Voting for a Market With a Conscience : Minimum wage: Raising it will lessen public dependence of those on the bottom rungs.

When President Clinton spoke in his State of the Union address about shrinking the underclass by raising the minimum wage, he made an explicit plea to Republicans and Democrats to embrace his proposal. “You can’t make a living on $4.25 an hour,” he said, adding that we needed to “make the minimum wage a living wage.” His message was good public policy. But it was also good politics, a political volley designed to solidify part of a voter base largely animated by economic concerns.

Clinton was also mindful of the grass-roots movement in California to raise the standard of living of our lowest wage earners. If Bob Dole wants to compete for part of that same pool of voters and not concede the economic high ground to Clinton, he should also endorse raising the minimum wage. By the time he reaches the Republican convention in San Diego, Dole should be a firm supporter of the Living Wage Initiative, which backers say has received enough signatures to qualify for the November ballot. The initiative would raise California’s minimum wage to $5 an hour in 1997 and $5.75 in 1998.

The usual suspects with usual arguments will fight raising the minimum wage. Small-business interests will cry that it would close them down. Academic economists will “prove” that more jobs will be lost than created. Conservative pundits will echo Pat Buchanan’s claim that increasing the minimum wage will “hurt the ones you are trying to help,” namely entry level minorities and unskilled workers who will be “priced out” of the job market.

But when economists reach for their flow charts, voters should reach for their common sense. Historically, moderate increases in the minimum wage have not translated into job losses for young or unskilled adults. In the real world, low and moderate income groups spend any additional money that they earn. They prime the pump of our economy by investing in basic goods and services, not in rare stamps or fine wines. That means overall employment levels go up as the market responds. Beyond the strictly economic arguments however, society has an obligation to tell those who want to become entrepreneurs that if the only way to stay in business is to pay a poverty wage, then they simply shouldn’t be in business.

And make no mistake about it, the current minimum is a poverty wage. By U.S. Department of Health and Human Services standards, a family of three requires $12,980 a year to rise above the poverty level. A 40-hour week at the current California minimum of $4.25 generates $8,840 a year. There are 1.5 million California workers who earn less than $5 an hour and, contrary to popular belief, 80% are adults, not teenagers.

The grass-roots rebellion in California is under way because of government’s failure to act. During the last eight years, the consumer price index has climbed 26% while the minimum wage has remained stagnant. Keeping the minimum wage artificially deflated is a de facto tax subsidy to business, since thousands of full-time workers require food stamps or use county health facilities to provide for their families. The best way to “change welfare as we know it” is by providing people the opportunity to make more money.

Instead of a “free market” in wages, we need a “social market.” We have a social obligation to minimize the sacrifice that the market we worship imposes upon those struggling to gain a foothold on the ladder of upward mobility. The Living Wage Initiative is a step toward creating a political process that helps moral values intrude upon and shape the market.

If Dole can look past his advisors and a knee-jerk reaction against state economic intervention, he may find that supporting an increase in the minimum wage is a vote-getter. One recent statewide poll found that six in 10 Californians support the initiative. More important for Dole, independents and infrequent voters also strongly favor the proposal. Clinton’s lead over Dole increases when people are told the candidates’ respective positions on the minimum wage. Politics at the presidential level is about holding your base and attracting the center. In California, the political center is in favor of rewarding hard work by guaranteeing a livable wage.

Dole states that he wants to help people who help themselves. He claims to be a man of action, not words. As he campaigns in California, he can do the right thing economically and politically by endorsing the Living Wage Initiative. If Dole joins Clinton in support, the initiative is sure to pass. When it does, the men and women who drag themselves to low level jobs every day will know that whoever wins, the political process has not ignored them.