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1976/05/10 - Economic Policy Board
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1535167
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1976/05/10 - Economic Policy Board
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James M. Cannon Files (Ford Administration)
James Cannon's Meetings Files
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Minimum wage
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The original documents are located in Box 59, folder "1976/05/10 - Economic Policy Board"
of the James M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 59 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEETING
AGENDA
8:30 a.m.
Roosevelt Room
May 10, 1976
PRINCIPALS ONLY
1.
Administration Minimum Wage Policy
Labor
FORD ABRACK
May 7, 1976
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE
Proposed Agenda
Monday, May 10, 1976 (Principals Only)
1. Administration Minimum Wage Policy
Labor
Tuesday, May 11, 1976
No EPB Executive Committee meeting
Wednesday, May 12, 1976
No EPB Executive Committee meeting
Thursday, May 13, 1976
No EPB Executive Committee meeting
Friday, May 14, 1976
No EPB Executive Committee meeting
B. FORD 1
U.S. DEPARTMENT OF LABOR
OFFICE OF THE SECRETARY
WASHINGTON
DRAFT
May 6, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
W. J. USERY, JR.
Subject: Administration Minimum Wage Policy
The House Subcommittee on Labor presently plans to mark
up a minimum wage bill in May. At that time the Administra-
tion will be pressed to take a position. Last October,
Congressman Dent introduced H.R. 10130, which would increase
the basic minimum wage (now $2.30) to $2.65 on July 1, 1976
and to $3.00 on January 1, 1977. Thereafter, the bill would
index the $3.00 minimum wage upward twice yearly by percentage
increases in the CPI plus a one percent add on at each adjust-
ment. However, both Congressman Dent and the AFL-CIO are
currently giving greater attention to a different proposal,
which has not been introduced formally. This proposal would
increase the minimum wage to $2.65 on January 1, 1977 with
annual increases thereafter so as to maintain the minimum,
in dollars and cents, as a fixed percentage of gross average
hourly earnings of non-agricultural workers. No specific
percentage has been proposed at this point.
Proposals to increase the minimum, and especially proposals
to index it, will be controversial. The minimum wage has
always been an emotional issue for rank-and-file workers but
the economics profession believes strongly that increases in
the minimum wage decrease employment opportunities, especially
for certain groups like the elderly, the handicapped, and
youth. It will be almost impossible for the Administration
to avoid taking a clear position on the issue.
FORD : LIBRARY
OPTIONS
Option 1: Oppose any increase at the present time.
Those who are concerned about the employment impact of the
minimum wage point out that a constant minimum would exper-
ience erosion over time with respect to average earnings
and would thus have less and less impact. However, the
minimum has been increased with some regularity since it was
first enacted in 1938, and the Congress is not likely to
allow it to remain constant for very long. It will be
argued that the most recent increase to $2.30 on January 1
of this year had been eaten up by inflation before it became
effective (the CPI had increased 15.4% percent since the
effective date of the 1974 amendments but the $2.30 figure
represents an increase of only 15% percent in the minimum
wage since that time.) Opposing any increase is very likely
to put us in the position of having to veto yet another bill
with which the little person identifies yet which does not
have any impact on Federal expenditures.
Option 2: Favor a legislated increase but oppose indexing.
This would permit the President to recognize the impact of
inflation on the minimum wage while avoiding the relatively
controversial step of endorsing indexation. However, a
somewhat larger dollar and cents increase is likely if
indexation is not adopted. Depending on the course of the
economy over the next year or so a larger legislated increase
might be more inflationary and have worse employment effects
than indexed increases would have.
Option 3: Favor indexation.
This would permit the President to take the initiative on
something which is likely to happen anyway. Historically,
legislated increases have resulted in approximately the same
level of minimum wage that indexing by hourly earnings would
have, and substantially more than indexing by the CPI (Tab
A). There is some risk of future legislated increases on
top of the indexed minimum, although the mere fact of
indexation would undercut political support for such increa-
ses. If the Administration adopted this option, it could
either favor a particular approach to indexation or remain
flexible and try to work something out with the committee.
LIBRARY GERALD R. FORD
- 3 -
Option 4: Favor indexing, but only in exchange for a link to
the unemployment rate.
This option would recognize the need to increase the minimum
in order to keep pace with increases in real earnings, but
would also recognize that increases in the minimum wage may
decrease employment opportunities. A formula would be
developed which would slow the rate of increases in the
minimum when the unemployment rate increased. A variety of
formulas is possible.
Option 5: Favor indexing, but only in exchange for informal
agreement that the Labor Department would undertake
some experimentation and demonstration programs
with respect to the effect of the minimum wage on
employment levels of certain groups.
This option would permit the President to be visibly asso--
ciated with the most popular minimum wage proposal presently
on the Hill but would also ensure our ability to engage in a
responsible program of experimentation within the present
statutory framework without opposition from labor groups.
RECOMMENDATION
Option 5
I recommend that you favor an increase in the minimum wage.
It is likely to be enacted, and you should not be in a
position of opposing another bill which seems to help
the little man--particularly one which has no direct budget
impact. Further, I recommend that you generally favor the
concept of indexation but emphasize that details are important
and the relationship between the indexed method chosen and
the dollar and cents base from which it started would deter-
mine your final position. Privately, you would indicate
that this favorable position is conditional on modest
administrative experimentation within the present statutory
framework so as better to establish the relationship between
the minimum wage and employment.
FORD is LIBRARY
EYES
ONLY
MINUTES OF THE
ECONOMIC POLICY BOARD
EXECUTIVE COMMITTEE MEETING
SPECIAL SESSION
May 5, 1976
Attendees: Messrs. Seidman, Greenspan, Lynn, Usery, Dixon
Cannon, Malkiel, O'Neill, Porter, Perritt,
Darman
1. Structural Unemployment and the Minimum Wage
The Executive Committee reviewed a series of memorandums
prepared by the Council of Economic Advisors and the
Departments of Labor and Commerce, distributed to the
Executive Committee members last week, relating to
structural unemployment, proposals to index the minimum
wage and a minimum wage youth differential. The
discussion focused on the nature of the unemployment
problem, experience rating the unemployment system,
a youth minimum wage differential, and proposals to index
and/or increase the minimum wage.
Decision
The Executive Committee requested the Department of Labor
to prepare a draft options paper on the minimum wage and
proposals to index the minimum wage for further Executive
Committee consideration and submission to the President.
=
FORD
/
BYES ONLY
RBP