Recent minimum wage increase continues to spur policy arguments

Opponents charge higherOpponents charge higherwages will elimate jobsOpponents charge higherwages will elimate jobsfor law's target-the poor An estimated 10 million Americans received an early Christmas present from the federal government last week -- a 50-cent increase in the minimum wage. The increase -- the first in nearly five years -- was part of a bill President Clinton signed into law August 20. The wage will rise an additional 40 cents next September. And although the increase had been supported by both Clinton and Republican presidential nominee Bob Dole, Republican Congressional opposition to the bill forced the additions of two clauses -- both vehemently opposed by the president -- before the increase was approved. The final legislation, therefore, gives employers the right to pay new workers the older $4.25-per-hour wage for their first 90 days on the job and to pay employees who receive tips a reduced $2.13-per-hour wage. Supporters of the increase -- including Clinton and Labor Secretary Robert Reich -- cite statistics which show that inflation brought the minimum wage to a 40-year low in purchasing power as proof of the need for the increase. "This is not just an economic issue, but a moral issue," Reich said in announcing the increase earlier this year. "This happened because a huge majority of Americans said it is fair, it is decent, it is about time." But opponents such as Speaker of the House Newt Gingrich (R-Ga.) fear the raise will eliminate many low-wage entry-level jobs, hurting the very segment of society -- the poor -- that the minimum wage was originally designed to protect. Gingrich explained that an earned income tax credit for low-wage workers would have led to similar benefits for poor workers without adversely affecting employment. "This [minimum wage increase] makes it less likely that you would hire poor people," he said. "Lowering the tax rate or providing tax credits would ensure that people working for a living have a higher income." Republicans point to prominent economists who argue that the increased wage will reduce employment in the short term, while damaging the quality of employment in the long term when employers reduce non-wage benefits. But Penn Economics Professor David Crawford said most of the arguments against the increase "tend to boil down to ideological terms." "Most economists have argued that an increase of the size we're talking about is not likely to have much of an impact on employment," he said. "In real inflation adjusted terms, all the increase does is bring the minimum wage back to its historical purchasing power." Currently, all University work-study jobs pay salaries above the minimum wage, according to Manager of Student Employment John Rudolph, who noted that work-study salaries will increase to stay above the new wage level. Many other local employers, including Kinko's and Domino's Pizza, said they too pay salaries above minimum wage.