That great idea Sen. Orrin Hatch (R-Utah) had for putting the unemployed youth of America to work by paying them less than the minimum wage has run into trouble from the last place you'd expect: the U.S. Chamber of Commerce.
It's not that many prospective employers don't still like the idea. But they're afraid it might invite a counterpunch, in the form of a higher minimum wage for everone else. And the business community's "main focus," emphasizes the fact sheet put out by the chamber, "is to hold the line on the minimum wage rate itself."
That strategy could spell a long delay for Hatch's proposal of a subminimum wage for teenagers, even though it has long been advocated by business interest. With Senate hearings on the so-called "youth differential" coming up next week, there is a distinct lack of enthusiasm among many of those who had been expected to cheer the loudest. Even some of the folks who represent McDonalds's and Burger King are staying away.
For the chamber, the reason is simple. Opening up the Fair Labor Standards Act to sanction lower pay for teenagers would simply invite organized labor to demand and perhaps win a higher minimum for adults.
It is a danger that business interests believe they can avoid simply by leaving FLSA alone. As it stands, with the minimum wage having just gone up to $3.35 an hour, labor's chances of winning a further increase, as an independent proposition, appear to be negligible.
And as Mark de Bernardo, labor law attorney and lobbyist for the chamber, observes, "If you hold the line on minimum wage and inflation continues, it has the net effect of a rollback."
The chairman of the Senate Labor Committee as well as the chief Senate sponsor of a teenage subminimum, Hatch says he regards the new business stategy as "very nearsighted."
"The fact is that we have to establish a youth differential" he maintains. "It's the only provocative ideas I know of" to deal with youth unemployment. "It's ridiculous not to try it. It's almost criminal not to try it."
Hatch's bill would permit any employer to hire 16-to-19-year-olds at 75 percent of the minimum wage for the first six months of employment. The proposal, which came close to enactment in 1977, has been depicted for years as a plum for the fast-food industry, where teenagers working for the minimum wage are the backbone of the business. Critics have even given it to the sobriquet "McDonald's amendment," to the chagrin of McDonald's founder, chairman Ray Kroc.
This year, though, the fast-food industry isn't even going to testify on behalf of the measure. The Foodservice and Lodging Institute, which represents McDonald's, Burger King, Kentucky Fried Chicken and dozens of other multistate restaurant and hotel companies, decided to stay away from the March 24-25 hearings after discussing the matter "very thoroughly."
"Because of market conditions and our hope to get better qualified employes, we're afraid that even if we got the differential, we'd have something we couldn't use," says William Giery, the institute's executive secretary.
Officials of the American Retail Federation, another organization that is avoiding the hearings, have also failed to detect much sign that the merchants they help represent are willing to provide the needed jobs. Not a few buinessmen, it appears, would prefer to see expansion of an existing program permitting eligible employers to hire limited numbers of fulltime high school and college students for 85 percent of the minimum wage.
The difference between that and Hatch's proposal, says Retail Federation vice president Don White, is that the student program "translates into someone who has an 80 IQ or better, takes a few showers a week, and is a student."
The Foodservice Institute's members have still another "headache" to consider --- organizing drives confronting a number of fastfood operations around the country by the fledging United Labor Unions and an affiliate, the Detroit Fast Food Workers.
The union organizers have reportedly been trying to enlist members by charging, among other things, that the fast-food chains are seeking authority to pay a subminimum wage. The chains, Geiry indicated, would prefer to undercut that argument.
The new unions "have lost every election they've had so far," Giery said, but "the headache is there. It's not going to go away."
Approximately 10.6 million people --- some 12.5 percent of all wage and salary workers --- were employed in jobs paying the minimum wage or less in the second quarter of 1980. Of that number, 47 percent were women and another 30 percent were teenagers.
At $3.35 an hour, the minimum wage itself is actually worth a penny less, in constant dollars, than it was five years ago, and almost a dime less than it was worth in 1968. But the business community looks at it differently.
The minimum wage level "has already risen more than 46 percent since 1977," says the Chamber of Commerce fact sheet.
"We're not talking about the multinational oil companies," adds de Bernardo. "In the retail trades, we shoot for a 3 percent profit margin . . . Holding the line on the minimum wage is the No. 1 priority, and No. 2, No. 3, No. 4 and No. 5 . . . The question is what is there that's worth opening up the Fair Labor Standards Act to amendment? The youth differential is not."
The chamber lobbyist said he has also sensed "some retreat" in President Reagan's support. On the campaign trail back in January of 1980, candidate Reagan told a news conference in West Orange, N. J., he felt the minimum wage had been particularly hurtful to young workers looking for jobs.
