Minimum Wage Pushes Higher, Controversy Grows Louder
When Congress was busy passing a hike in the federal minimum wage in 1996, an opponent, Richard Berman, wrote to two congressmen, claiming the legislation would threaten the jobs of "more than 621,000 employees" across the United States.
Nothing of that magnitude happened.
This week or next, Sen. Edward Kennedy will propose another increase in the minimum wage, by $1 over two years. The Massachusetts Democrat plans to attach it to a bankruptcy bill rolling through Congress and sought by the Republicans.
If passed, the minimum wage will rise to $6.15 an hour on Jan. 1, 2000, boosting the wages of 10 million people, its backers say.
The plan has already revived the heated debate in Washington - and between economists - over the impact on the job market of increases in the minimum wage.
Mr. Berman is executive director of the Employment Policies Institute, a nonprofit group supported by retailers, fast-food companies, and other firms that often pay minimum wages.
Frequently on the other side of the debate is the Economic Policy Institute. This Washington think tank gets some financial support from organized labor.
Both organizations have the same acronym - EPI. That's about all they share. Their argument sometimes gets heated.
Last year EmPI accused EcPI "of intentionally misleading the public by distorting the truth," and used such words as "duplicity" and "trickery."
Their war, marked by volleys of studies, continues.
In April, an EmPI study said the 1996 hike in the minimum wage from $4.25 an hour to $4.75 destroyed 215,000 job opportunities for teenagers.
A month later, a 60-page EcPI study found no "systematic, significant job loss" from the combined 90 cent 1996-97 hike.
EcPI economists Jared Bernstein and John Schmitt, ran "a wide battery of tests" of the job impact on two groups of low-wage workers affected most by the minimum wage: teenagers and adults with less than a high school degree.
"Not only are the estimated employment effects generally economically small and statistically insignificant, they are also almost as likely to be positive as negative," they found.
When Berman forecast serious job losses from the earlier 90 cents an hour minimum-wage hike, unemployment stood at 5.4 percent of the labor force. Some 63 percent of the population not in jail or otherwise institutionalized was working.
Today, the jobless rate is 4.5 percent and the employment to population ratio is 64.2 percent.
"Opponents [of a minimum-wage hike] are having a hard time finding an effect on employment," Mr. Bernstein says.
Economists quite often get opposite results in their analysis of an economic issue.
Sometimes this means that, like lawyers, the economists are representing those who foot the bill for the analysis.
At other times, opposite conclusions on the same topic only indicate that it is a close call.
In this minimum-wage case, all the help-wanted signs in the shopping malls hint that the job loss cannot be great at this time.
Bernstein agrees that a much larger hike in the minimum wage could cause a loss of jobs. But the plan of Senator Kennedy in the Senate and in the House of Rep. David Bonior (D) of Michigan, won't raise the minimum wage in constant dollars to that prevailing in the 1960s.
About 71 percent of those benefited by the 1996-97 raise in the minimum wage were adults, 58 percent were women, notes the EcPI study. About 46 percent worked full time and another third worked 20 to 34 hours per week. The average minimum wage worker provides more than half of his or her family's weekly earnings.
One thing both sides agree on: boosts in the minimum wage don't do much to reduce poverty. That's because many who are poor aren't working or only work intermittently. But it does help low-income working families, says Bernstein.
Surveys indicate that more than 70 percent of Americans support an increase in the minimum wage. That's why Kennedy is confident that enough Republicans will support his measure for it to pass, says Jim Manley, his press secretary.