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Minimum Wage
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Minimum Wage
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Records of the Office of the Chief of Staff (Clinton Administration)
George Stephanopoulos's Subject Files
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FOIA Number: 2016-0531-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Chief of Staff
Series/Staff Member:
George Stephanopoulos
Subseries:
OA/ID Number:
5846
FolderID:
Folder Title:
Minimum Wage
Stack:
Row:
Section:
Shelf:
Position:
S
22
2
2
3
10
The Minimum Wage
The Administration has promised to revisit the minimum wage after the impact of health care
reform on employers was resolved.
In Putting People First and during the campaign, President Clinton promised to index the
minimum wage to prevent a decline in its purchasing power and to "make work pay Since its
last increase (April 1991) the real value of the minimum wage has declined by 45 cents.
The Federal minimum wage is currently $4.25 an hour. The minimum wage increased to $4.25
in April 1991 and to $3.80 in April 1990. It was frozen at $3.35 per hour 1981-90.
The real value of the minimum wage is now 33 percent lower than was in 1979 If the
minimum wage does not increase again, by 1996 it will sink to its lowest real level since 1955
The recent expansion in the EITC, while very helpful, only partially offsets the erosion in the
value of the minimum wage. In the best case scenario (for a married couple with a year-round
minimum-wage earner) the EITC brings the after-tax hourly wage rate up to $5.14 in 1994 -- still
below the poverty level.
The phase out of the EITC increases the marginal tax rate for some workers, which may
discourage work. The minimum wage has the opposite effect -- it makes work more desirable.
The EITC is only claimed by about 80% of eligible families, and the EITC is generally paid
in a lump sum. The benefits of a minimum wage hike are received with every pay check.
The standard criticism of the minimum wage is that it raises employer costs and reduces
employment opportunities for teenagers and disadvantaged workers. Recent research finds no
convincing evidence of significant adverse employment consequences of moderate (e.g., $1.00
or less) increases in the minimum wage. See pages 4 and 5.
0 The youth subminimum wage that was enacted in 1989 for a three year period. Much evidence
suggests that employers very rarely took advantage of the subminimum wage.
o On a theoretical level, the minimum wage may not harm employment because some employers
will be able to fill vacancies faster and reduce turnover if there is a a moderate rise in the
minimum wage. Employers don't do this on their own because it cuts into profit. Of course, too
high a rise in the minimum could have adverse consequences for employment.
O Two-thirds of-minimum-wage workers are adults. The dramatic changes in the wage structure
the last 15 years (i.e., the rise in wage dispersion) has meant that-many prime-age workers are
earning wages at, or near, the minimum wage. The average minimum wage earner brings 40
percent of his or her family's labor income
O Wage growth for median and low-wage earners has been remarkably low in this recovery. In
1993, and so far in 1994, the median worker (as well as lower-wage workers) has experienced
a decline in his or her earnings.
O A recent study concludes that the declining real value of the minimum wage since 1979
accounts for 20 percent of the rise in wage inequality for men, and 30 percent for women.
O A $1.00 rise in the minimum wage would directly raise the pay of some 13 million low-wage
workers, and could have a "ripple" effect on another 4 million.
Last year five bills were introduced in Congress to raise or index the minimum wage.
Senators Kennedy and Sarbanes made raising the minimum wage an effective campaign issue this
year. Senator Kennedy plans to reintroduce his bill this year.
O A large majority of Republicans voted to increase the minimum wage to $4.25 in 1989
(including Newt Gingrich and Bob Dole).
A 1992 Time-CNN poll found that 74% of the public favored raising the minimum wage to
make work a more attractive alternative to welfare. Polls find that support for a minimum wage
increase is strongest among women and minorities. Polls have found that most of the public is
skeptical of claims that a minimum wage increase reduces employment. A majority of the public
even supports a minimum wage hike if they are first told that a minimum wage rise will cost
some people their jobs.
The AFL-CIO has voiced its support for a minimum wage increase. In addition, women's
groups (women currently make up 66% of minimum-wage earners), children's groups, and civil
rights groups would favor a minimum wage increase.
0 The interest groups opposed to the minimum wage (e.g., NFIB) are better organized and more
influential than they have been in the past.
The Real Minimum Wage
7
6.5
$6.29
6
$5.82
1994 Dollars
5.5
5
4.5
$4.25
4
3.5
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
Year
NOTE: Minimum wage is in 1994 CPI-U-X1 Dollars. The inflation rate for 1994 and 1995 is assumed to be 2.7 and 3.1 percent, respectively.
A. Comparison of Stores in NJ and Pa
25
20
Average Employment Per Store
15
10
5
0
Pennsylvania
New Jersey
Before
After
B. Comparison Within NJ By Initial Wage
25
20
Average Employment Per Store
15
10
5
0
Wage = $4.25
$4.26-4.99
$5.00 plus
Before
After
Figure 2.3 Average Employment Per Store, Before and After
Dice
9
A. Change in Teenage Wage Rates
0.4
0.35
0.3
Change in Mean Log Wage 1989-92
0.25
0.2
0.15
0.1
0.05
o
-0.05
O
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Fraction Earning $3.35-$4.24/hour, 1989
B. Change in Teenage Employment Rates
5
0
Change in Teen Employment Rate, 1989-92
-5
-10
-15
-20
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Fraction Earning $3.35-$4.24/hour, 1989
Figure 4.5 Interstate Patterns of wageard Employment Growth,
Strengthening the Labor Sector
A strong and viable labor sector, including trade unions, is
vital to the achievement of Summit goals of consolidating
democracy, promoting shared prosperity, and achieving sustainable
development. Labor policies are required that will foster a
healthy, educated, and secure workforce, one which is productive
and shares equitably in the benefits of economic growth.
National Actions
--Review national labor codes to ensure that the basic labor
rights of freedom of association, the right to organize and
bargain collectively, freedom from forced labor, and limitations
on child labor are adequately enshrined.
--Fully implement and enforce such codes, reinforcing labor
ministries or judicial systems as necessary.
--Adopt policies and programs that adequately prepare workers to
enter the labor market and enable them to adjust rapidly to
changing market conditions, particularly through the provision of
adequate education and training systems.
--Ensure that workforce training matches the changing
requirements of the contemporary work environment. The public
and private sectors should support programs that will provide
workers with the necessary combination of technical training,
skills, and work experience, including vocational training and
apprenticeship programs.
--Promote tripartite dialogue and the adoption of cooperative
labor management practices to improve productivity.
International Actions
Working together, governments will:
--Meet at the Ministerial level in the first half of 1995 and as
often as necessary to discuss matters of common concern relating
to labor.
--Discuss approaches to effectively maintain high levels of labor
standards in the Hemisphere to support the process of economic
integration and trade liberalization.
--Sponsor regional or other plurilateral workshops to share
experiences in what works with respect to strengthening the labor
sector, focusing on areas such as labor-management relations,
employee training, adjustment policies, and the transition of
workers from rural to urban areas.
1
--Promote a formal dialogue among worker organizations, business
organizations, and governments to improve the industrial
relations climate and productivity in the hemisphere.
--Working through the IDB's Multilateral Investment Fund,
establish a hemispheric center to provide research and technical
assistance in promoting skills training programs, encouraging new
and innovative techniques of labor-management relations,
improving productivity and enhancing global competitiveness, and
enhancing the stature and quality of services provided by
ministries of labor.
3