Raising the $3.35 Minimum

By Jacob V. Lamar Jr

They are dirty jobs, but someone has to do them: messenger, storeroom clerk, cook in a fast-food restaurant. The work requires few skills, pays little and offers almost no chance for advancement. Minimum-wage jobs. In the 1980s earning a living at minimal pay is more difficult than ever. During the inflationary spiral of the late '70s, the minimum wage was increased almost yearly, but since Ronald Reagan took office in 1981, the standard has been frozen at $3.35 an hour. Not since World War II has it gone unchanged for so long.

"The minimum wage is not a living wage," says Senator Edward Kennedy, the Massachusetts Democrat, "and it is not a decent society in which a full-time job means a lifetime in poverty." For the 5 million people earning the minimum wage or less (out of 58 million hourly workers), a full-time job means $6,968 a year at most. The poverty line for a single person is $5,469 a year, for two people $6,998, and for a family of four $10,989.

As the new chairman of the Senate Labor and Human Resources Committee, Kennedy is expected to push for an increase in the minimum wage during this Congress. In the House, New York Democrat Mario Biaggi has submitted a bill to raise the current rate to $5.05 an hour over a five-year period and index it after 1991 to half of average hourly earnings. The present minimum is less than 38% of average pay.

Kennedy and Biaggi will face formidable opposition from those who claim that an increase will only lead to higher unemployment and inflation. Hiking the minimum has a ripple effect on the pay scale, says Mark A. de Bernardo, manager of labor law at the U.S. Chamber of Commerce. "When you raise somebody's wages by a dollar," says De Bernardo, "then those people who are making a dollar more have to be raised as well." Higher labor costs to employers, he contends, will lead to higher prices and less service for consumers. Moreover, employers would fire laborers to make ends meet. If the minimum is raised, says Clifford Fry, an economist and chairman of the University of Houston's finance department, "companies will reduce payrolls and get rid of marginal workers. This will keep the poor and unskilled from being employed."

Yet advocates of an increase believe it would address one of the more confounding problems of the poverty cycle, what has been called the "chump change" dilemma: many able-bodied poor people see no profit in working for low wages when they can often earn more in welfare or hustling on the street. The problem is most severe among inner-city black youths, who make up the largest segment of the nation's unemployed. Many liberals and labor leaders argue that upping the minimum wage will encourage more people to seek employment and get off the welfare rolls.

But even some supporters of a hike acknowledge that an increased minimum wage would still be disdained by large numbers of jobless young people, who are not inspired by the prospect of flipping hamburgers at a fast-food franchise. "These are dead-end jobs," says Lorna Barnes, an account executive at Chicago's Minority Economic Resources Corporation, which trains and places young people in jobs. Barnes contends that an aggressive job- education and retraining program would have far greater impact than a minimum- wage increase. That seems to be one idea on which left and right can agree: the Reagan Administration has proposed an $800 million training program for youths receiving welfare benefits. Without the skills to build a career, workers will find the minimum wage is chump change no matter how high it goes.

CHART: TEXT NOT AVAILABLE

CREDIT: TIME Charts by Renee Klein.

CAPTION: MINIMUM WAGE

DESCRIPTION: Minimum wage from 1950 to 1987; figure in background holds up dollar sign.

With reporting by Gisela Bolte/Washington