Administration may seek new minimum wage

January 30, 1993|By Robert A. Rosenblatt | Robert A. Rosenblatt,Los Angeles Times

WASHINGTON -- The Clinton administration, in an effort to help the legions of U.S. workers still on the lowest rungs of the income ladder, will push hard for an increase in the minimum wage or the earned income tax credit, sources said yesterday.

Secretary of Labor Robert Reich has told a private meeting of Labor Department employees that an increase is a "very important" goal of the administration, according to a department official.

Lawrence Katz, picked by Mr. Reich for the new post of chief economist of the Labor Department, is the author of a study that defies conventional economic wisdom by contending that employment in the fast-food industry in Texas expanded, despite a minimum wage increase.

He will help Mr. Reich prepare the arguments for a higher wage or an expanded tax credit.

President Clinton's campaign document, "Putting America First," discussed an increase in the minimum wage to keep pace with inflation and an expansion of the tax credit, but the issue received little attention during the election season.

Now, however, Mr. Reich has indicated to the Labor Department that providing economic help to the working poor will be a major priority.

The current minimum wage is $4.25 an hour, and was last increased in April 1991, from $3.80 an hour. Approximately 5.7 million persons are paid the $4.25 an hour rate or less, in a total salaried labor force of 103 million Americans.

No decisions have been made about the size of a wage increase, or expanded tax credit, or when efforts might begin to impose them.

But Mr. Reich told the closed-door meeting that his department's agenda closely "dovetails" with that of organized labor.

The AFL-CIO contends that the minimum wage, historically about 50 percent of average earnings, slipped markedly in the 1980s. Average wages are expected to reach $11.50 an hour in 1994, which would indicate a call for a minimum wage of $5.75 an hour, according to union economists.

Efforts to expand the minium wage and the earned income tax credit would represent the traditional liberal impulses of 3/8 3/8 TC Democratic administration.

Both certainly would face tough opposition from Republicans and opponents within the administration concerned about the impact on small, low-profit businesses and the federal budget deficit.

Administration officials argue that it is important to boost the minimum wage because the lowest-paid workers have been falling behind the rest of the nation. They also favor an expansion of the earned income credit as a vital tool to encourage the economic stability of millions of relatively poor families.

Last year, the credit was claimed on 13.9 million tax returns, out of a total of 115.8 million. A credit was available for those with incomes up to $22,370 and a child in the home.

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