True or false: The typical person earning the minimum wage is a teen-ager in his or her first job. Answer: False. Only 31 percent of those earning the minimum wage in 1986 were teen-agers. The rest were adults and nearly two-thirds of those were women. Eighty-three percent were white and 66 percent of the minimum wage earners who were paid on an hourly basis worked part time. At $3.35 an hour, this is not exactly the fast track out of poverty.
A new report from the Center on Budget and Policy Priorities has found that the minimum wage, which once provided a family of three with sufficient income to escape poverty, is now falling $2,100 short of doing that. The last minimum wage increase enacted by Congress was in 1977, and the last annual adjustment occurred in 1981 when it was raised to $3.35. In the years since, Democrats have had their hands full battling the Reagan administration's attempts to develop a subminimum wage level for teen-agers.
Meanwhile, according to the center's report, consumer prices have risen by 30 percent. After adjusting for inflation, the value of the minimum wage has sunk to the lowest level since 1955. In the '60s and '70s, a full-time year-round minimum wage worker could generate enough income for a family of three to stay out of poverty. By contrast, such a worker would now bring home $6,968 a year, which is only 77 percent of the 1987 estimated poverty threshold for a three-person family. The report cites Census Bureau data that show the total number of workers who are living below the poverty level rose from 6.7 million in 1975 to 9.1 million in 1985. Full-time, year-round workers were among the hardest hit: the number living below poverty level rose from 1.3 million in 1975 to 2 million in 1985.
The report, written by senior research analyst Isaac Shapiro, makes this point: "The minimum wage represents a statement by society that pay for work should meet certain basic standards. The standard is most relevant to workers who generally lack political clout, are not unionized, and are in little position to bargain for better wages themselves.
"Now that the wage floor has deteriorated for more than six years, and in the face of continuing opposition to an increase, the policy debate returns to a basic question: Are there minimal wage standards that should be applied to most or all working situations or should the concept of the minimum wage gradually be abandoned? Freezing the minimum wage at $3.35 an hour for an indefinite period of time, while prices continue to rise, would suggest that this society is willing to accept the minimum wage's gradual erosion to the direction of the mostly unregulated labor market that existed prior to the enactment of the minimum wage law in 1938. It would be a step away from the principle that a wage floor is necessary as a basis for establishing what work conditions are acceptable to society."
Four out of five workers who are paid by the hour and earn the minimum wage live in households that are not poor, principally because there are other wage earners in the family. But seven out of 10 of the poor minimum wage earners were their families' sole earner in March 1985. Thus, raising the minimum wage would have a substantial impact on lifting those families out of poverty or reducing their degree of impoverishment. The report contends that raising the minimum to $4.35 an hour would provide earnings equivalent to the 1987 poverty line for a three-person family.
The report cites a 1977 analysis by the Minimum Wage Study Commission, which was established by Congress, that found that a 10 percent increase in the minimum wage would create only a 1 percent reduction in teen-age employment opportunities. The impact on adult employment was found to be even less. The argument that international competition makes this a bad time to be raising wage floors is not relevant because only 12 percent of minimum wage earners work in industries that produce goods. Most work in service and retail trade industries.
House and Senate Democratic leaders launched an effort in March to increase the minimum wage to $4.65 by 1990 and to build in automatic wage adjustments. At the time, Sen. Edward M. Kennedy (D-Mass.), who is chairman of the Senate Labor and Human Resources Committee, said that raising the minimum wage might encourage people to move off welfare and get jobs. As things stand, he said, "through welfare and other safety-net programs, the government is subsidizing the payrolls of firms with low-wage employes."
And at $3.35 an hour, it is keeping people in poverty.