Clinton to Seek 75-Cent Boost in Minimum Wage

President Clinton, hoping to boost workers’ incomes and rekindle his support among middle-class voters, has decided to seek an increase in the federal minimum wage to $5 an hour from the present $4.25, officials said Monday.

Clinton’s proposal to Congress will call for a two-step increase, with a hike of 50 cents this year to be followed by a 25-cent rise next year, the officials said.

The President is likely to mention the proposal in his State of the Union Address, to be broadcast live at 6 p.m. PST today, but it will not be the central focus of the speech, one official said.

Instead, aides said, the address will be a broad outline of Clinton’s hopes for the next two years, emphasizing three goals: readying the nation for a “new economy,” creating a “new government” that is smaller and more efficient and forging a “new covenant” between that government and the public.

Indeed, officials quietly put out word of the minimum wage proposal on Monday precisely so that the news would not dominate media coverage of the State of the Union Address and crowd out Clinton’s larger message.

The President decided to ask Congress for the minimum wage increase after his economic advisers assured him that a wage hike would not choke off the creation of new jobs, as some economists have said they fear, officials said.

White House Press Secretary Mike McCurry refused to confirm Clinton’s decision at a briefing Monday but he laid out an energetic case in favor of a wage increase.

“It fits with a consistent theme that this President has articulated: that working families and those who work hard for a living need to get a break,” McCurry said. “The value of the (minimum) wage . . . has eroded over time and as a matter of fairness that needs to be addressed.”

The move is likely to be popular. The Times Poll released today found that a whopping 72% of Americans favor a minimum wage increase, with only 24% opposed. Even Republicans favor an increase, by 62% to 35%.

Still, Republican congressional leaders said they would fight the proposal, which must be passed by both houses of Congress to go into effect.

“I will resist an increase in the minimum wage with every fiber of my being,” thundered Rep. Dick Armey (R-Tex.), the House majority leader. He said Republicans believe an increase in the minimum wage causes employers to eliminate low-wage jobs.

“The analyses are different between our party and their party,” he said. “It’s a heartfelt issue with me. I’ve seen the pain of people who desperately need work having lost their job because of increases in minimum wages.”

The President’s decision represents a victory for Labor Secretary Robert B. Reich, who has been pushing for an increase in the minimum wage within the Administration since Clinton took office.

Reich nearly won White House approval for a minimum wage increase in late 1993 but was derailed because Administration economic policy-makers feared it would collide with a key element of the Clinton health care plan--an employer mandate to pay for health care insurance. Reich’s critics inside the White House said that proposing both would have been equivalent to imposing a double increase in the minimum wage and Clinton abandoned the idea to keep the focus on health care reform.

But since the defeat of the Administration’s health care plan last year, Reich has revived the idea of a minimum wage hike as a way to distinguish Clinton’s economic policy from the Republican agenda. He believes that the Administration needs to keep its focus on proposals that are designed to address the erosion in middle-class incomes as a way to underscore the extent to which the GOP has, by contrast, focused its agenda on aiding the wealthy.

Clinton has long leaned toward an increase in the minimum wage but he waited for his advisers to address several economic issues:

Besides their consensus that job growth would not be threatened, they considered whether it would create inflationary pressure (a little, but not much, they said) and whether it would have a ripple effect, pushing wages up for workers in the middle (yes, they said).

Clinton rejected a proposal for “indexing” the minimum wage so that it would rise automatically in response to inflation, one official said.

Democratic leaders said they strongly favor the proposal.