symposium

0 Comments | Insight on the News, March 13, 2000 | by Jim DeMint, | Julianne Malveaux

Q: Should states be able to opt out of future minimum-wage raises?

Yes: Flexibility will keep welfare reform alive and help those most in need.

The question of raising the national minimum wage is different from any past debate for one important reason: This is the first increase under consideration in a post-welfare-reform world. The landmark 1996 welfare overhaul shifted responsibility to the states for moving welfare recipients into jobs.

Welfare reform is a success in almost every state, and I would like to keep it that way. That is why Texas Democratic Rep. Charlie Stenholm and I are proposing legislation in the House of Representatives to enable the states to set minimum-wage rates appropriate to their unique economic conditions and the needs of their citizens. By taking the "state-flexibility" approach to the national minimum wage, Congress can ensure that state welfare-reform efforts are not derailed by an across-the-board wage hike.

The issue of state flexibility on the national minimum wage is the same one that confronted lawmakers when they addressed the problems of welfare: Who is best qualified to tailor policies and craft a better future for our most vulnerable citizens and communities? In reforming the failed federal policies of welfare, Congress and the public responded in unison: "The states!" Today that same answer holds true for the minimum wage.

The flexibility that states were granted under the welfare-reform law came with a price. Failure to meet stringent quotas for increasing the work-participation rate for persons on welfare will subject any state to a significant cut in federal funds. New York stands to lose more than $122 million if it does not meet these quotas. California's annual payments could be cut by $187 million. Pennsylvania, which is lagging behind the national average, would lose $36 million if it does not increase the work-participation rate of its current welfare recipients.

Confronted with the opportunities and responsibilities of welfare reform, the response at the state level has been phenomenal. Most of the states are ahead of the quotas and have moved more individuals than expected off the welfare rolls entirely. The national economic boom has helped, but most of the credit goes to the innovative responses of states to the new found freedom unleashed by national reforms.

Congress never could have crafted a welfare program that made sense in every community. The state officials closest to the people are making the difference. Some states are using their welfare money to enhance training activities. Others are expanding child care and health services. One state even buys used cars for some welfare recipients to get them to work and to keep them off of welfare.

Proponents of state flexibility on the national minimum wage want to unleash this same creativity in the states to help those left behind by economic prosperity. We shun federal-government mandates largely because the welfare experience shows us that Washington does not know best, and state officials are just as competent and compassionate as federal officials when it comes to making good choices.

Hiking the national minimum wage in the face of welfare-reform efforts is risky business. Persons out of work and on welfare today will be less attractive at a minimum wage of $6.15 an hour than they already are at $5.15. As is frequently the case, more qualified teen-agers are the ones who will be drawn into the workforce by a higher wage rate. That is why research from the University of Wisconsin found that welfare mothers stay on public assistance as long as 44 percent longer after a minimum-wage hike. They just do not have the skills to justify the higher mandated wage or to compete with better-qualified job applicants who take entry-level positions after a wage hike.

In the past, there was an alternative for those who could not find a job: They could go on welfare. Things have changed. The safety net of welfare is shrinking and may not be available to many who "fall through the cracks" when the states do not have all of the tools they need to find or promote work opportunities.

Separate pay scales depending on locality are nothing new. Many national and state laws already recognize that a single payment rate does not make sense in different parts of the country. The federal government pays its employees varying rates depending on the cost of living in the communities where they work. For instance, the pay for entry-level federal employment is 46 cents higher, or almost $1,000 a year more, in San Francisco than in Orlando, Fla. Likewise, New York provides different welfare-payment rates according to whether the recipient lives inside or outside New York City.

The minimum wage does not target those on welfare or even the working poor. The average family income for those who would benefit from a mandated national wage hike ranges from $30,000 in Mississippi to $58,000 in Maryland -- hardly a poverty-level income anywhere in the country. Those who are unemployed and on welfare today are not going to benefit from a national wage hike that targets others. However, welfare recipients would benefit almost immediately if Congress were to expand the tools that the states have to supply the on-the-job training they need. Only the officials at the local level know which approach will work in each circumstance. That, in a nutshell, is what our state-flexibility approach is all about.