The federal minimum wage increases from $2.90 an hour to $3.10 an hour effective today.
The boost of 20 cents an hour will mean a 6.9 percent raise for an estimated 5 million dishwashers, waitresses, clerks, messengers, maids, laborers and others on the first rung of the employment ladder.
However, there will be no New Year's Day raise for workers covered by the District of Columbia minimum wage, which ranges from $2.50 to $3.50 an hour. The D.C. minimums apply only to firms not covered by the federal minimums.
About 85 percent of America's workers now hold jobs that, under federal law, guarantee them at least $3.10 an hour, the Labor Department estimates.
The vast majority of workers already earn enough above the minimum that their pay will not go up today. Some workers who earn a few cents an hour more than the new minimum will also get raises, but there are no reliable estimates of how many people that involves.
Today's hike in the minimum wage is the seventh annual increase in a row -- and the next to the last step in a series voted by congress in 1977 that culminates with a $3.35 minimum on Jan. 1, 1981.
In the last decade, the federal minimum wage has increased 113 percent, from $1.45 effective Feb. 1 1970, to todays' $3.10. First established to 25 cents an hour in 1938, the federal minimum reached $1 an hour in 1956.
The latest 6.9 percent increase is little more than half the nation's current inflation rate of 13 percent per year and is less than the 8.1 percent increase in the average wage over the past 12 months.
That means, "people at the bottom of the economic ladder will be getting less than the average and will be falling behind," said Sar Levitan, a George Washington University economist who recently wrote a book on the impact of the minimum wage.
Levitan argued that one of the biggest benefits of increasing the federal salary floor is to provide a greater incentive for people to give up welfare and get themselves a job.
Society subsidizes its poorest members in one way or another, Levitan Contends, and it is better to help by guaranteeing a minimum wage than by giving handouts.
"Unless you give them the incentive (of at least a minimum-wage job), they have to depend on welfare, on food stamps, on Medicaid or on something else," he said in an interview yesterday.
Levitan contended that further increases in the minimum wage are needed to keep the lowest-paid workers from falling further behind the earnings of others, especially union members who have the economic clout to bargain for higher pay.
Opponents of the escalating wage floor, including the Chamber of Commerce of the United States and the Greater Washington Board of Trade, argue that the increases do more harm than good.
"There has been a steady increase in prices for goods and services since the last round of minimum wage increases. I predict the same thing is going to happen in 1980 and 1981," said Leonard Kolodny of the Board of Trade.
To counteract the impact of the minimum wage increase, employers try to reduce the number of employes they hire and to cut working hours, opponents note. The impact is greatest on firms that employ large numbers of young, part-time workers, especially in the food service and retail fields.
Rising teenage unemployment results directly from minimum wage increases, says Chamber of Commerce economist Richard Landry. The chamber has tried unsuccessfully for years to have young workers excluded from the minimum wage or to set a special "youth rate.'
The federal minimum wage must be paid by all firms doing at least $275,000 worth of business a year. Next July the minimum firm size jumps to $325,000 annually.
District of Columbia businesses not covered by the federal law must pay minimums set by the District.Those minimums range from $2.50 an hour in retail, barber and beauty shops to $3.50 an hour for manufacturing employes and private household workers. A proposal to hike the minimum pay in Washington barber and beauty shops to $4.02 an hour is now pending.