ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, February 17, 1996 TAG: 9602190002
SECTION: EDITORIAL PAGE: A-9 EDITION: METRO
SOURCE: BO CHAGNON
IN HIS JAN. 5 commentary, ``Raise will hurt the unskilled,'' Norman Brinker claims, ``I may have learned more than most people [about the effects of raises in the minimum wage], having created more than 1.5 million jobs in the last 35 years.'' How could he learn so much when he hasn't bothered to check the facts?
He claims: ``The truth is, labor costs have been legislated ... far out in front of inflation and employee productivity.'' Have they?
The Statistical Abstract of the United States, published annually by our federal government and available in my local library, lists the legislated minimum wage, the consumer price index and the productivity index. Using several volumes, I prepared a chart dating back to 1950, and calculated values for the buying power of minimum wage and its relative value compared with inflation and productivity.
Contrary to Brinker's ``truth,'' the chart reveals that minimum wage, compared with inflation and employee productivity, is at record low levels. By 1993, minimum wage could buy less than 40 percent of its inflation and productivity value for 1956, its best year since 1950.
He chides President Clinton for ``using 1956 as a starting point for comparison, a year when Congress set the wage even further ahead of inflation than usual.'' A Freudian slip, perhaps? A peak year for minimum wage compared to inflation and productivity was 1956, but not a peak year for minimum wage compared only to inflation. That peak was 1968. Clinton is being conservative if he chooses 1956 and talks only about inflation. (It was Brinker who was kind enough to remind us about the effects of productivity gains.) If Clinton chose 1968, he could correctly say that minimum wage is in the vicinity of only 60 percent of a prior inflation-adjusted value.
Brinker also reminds us of the Fair Labor Standards Act passed in 1938, and claims that experience has proved false the arguments in its favor - that a minimum wage would ``help the underpaid workers of our country, reduce the relief rolls and spread employment.'' He asks us to look at the relationship between minimum wage and unemployment. So I did.
In 1938, unemployment was 19 percent. In the following six years, unemployment declined steadily to a low of 1.2 percent. It appears that passing the Fair Labor Standards Act did reduce the relief rolls and spread employment.
But taking a broader look at unemployment since 1938, the three low points came during World War II, the Korean and Vietnam wars. Unemployment has much more to do with other factors than the relative position of minimum wage. The highest unemployment rates since the Depression were in 1982 and 1983, the fourth and fifth years of consecutive decline in the buying power of minimum wage. But that doesn't prove much. And neither does the observation that after six more years of decline in buying power for minimum wage, unemployment reached a post-Vietnam low.
In reality, the minimum wage has little impact on the unemployment rate, but it does provide help for our country's underpaid workers. The real truth is: Top corporate wages have risen far out in front of inflation and productivity, while underpaid workers have been squeezed. One outcome is that welfare benefits, which are defined as goods and services, and therefore ``increase'' with inflation, now surpass the value of a minimum-wage job. Gov. George Allen says providing a minimum-wage job for someone on welfare is ``a hand up, not a handout.'' That is a misnomer. It's actually a push down, not anything handy at all for the poor. Failure to raise minimum wage has been one of the major factors converting welfare as a safety net to welfare as a cycle of dependency.
Brinker claims that with the food-service industry's automated equipment, ``you only need one skilled employee to operate each machine instead of the three or four lesser skilled people who were previously employed.'' Wait a minute. Short-order cooks are required to prepare any item on the menu - or, rather, several items at the same time. He wants me to believe that loading and unloading a ``sushimatic'' (a Brinkerism, I believe) requires higher skills? Even if the task is mainly physical, was my father, who packed quarts of ice cream in the '30s, thereby ``lesser skilled'' than today's youth who load half-gallons of ice cream into supermarket freezers?
Brinker would have us believe that raising minimum wage from $4.25 to $5.15 an hour would hurt the unskilled, because people with better education or skills will be willing to accept jobs, creating ``an even larger pool of job applicants.'' I thank him for such a rosy forecast. Able-bodied folks would get off welfare, pleasing the conservatives; availability of skilled labor would rise, pleasing employers; and we would begin to help underpaid workers, pleasing the liberals. The employment level, as we've seen, would be unaffected.
And yet, Brinker opposes raising the minimum wage. Shall we trust him for what he learned creating ``more than 1.5 million jobs in the last 35 years''? Shall we check the facts?
The Value Line Investment Survey, also available at my public library, reports that his company, Brinker International, ``has about 37,500 employees.'' So where are the other 1,462,500 jobs? It seems he has fudged all the facts.
And yet, I think his 35 years of experience has taught him something about minimum wage. I think he has learned that increasing top corporate wages can be accomplished by decreasing minimum wage. His commentary, pretending to protect the ``unskilled,'' is actually an attempt to justify increased exploitation of underpaid American workers.
Bo Chagnon of Roanoke is a performing artist and songwriter.
LENGTH: Medium: 98 linesby CNB