Cut the rhetoric, not the minimum wage

January 26, 1995|By Jim Florio

New Brunswick, N.J. -- THE HARD edge of the new congressional leadership's "Contract With America" is slowly being unveiled for all to see.

For example, it wasn't sufficient for Rep. Dick Armey, a Texas Republican and the House majority leader, to merely state his opposition to an increase in the minimum wage from the current $4.25 to $5 per hour.

Rather, he felt the need to declare war on any such initiative, proclaiming that he'd oppose it "with every fiber of [his] being."

Then, revealing his scorched-earth strategy, Mr. Armey expressed his opposition to the very concept of a minimum wage.

If you thought the debate on such things as whether we should have a minimum wage was concluded decades ago, or, for that matter, why we need to have prevailing hourly wages or a 40-hour week, you are apparently wrong.

We are going to begin the debate anew.

Interestingly enough, Speaker Gingrich, Mr. Armey and their supporters want to reopen these matters allegedly in the interest of workers.

Mr. Armey's opposition to any minimum wage is out of a concern that $4.25 per hour, or even a mandatory minimum wage of $1 per hour, will price a willing worker out of the market, if that worker's circumstances make him or her willing to work for less.

The merits of a minimum-wage increase are abundantly clear from an economic and social standpoint.

The fact that many heads of households are working 40-hour weeks for an annual salary of $8,800 should be troubling to all but the most insensitive.

With 50 percent of American families earning $32,000 or less, and with average hourly wages for the last decade remaining stagnant, at best, one should not be surprised at the stress and strain on American families today.

An increase in hourly wages will improve our nation's standard of living. Enhanced purchasing power, as it works its way up from the bottom of the wage scale, with no cost to the Treasury or taxpayers, will benefit the economy.

In fact, the Treasury will benefit directly as minimum-wage workers, with deferred, unmet needs, will put those new dollars immediately to work generating economic growth and tax revenues.

When, in 1992, New Jersey increased its minimum wage to $5.05 per hour -- higher than the amount anyone is contemplating at the national level -- the same arguments we're hearing today were raised by opponents.

A study was undertaken by Princeton University economists Alan Krueger and David Card to determine the impact of the minimum wage on the economy.

The primary focus of their review was the service industry, where many lower-wage jobs are concentrated.

They concluded that no job-loss occurred as a result of the minimum-wage increase.

One observation: if there were no market for the worker's labor, the worker would be fired anyway, i.e., the worker is there because the employer needs him or her.

The ultimate irony in opposing an increase in the minimum wage is that it comes at a time when there is virtually unanimous support for changing the welfare system as we know it.

A cardinal principle of thoughtful welfare reform is to try to get people out of that failed system by "making work pay."

Leaving welfare to go to a minimum-wage job that currently pays $170 per week -- less than welfare -- makes no economic sense.

That is particularly the case when one considers that welfare provides its participants with health-care benefits. Virtually all minimum-wage jobs do not.

The obvious observation is that unless you advocate getting people off welfare as pure punishment, realistic welfare reform must begin with the understanding that an increase in the minimum wage is an essential starting point.

An increase in the minimum wage for the people of America is overdue.

Congressman Armey and his fellow proponents of the Contract With America should not stand in its way, lest they send out a very clear and revealing message about that pact.

Contracts for Involuntary Servitude are from a period in our history that we are well rid of.

To advocate that people in desperate straits should have the "right" to work for pennies per hour -- if their desperation provides that opportunity to an employer -- marks proponents as enemies of mainstream American values.

Jim Florio, a Democrat, was governor of New Jersey from 1990 to 1994. He now practices law and is a professor at Rutgers University.

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