Business Takes On Democrats Over Raising Minimum Wage - businesses say low-wage earners would lose jobs - Brief Article

Nation's Business, May, 1999 by James Worsham

Business has launched a major counteroffensive to Democratic-led efforts in Congress to raise the federal minimum wage to $6.15 an hour from the current $5.15--an increase of almost 20 percent.

As they did last year, Democratic congressional leaders are pushing to boost the rate to $5.65 an hour on Sept. 1, 1999, then to $6.15 on Sept. 1, 2000. The rate was raised to its current level on Sept. 1, 1997. (See the chart.)

Democrats, bolstered by labor unions, argue that the purchasing power of today's minimum wage is 30 percent lower than that of the 1968 wage. And the White House says that raising the minimum wage by $1 would boost the wage's purchasing power only to the 1981 level.

But business groups, including the U.S. Chamber of Commerce, argue that increasing the minimum wage would eliminate jobs, especially low-income, entry-level jobs. A 1998 study by the Washington-based Employment Policy Foundation, a business-funded group, showed that the "most vulnerable workers are those with the fewest skills and lowest levels of education."

Business groups have also drawn support for their opposition from Federal Reserve Board Chairman Alan Greenspan, who told Congress in January that a higher minimum wage would only hurt those trying to get on "the lower rungs of the ladder of our income scales, develop skills, [get] the training."

                   How The Federal Minimum Wage Has Grown

Effective Date     Rate Per Hour
October 1938          $0.25
October 1939           0.30
October 1945           0.40
January 1950           0.75
March 1956             1.00
September 1961         1.15
September 1963         1.25
February 1967          1.40
February 1968          1.60
May 1974               2.00
January 1975           2.10
January 1976           2.30
January 1978           2.65
January 1979           2.90
January 1980           3.10
January 1981           3.35
April 1990             3.80
April 1991             4.25
October 1996           4.75
September 1997         5.15
September 1999 [*]     5.65
September 2000 [*]     6.15


(*.)Proposed by Democratic
congressional leaders
SOURCE: U.S. DEPARTMENT OF LABOR