Days late dollars short
TEN YEARS ago when Capitol Hill last agreed to raise the minimum wage, President Clinton said the extra $1,800 a year for the working poor "will make the difference between their ability to keep their families together and their failure to do so. This bill ensures that a parent working full time at the minimum wage can lift himself or herself and their children out of poverty."
Opponents were bitter over the rise from $4.25 to $5.15. House Republican majority leader Dick Armey of Texas forecast a "perverse" disappearance of entry-level jobs. He said minimum- wage workers would become "the broken eggs in the omelet."
A decade later, the Democrats, about to become the majority in the House and Senate, say raising the federal minimum wage is one of their top priorities. House Speaker-elect Nancy Pelosi of California said she will push to raise the wage to $7.25 in her first 100 hours of power. At a Capitol Hill news conference two weeks ago, Massachusetts Senator Ted Kennedy declared that raising the minimum wage is "my first order of priority."
In post election exuberance, Kennedy added, "And I want to give the assurance of something else: We're going to raise it and raise it and raise it and raise it and raise it and raise it and raise it and raise it." Senator Charles Schumer of New York said, "And we want to make sure when costs go up, the wage goes up."
The question is how much of this is worthy of exuberance and how much of it, to borrow from former Federal Reserve chairman Alan Greenspan, is irrational.
The minimum wage has become one of the most appalling symbols of the exploding gap between rich and working poor in this nation. For a decade, Republicans have beat back federal increases -- even as many states went ahead with their own increases -- on the premise that higher minimum wages would destroy small businesses.
A new briefing paper released this week by the Economic Policy Institute, a liberal think tank, studied the 17 states and the District of Columbia that had raised the minimum wage between 1997 and 2005. It found that the states that increased the minimum wage actually experienced -- for the most part -- higher wages "without reducing employment or discouraging labor supply." The median minimum wage of those states is $1.40 over the federal wage.
"Overall," the report said, "it is safe to conclude that statistically reliable evidence for any employment losses in the data is nonexistent." This included restaurants and bars, where owners and lobbyists have long cried they would be devastated if they were forced to pay higher wages. The report quoted a study of New Jersey's fast-food industry that concluded, "The increase in New Jersey's minimum wage probably had no effect on total employment . . . and possibly had a small positive effect."
A study earlier this year by the Fiscal Policy Institute of New York found better economic performance in the 10 states with higher minimum wages than the others.
But the lobbyists held Capitol Hill hostage for so long, the Democrats need to do a lot more than they propose to do. The current value of the minimum wage is the lowest since the $4.74 of 1955, when adjusted for inflation. The proposed raise to $7.25 still does not equal the inflation-adjusted value of the minimum wage in 1968, $7.71. The minimum wage is currently only 31 percent of the average hourly wage for nonsupervisory workers. That equals the widest gap since 1949. For the 1950s and '60s, the wage floated between 44 percent and 56 percent of the average hourly wage.
According to other liberal think tanks, such as the Institute for Policy Studies and United for a Fair Economy, the minimum wage would now be $23 if it had risen at the same pace as CEO pay since 1990.
The Democrats are not, of course, going to shoot that high as they are playing a tricky game, regaining power on White House bungling but not wanting to stray from the center.
But just to be at the federal poverty line for a single-parent family of three requires a minimum wage of $8 an hour. So $7.25 is already a decade late and about a dollar short. Kennedy says the new Congress will hike the minimum wage and "raise it and raise it." If it does not, it will be another promise that becomes a broken egg.
Derrick Z. Jackson's e-mail address is jackson@globe.com. 