An increase in the federal minimum wage is necessary to bring low-income workers up to a decent standard of living and would not significantly harm the economy, the Senate Labor and Human Resources Committee was told yesterday.
"Our calculations suggest that estimates of large job losses and dire consequences to the economy as a result of raising the minimum wage do not stand up to scrutiny," said University of Pennsylvania economics Prof. F. Gerard Adams, one of four witnesses to testify about a proposed increase in the minimum wage.
Two of the witnesses disputed Adams' testimony, asserting that raising the minimum wage will bring about the loss of hundreds of thousands of jobs and raise the cost of goods and services to consumers.
Yesterday's testimony came as part of a series of hearings being held to assess a bill introduced in March by committee Chairman Edward M. Kennedy (D-Mass.). The House and Senate are considering a plan that calls for raising the wage incrementally from its current level, $3.35 an hour, to $4.56 an hour over the next three years and eventually tying the wage to one-half of the average hourly wage as determined by the Bureau of Labor Statistics.
The Reagan administration has opposed the bill since its introduction, according to Department of Labor spokesman Paul Williams. President Reagan has not indicated whether he would veto the bill if passed.
In yesterday's testimony, Adams told the committee that a study conducted according to economic research methods used by the government found that the proposed wage increase would raise inflation by no more than 0.2 percent annually and would increase the unemployment rate by less than 0.1 percent.
"This is a small price to pay for the benefits . . . of reestablishing the traditional relationship between average wages and the minimum wage," he said.
John R. Glennie, vice president of a Washington economic consulting firm, told the committee, however, that research done for the Retail Industry Task Force on the minimum wage found that the proposed increase would eliminate 880,000 jobs by 1990, as much as 41 percent of them in the retail industry.
Charging that the proposed increase would "undermine" all the objectives the bill's proponent's say it will achieve, Glennie said the increase will not help alleviate poverty. A large percentage of minimum wage-earners are from families well above the poverty level, he said.
Nor would the proposed increase help those workers who keep their jobs, Glennie said. "Workers who remain employed will likely see reductions in fringe and other nonwage benefits, including training opportunities, as total personnel costs are brought back into line with sales revenues," he said.
Glennie and UCLA economics Prof. Finis R. Welch said past minimum wage hikes have had mixed successes and have often led to particularly serious unemployment among blacks and teen-agers.
The minimum was increased to $3.35 in 1981. Since then, the purchasing power of the average minimum-wage worker has shrunk by about one quarter because of inflation, according to statistics provided by Adams. The minimum wage is 34 percent of the average hourly wages in manufacturing, as compared with 53 percent in 1968 and 45 percent in the 1970s, the statistics show.
Economist David H. Swinton of the Southern Center for Public Policy in Atlanta supported Adams' position that an increase is necessary if the United States is to continue its tradition of decent working standards.