Summer workers may get pay cut. Reagan revives `subminimum wage' idea as way to create teen jobs
The Reagan administration is heading for a showdown with Congress on a controversial proposal to create a $2.50-an-hour ``subminimum wage'' for teen-agers this summer. The measure, recently introduced in both houses of Congress, is seen by President Reagan and Labor Department officials as a means of reducing high teen-age unemployment -- particularly among blacks and Hispanics. The unemployment rate for black teen-agers has been roughly 40 percent, more than two times higher than for white teens.
Administration officials say the minimum-wage reduction will help boost teen-age employment by creating an estimated 400,000 new summer jobs in the private sector for laborers ages 16 through 19 willing to work for $2.50 a hour as delivery persons, movie ushers, ad-hoc maintenance workers, gardeners, or in other unskilled jobs. The subminimum wage would apply only from May 1 to Sept. 30.
A congressional hearing is expected to be held on the issue this month.
Supporters of the proposal contend that the current $3.35-an-hour minimum wage is too lucrative a wage, from an employer's point of view, to justify many unskilled summer jobs.
``In essence the minimum wage has priced some functions out of the economy, because they aren't worth $3.35 an hour,'' says Jeffrey H. Joseph of the United States Chamber of Commerce, which supports the proposal.
Critics maintain that passage of the subminimum wage will result in employers hiring younger, cheaper unskilled workers to the detriment of older workers. Rex Hardesty of the AFL-CIO says some employers might be tempted to ``fire daddy to hire junior.''
He says that in effect the proposal could reduce the high unemployment rate among some teens while boosting joblessness among unskilled older workers.
Labor Department officials say the seasonal nature of the subminimum-wage rule will help prevent employers from dumping older workers to hire teens. They add that employers who discriminate against full-time workers to hire teens will be subject to a $10,000 fine and six months in prison.
Some labor officials doubt the bill will actually result in the creation of new jobs.
``An employer decides to create jobs simply because of an 85-cents-an-hour differential? That makes the difference between creating 400,000 jobs and not creating them? Does that make sense?'' asks Arnold Mayer of the United Food and Commercial Workers.
``It is one of these simple-sounding things that on the face of it doesn't look like it can do any harm -- it's just these kids for the summer. But it's not that simple,'' says Clara Schloss, a former Labor Department research director, who served on a 1977 commission studying minimum-wage regulations. That commission voted 6 to 1 against enacting a subminimum wage for teen-agers.
``The bottom line was that there was nothing to be gained and much to be lost,'' she says. ``We found practically no one who was willing to say they would be willing to create additional jobs.''
Christopher C. Quarles III, a Labor Department special assistant, disagrees with this assessment. ``We regard this as a jobs bill and not as a per-se attack on the minimum wage. ``What this wage is going to do is induce employers to bring back the kind of jobs that you or I might have had when we were teen-agers.'' He cited grocery-store delivery boys and movie-hall ushers.
Critics maintain that when considering the effects of inflation, the minimum wage -- raised to $3.35 in 1981 -- is today worth only $2.80 in 1981 dollars. They say President Reagan already has a subminimum wage: the current $3.35 minimum wage. ``I don't understand why the administration is pushing so hard. Increasingly, the minimum wage has become a subminimum wage, even with a 3 or 4 percent inflation rate,'' Mr. Mayer says.
The bills introduced two weeks ago in both the House and the Senate call for the subminimum wage to go into effect each summer through September 1987, when Congress would review the program's effectiveness.
Similar bills have been introduced in Congress twice before. Opposition in both labor committees of Congress is strong enough to keep the bills tied up indefinitely, congressional sources say.