President Carter has reached agreement with organized labor and congressional leaders to raise the minimum wage from $2.30 to $2.65 an hour next year, with automatic annual increases in the future.
The administration had previously endorsed a $2.50 wage floor, prompting angry protests from AFL-CIO President George Meany, who had proposed a $3 minimum.
The compromise - following closely behind the administration's agreement to support changes in the nation's labor laws to make it easier for unions to organize - was disclosed yesterday by Carter at a breakfast with congressional leaders.
Carter later told a press conference that the administration would back legislation to be proposed by House Education and Labor Committee Chairman Carl D. Perkins (D-Ky), who quickly issued a statement outlining the compromise.
Perkins said the bill would raise the wage floor to $2.65, which is 51 per cent of average hourly manufacturing wages, on Jan. 1, 1973. The floor would then rise to 52 per cent (an estimated $2.39)on Jan. 1, 1979, and to 53 per cent (an estimated $3.15)on Jan. 1, 1980. lt would remain at 53 per cent thereafter.
An estimated 6 million workers, out of a total work force of about 90 million, would receive wage increases next year under the proposal.
The annual escalator provision is an innovation. Now the minimum wage is set by statue, usually meaning a lapse of several years between raises in the wage floor.
Carter's announcement of the agreement - and its disclosure to the press by House Speaker Thomas P. O'Neill Jr. (D-Mass.) - caught nearly everyone off guard, including the AFL-CIO.
An AFL-CIO spokesman declined comment, saying Meany would have a statement today. Other sources said there was basic agreement between the administration and Meany on the wage levels, although they still disagree on whether the present credit for tips should be retained. A White House official said this is "still a sore point."
Organized labor wants elimination or phaseout of the tip credit, under which employers can pay less than the minimum wage if employees earn tips. The White House reportedly favors retention of the tip credit.
After a meeting late yesterday between Perkins and Labor Secretary Ray Marshall, who was the administration's chief negotiator of the compromise, congressional leaders indicated that the House would move swiftly to pass the legislation.
They said the House labor standards subcommittee will act on the bill later this week, in time for action by the full committee next Tuesday. Perkins said he anticipated the House will pass the legislation "before we go home in August."
The compromise followed weeks of negotiations during which both sides, anxious to avoid a further chilling of relations between the administration and organized labor, edged close together. As recently as two weeks ago, they appeared hung up over the difference between $2.60 and $2.65 and a couple of percentage points on the annual escalator.
A key element in the compromise appeared to be the gradual increase in the percentage formula, which helped overcome Carter's reported fears of an immediate adverse effect on inflation and unemployment.
"From an economic standpoint, it was decided that it was not worth the political disadvantages of an ongoing battle," said one administration source.
During the breakfast meeting with congressional leaders, Carter also pressed them to move a same-day voter registration bill that has been stuck in Congress because of a lack of votes to pass it. The leaders promised action and the bill is now scheduled for the House Rules Committee today.
Carter also asked that the Senate not restrict the U.S. ability to make multilateral loans to certain countries as the House did in voting on a foreign aid appropriations bill. The House voted to prohibit U.S. contributions to international banks being used for loans to Laos, Cambodia, Vietnam, Mozambique, Angola and Uganda.