The federal minimum wage contributes to unemployment, does little to help the poor and should not be raised by Congress, according to a study released yesterday by a U.S. Chamber of Commerce affiliate.
The study also recommended that Congress adopt legislation that would allow tips received by restaurant and other service workers to be counted toward payment of their legal minimum wages.
Research shows that "The costs of minimum wage legislation substantially outweigh the modest benefits, if any," according to Belton M. Fleisher, an economics professor at Ohio State University. He authored the study for the National Chamber Foundation.
"Indeed, disemployment of minimum wage workers is so large, a strong case can be made that minimum wages have lowered their average earnings," he said.
This was the latest salvo in a continuing debate over the issue, which regularly pits business and Republican interests against organized labor and Democrats.
Union leaders favor a higher a minimum wage and consider the concept a basic worker protection.
President Reagan has indicated that he would like to eliminate the minimum wage for young people seeking part-time and summer jobs, but he has settled for a proposal that would create a special "sub-minimum" wage of $2.50 for the young.
Fleisher said he opposes the sub-minimum-wage proposal for teen-agers.
Although he agreed that it would help their job prospects, he said the gain "would occur at the cost of an unknown number of lost job opportunities for adult men and women."
In contrast to many opponents of the minimum wage, Fleisher found that the inflationary impact of the law has been modest, saying that the minimum-wage increase must be coupled with an increase in the money supply in order to boost prices.
After the last minimum-wage increase, to $3.35 per hour in 1981, some 1.25 million jobs were lost when employers could not afford to hire at the new rate, he said.