Raise the Minimum Wage

 Since 1938, when the newly passed Federal Labor Standards Act established the first minimum wage at 25 cents an hour ($2.89 in 1998 dollars), eight presidents have signed into law increases of varying amounts. The minimum wage has provided a safeguard against some of the more egregious forms of exploitation, and it has helped low-income workers move toward what might be thought of as a living wage.

The latter consideration, in fact, was at the heart of a letter Cardinal Roger Mahony of Los Angeles, chairman of the Domestic Policy Committee of the United States Catholic Conference, wrote to all members of the House of Representatives on March 8. Raising the minimum wage, he argued, not only would move the minimum wage closer to becoming a living wage, but also would acknowledge the harsh economic realities facing low-income families and add a measure of dignity to the lives of workers. Why is a raise from the present $5.15 an hour needed? Cardinal Mahony answers by observing that the current full-time worker’s minimum wage is only $10,712 a yearmore than $3,000 below the federal poverty level for a family of three.

At present, efforts to raise the minimum wage to $6.15 an hour are being held up in Congress. The House of Representatives, while willing to consider an increase in this amount over a period of two years, wants to attach to its bill a provision that would mean enormous tax cuts of $123 billioncuts that would primarily benefit wealthy Americans. The president has warned that he will veto the bill unless the tax cuts are eliminated. Adding to the complexity of the situation is a Senate bill that would also raise the minimum wage to $6.15, but over three years instead of two; this bill, like the House bill, also includes tax cuts, albeit smaller ones.

On the same day that Cardinal Mahony wrote his letter, President Clinton released a report by the National Economic Council detailing ways in which a higher minimum wage would benefit both workers and the economy. Called The Minimum Wage: Increasing the Reward for Work, the report describes in detail a number of reasons why the increase is desirable. Over 10 million Americansmost of them adultswould be helped because it would lift their earnings by $2,000 a year. This amount equals enough money to pay for nearly seven months of groceries or five months of rent.

Inflation has eaten away at the real value of the various minimum wage increases over the past decades. The $6.15 proposal would at least restore the real value of the minimum wage to what it was in 1982. (The minimum wage reached its highest level in 1968, at $7.67 in 1999 dollars.) One could only wish that the currently proposed increase were higher than a dollar. A number of states, in fact, have made more significant increases on their own initiative. California and states in the Northwest like Oregon and Washington already have minimum wage rates higher than the federal rateas do several states in the Northeast.

Some who argue against an increase at the federal level claim that it would have a negative effect on employmentthat employers, to offset the raise, would hire fewer people. Various economic studies, however, have found that an increase has no negative effect on employment since, as the National Economic Council’s report put it, high wages can help firms attract better workers, motivate them to work harder and retain them for longer periods. The report also notes that since 1993, over 21 million new jobs have been created; and as of February 2000, the unemployment rate had fallen to 4.1 percentits lowest in three decades. There are also indications that minimum wage increases, by adding to the incentives to work, have helped reduce welfare caseloads. The Council of Economic Advisors of the U.S. Labor Department has found that between 1996 and 1998, higher federal and state minimum wages were responsible for 10 to 16 percent of the decline in caseloads.

Whether the increase is made in two years or three, the added dollar will at least be a step in the direction of addressing issues of poverty in the richest country in the worlda country in which, nevertheless, nearly one in five children grows up in poverty. A major theme in Catholic social teaching concerns the dignity of work and the rights of workers; to delay in raising the minimum wage is implicitly to give short shrift to this dignity and these rights. In view of the ever-escalating levels of government surpluses, it shocks the conscience to think that Congress is dragging its feet in making so small an increase (too small, in our opinion) in the minimum wage.