Stop Exploiting Lowest-Paid Workers : Higher Minimum Wage Would Uplift Poor, Not Cut Jobs

Secretary of Labor William E. Brock III recently had the audacity to tell Congress that 6.7 million U.S. workers really aren’t worth more than $3.35 per hour. In case you’re curious, that comes out to $6,968 per average work year, or about 20% below the poverty level for a family of three. In contrast, no one in this Administration said “too much” when America’s highest-paid executive, Lee Iacocca, received more than $20 million last year. In case you’re still curious, that comes to $9,615 per hour for the same average work year.

I wonder how Brock can justify telling American workers who exist at the bottom end of the wage totem pole that they shouldn’t earn at least as much in a whole year as one person in America now earns in one hour. This simple juxtaposition of the highest- to the lowest-paid in the nation tells a sad story about our country and our values. It also underscores the callousness of the Reagan Administration toward the plight of the nation’s working poor.

The minimum wage, when it was first enacted in 1938, was designed to provide a living wage for a family of three. It was meant to provide even the poorest workers with a measure of dignity. Since 1981, however, it has been frozen at $3.35 an hour while the cost of living has continued to rise. The people on America’s lowest rung have seen their buying power shrink by 94 cents an hour, equivalent to a pay cut of $37.60 out of a $134 check for a 40-hour week. Where is dignity when someone down the street is given more on welfare than you can earn at the minimum wage?

Now the secretary of labor, whose job it is, by law, “to foster, promote and develop the welfare of the wage earners of the United States,” is trying to block Congress’ attempt to raise the working poor out of poverty. He hints at a compromise if Congress will abandon young workers and forget indexing the minimum wage to prevent today’s deplorable situation from developing again. Otherwise President Reagan will veto any effort to legislate decency in the nation’s wage structure.

Raising the minimum wage, Brock says, is bad policy because it would force employers to eliminate jobs. This is the same shopworn argument that has been used by opponents of the minimum wage ever since it was first enacted. And 50 years of evidence refutes it.

In his 1966 report to Congress, “Minimum Wage and Maximum Hours Standards in the Fair Labor Standards Act,” Secretary of Labor W. Willard Wirtz summed up the experience of the first 30 years of the minimum wage: “The record is that following the original establishment of the minimum wage--after it was set at 25 cents in 1938, 30 cents in 1939, 40 cents in 1944, 75 cents in 1950, to $1 in 1956--employment in the United States always went up.” The same holds true in recent years.

The last time Congress acted to raise the minimum wage was in 1977, when it called for four-step increases from January, 1978, to January, 1981. In 1978 the unemployment rate fell to 5.8% from 6.9% the previous year as 2.7 million more Americans gained employment. Indeed, in contrast to the claims of minimum-wage critics, a case can be made that raising the minimum wage would actually increase employment. By a conservative estimate, raising the minimum wage to $4.65 an hour would put an additional $15 billion into the hands of the working poor--who would spend it for the purchase of goods and services. This would act as a much-needed stimulus to the economy.

Job creation is not the issue in the debate over the minimum wage. It is merely a smokescreen meant to hide the real issue, which is exploitation. There are already plenty of exemptions in the law that allow legitimate employers to pay below the minimum to students and others. There are separate rules for workers who earn income in tips, for instance, as well as for handicapped employees. Also, small retail businesses, which account for nearly two-thirds of all job growth in America, are exempt from the minimum-wage law.

That leaves a group of employers and their supporters who want to maintain a pool of cheap labor instead of training people well to increase productivity to the point of paying a humane wage. They want to continue an unlimited supply of low-wage workers to cover up their own shortcomings. And they can get away with it because those on the lowest rung don’t have the power to stand up for themselves.

This is a sad comment on American values. But Congress could take a big step toward changing it.

Raising the minimum wage to a decent level would clearly not solve all the problems of the working poor. There are now and will continue to be many people who want to work but cannot find jobs. And there are others who need better education and training to make them fully employable. But the beginning step is to increase the minimum wage. It is an investment in our society that we can well afford to make. Indeed, in good conscience and in good sense, we cannot afford not to make it.