upheld the prevailing opinion about the minimum wage, which by then had come under increasing attack from conservatives.

As a GOP presidential candidate, Ronald Reagan said in January, 1980: "The minimum wage has caused more misery and unemployment than anything since the Great Depression."

Beginning in 1938, Congress had increased the minimum wage, often several times in a decade, to keep pace with inflation. That made it hard to measure the wage's impact on the economy.

But under Reagan, the practice stopped. From 1981-89, the minimum wage was stuck at $3.35 an hour. Because of inflation, it declined in real value over the years.

Economists had expected that as labor got cheaper, more minimum- wage jobs would be created. Instead, they fell steadily as a percentage of all jobs throughout the `80s.

So some economists began to revise their assumptions.

By 1988, one commission member, Michigan University economist Charles Brown, had conducted new research and lowered his estimate of the impact on jobs of raising the minimum wage. Boosting it 10 percent might result in a half-percent loss in jobs that would otherwise be available for teen-agers, he said.

Then, in 1989, Congress raised the minimum wage from $3.35 to $4.25 an hour, giving economists a chance to study the effect of the increase on employment.

Princeton University economist David Card reviewed federal job statistics and concluded in 1992 that the rise had no impact on the number of minimum-wage jobs created.

Card compared low-scale jobs in states that increased their minimum wage with those in neighboring states where the minimum wage was already higher than the federal standard. He found no difference in employment levels.

But the biggest challenge to conventional wisdom was a study published last year by Card and Alan Krueger, another Princeton economist who served for a time as chief economist at the Clinton Labor Department.

Card and Krueger studied restaurant workers, the largest category of minimum-wage employees.

They called 331 fast-food franchises of four chains in New Jersey -- Wendy's, Burger King, KFC (Kentucky Fried Chicken), and Roy Roger's -- to determine the job impact of the state's 1992 decision to raise its minimum wage to $5.05 an hour.

They compared the New Jersey results with employment figures at 79 of the same restaurants in neighboring eastern Pennsylvania, which had seen no minimum wage increase.

On the whole, they found, the New Jersey restaurants didn't lay off workers after the minimum wage went up. …

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