IT'S TIME to raise the minimum wage. Congress last dealt with the subject in 1977, when it legislated a series of four increases. The last of these took effect five years ago on Jan. 1, 1981, when the rate went to $3.35 an hour. The cost of living has since gone up 25 percent. A person working full-time year-round at $3.35 an hour will make $6,968. That is a fifth below the most recent poverty threshold for a family of three, a third below the standard for a family of four. The gap should not be that great between what the government says people need and what it says they must be paid.
The working poor have been heavy losers in the legislation of the last five years. There is more than a little irony in this, given how much the country supposedly values self-help. Low-wage households were hurt by the big budget cuts of 1981, which made it harder for people who work to qualify for Aid to Families with Dependent Children (and, through AFDC, for Medicaid). At the same time these households were not much helped by the big tax cuts of that year. Tax bills in the 1970s had done a lot of their cutting in the lowest income brackets. The 1981 bill did not (though the new House tax reform bill would return to the tradition). The income and Social Security taxes of poor people both went up.
The lag in the minimum wage came on top of these other losses. The minimum wage is a powerful and underrated force in the economy. About 54 million workers are paid by the hour, just over half of all the employed. In 1984 about a tenth of these -- six million people, or one U.S. worker in 20 -- was paid the minimum or less (some jobs are exempt). There were several million more riding just above the minimum who were also affected by it.
Economists warn that raising the minimum wage can have some negative effects. Higher labor costs can mean higher prices, and lead employers to abolish jobs. But the gain -- not least in fairness -- would surely be greater than these scattered losses. Of the people in this country ages 22 through 64 who are officially poor, about half now work in any given year, and an eighth work 50 to 52 weeks full-time. They cannot make it on what they are paid.
The economy will not pull them out of poverty. This is now the fourth year of recovery, the unemployment rate is still 7 percent, many labor markets are weak and wages are barely keeping even with inflation. The thought in the administration in the last few years has been not to raise the minimum wage, but to create a further exception to it -- a youth subminimum -- in hopes of driving down teen-age unemployment. The threat of a subminimum has led organized labor and sympathizers in Congress to back away from the subject entirely. But it is time for them to try their hand. Congress at least should be willing to help the working poor help themselves.