"The minimum wage," Reagan said then, "has caused more misery and unemployment than anything since the Great Depression."
More recently, at a White House meeting last month with a delegation of mayors, the president spoke favorably once again of getting young people to work by trying lower wages for them. But in a blueprint for the president's first 100 days, Office of Management and Budget Director David A. Stockman had already suggested that proposals sure to antagonize organized labor, such as the youth subminimum, be deferred.
Hatch contends that business is going to find itself in a fight over the minimum wage anyway, no matter what happens to his bill.
There is no dispute that the teenage unemployment rate is alarmingly high, especially for blacks and other minorities. In February, the unemployment rate for 16-to-19-year-olds was 19.3 percent. For minority youth, it was 35.4.
The question remains whether a subminimum wage will get more of them off the streets and at whose expense. According to Michigan State University economist Daniel S. Hamermesh, a 75 percent subminimum would substantially increase youth employment without a big reduction in adult jobs.
A consultant for the Minimum Wage Study Commission, Hamermesh calculates that a 75 percent youth differential would produce 381,000 jobs for teenagers "at the cost of adult employment of 41,000." He feels the subminimum would allow employers to expand their operations.
According to economists at the Minimum Wage Study Commission, every 10 percent increase in the minimum wage results in a drop of 1 to 1.2 percent in teenage employment. But the impact is often hard to detect, at least in the short run.
The notion generates considerable sketpticism, in the ranks of both business and labor.
"There has been no indication from my industry that they are willing, ready and able to hire these kids over the provisions of the [Hatch] bill," said Retail Federation spokesman White.
"All you have now is an equal number of economists lined up in one camp or another," says de Bernardo.
For its part, the AFL-CIO and its member unions have been denouncing a youth differential for years. In a declaration from Bal Harbour last month, the federation agreed that "the teenage unemployment rate is disastrously high" but charged that a subminimum would merely "encourage employers to fire old minumum wage workers with family obligations to hire younger workers at less pay."
"The fatal flaw in the subminimum for youth is that it basically creates another class of workers," says AFL-CIO legislative director Ray Denison. "And if they do it for teenagers, people are going to start saying, 'let's do it for the elderly. When you're 65, you start slowing down. You aren't worth as much'. And then somebody will say, 'let's have one for blacks.'"
The Hatch bill would prohibit employees from systematically dismissing older workers to hire youths at the subminimum and from regularly getting rid of teenagers at the end of six months when they become eligible for the full minimum.
The National Center for Jobs and Justice, which is affiliated with the united Labor Unions, said in a recent report, however, that the Labor Department's Wage and Hour Division is already staggering under a backlog of 24,446 complaints.
Citing various statistics and studies, the center charged that "in effect, we already have a subminimum" with an estimated 2.5 million workers being paid less than the full minimum wage in violation of the law, at a cost to them of some $250 million a year.
Normal attrition could permit an almost permanent subminiumun in many fast-food shops in any case. The annual turnover of employes in the fast-food industry is between 200 percent and 250 percent, estimates California management consultant Martin B. Rabkin. In short, most teenagers "would be gone" after six months anyway. "If a kid stays there a year, he's probably going to be the assistant manager," Rabkin says.
Some business organizations, such as the National Restaurant Association, are less apprehensive about triggering a higher minimum wage and will testify in favor of a teenage subminimum.
The association says that 16 percent of all working teenagers --- 1 1/2 million in all --- work in the food service industry. The trade group also estimates that some 500,000 full-time "job opportunities in the restaurant industry were lost as a result" of the 1977 changes in the Fair Labor Standards Act when Congress voted to raise the minimum to $3.35 in four steps.
Politically, the shoe is on the other foot now. In 1977, proposals calling for a teenage subminimum lost by only five votes in the Senate and one in the House, but they were offered then as an offset to the higher minimum wages. Now the youth diferential bill is standing on its own, with organized labor waiting in the wings.
AFL-CIO has once again called for legislation "indexing" the minimum wage and making it automatic, an idea that sends chills through the business community.
No subminimum hearings are planned in the Democratic House, and Hatch --- conceding that he faces difficulties even in the Senate --- says he is willing to consider alternatives. His biggest hurdle could be is own committee, where two moderate Republicans, Lowell Weicker (Conn.) and Robert Stafford (Vt.) holds the swing votes. The seven Democrats on the committee, led by Edward Kennedy (Mass.), are all expected to vote against a youth differential and a weicker aide says he remains opposed to it, as he was in 1977.