Legislation to once again increase the minimum wage is being pushed by Sen. Ted Kennedy, D-Mass., and has the full backing of the Clinton administration. This legislation is being proposed despite studies that clearly outline the negative impact of the most recent minimum-wage increase. After the wage increases, the annual net increase in jobs was significantly lower than in the two years prior to the mandated wage increases.
The Bureau of Labor Statistics reports that eating-and-drinking places added a net 256,400 jobs in 1994 and 276,400 jobs in 1995. Then, according to the bureau, job growth in the industry slowed dramatically - a net increase of 145,200 in 1996 and 105,200 last year.Perhaps to some this empirical data is black and white, numbers on paper. But the experiences of small-business owners - individuals who have met a payroll and made the difficult decisions to lay off workers - ought to drive the message home.
Earlier this year, a group of small-business men and women attended a news conference with Senate Republican leader Trent Lott of Mississippi and Sen. James Jeffords, R-Vt., chairman of the Senate Education and Labor Committee. Harriet Cane, owner of the Sweet Life cafe in Marietta, Ga., was among those who "put a face" on the issue.
Cane's cafe employed as many as 16 workers (all were teenagers or working mothers) before the last minimum-wage increase. She now employs nine. To raise her senior employees above the new minimum meant she would have to increase her monthly payroll by $570, not including payroll taxes, Social Security, Medicare, unemployment insurance and workers compensation. The minimum-wage increase forced her to reduce employee work hours and to increase her personal workload by 15 hours. Cane also needed to trim outside costs. She is now mopping her restaurant's floors two weeks each month, doing her accounting and all of the restaurant laundry. In the words of Cane, another increase in the minimum wage "will shut my doors."
The experiences of Cane are familiar to thousands of small-business owners across America. Nevertheless, those arguing against increasing the minimum wage run the risk of being labeled indifferent or stingy. These labels are unfair and unjust and are hurled about by individuals who choose to ignore economic reality.
The net result of the last minimum-wage increase, which came less than eight months ago, has been job loss and slower job growth, according to the restaurant-industry survey and the Bureau of Labor Statistics. At a time when Congress and the Clinton administration are encouraging welfare-to-work solutions, it makes no sense to hamper the ability of small businesses to create good, starting-wage jobs.
If the president and his allies want to help Americans working at the minimum-wage level, they might start by reducing the federal tax burden on minimum-wage workers.
On Feb. 12, President Clinton told the American people that he wanted to "join the chorus of those who believe we should raise the minimum wage." The minimum-wage issue isn't about melodies. It's about economics, tough decisions and people who can't get a job. The president needs a new song sheet.