Agenda - 03-05-1997 - 10c - Laserfiche WebLink

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� 3 Introduction Observers from across the political spectrum now acknowledge that real wages have declined for the majority of American workers over the last two decades. Wages for the bottom three-fifths of wage-earners have been falling since 1979, and for four-fifths of wage-earners since 1989. ' The lowest wage workers have been the hardest hit. A worker at the 10th percentile (i.e. earning less than 90%of wage earners and more than 40%) lost 17% of his or her real income from 1979-95, an hourly wage drop from $6.10 to $5.06 in 1995 dollars. Women in this category fared even worse, with wages falling from $5.82 to $4.84 per hour.' The minimum wage itself fell behind inflation from 1979-1989, losing 31% of its real purchasing power during that period. This in itself was a significant cause of declining incomes for the poorest workers. What to do about the problem of declining wages, or indeed whether to do anything at all, is a matter of heated debate. Business interests and conservative political leaders generally oppose any direct government action to raise workers' wages. The argument is that government's role should be limited to measures designed to increase business investment. This, it is claimed, will ultimately lead to gains for workers. From the political center to the left, there is support for some form of government action to address the problem. One obvious mechanism is the minimum wage. On August 2, 1996, Congress passed legislation raising the federal minimum wage to $5.15 by September of 1997. However, the real value of the minimum wage after it is fully in effect will be about $4.89 in 1995 dollars. This is still 24%below its value in 1968. The income of someone working 40 hours a week, 52 weeks a year at this wage will still remain approximately 19%below the official poverty level for a family of three. Furthermore, the political forces necessary to bring the minimum wage closer to its past real value are not in evidence. Congressional Republicans fought hard against the recent increase, filibustering in the Senate and attempting to gut the bill with amendments that, for example, excluded millions of small businesses. Only five Senate Republicans broke ranks to vote against the latter amendment that would have doomed the bill. On the Democratic side, neither President Clinton nor the Democratic Congressional leadership made any serious effort to increase the minimum wage when they had control of both I Congress and the White House in 1993 and 1994. Further action to raise the minimum wage during the next Congress seems unlikely, regardless of who controls the House and Senate. The Living Wage The decline in wages for low-income workers and the failure of the federal government to t take stronger steps to address the problem have led to efforts to raise wages through legislation at the state and local level. These efforts, commonly referred to as"living wage campaigns," have been launched by grass-roots coalitions of community organizations, religious groups and labor unions— led in many cases by the AFL-CIO's state labor federations and local central labor councils and the 1Mishel,Lawrence,Bernstein,Jared,and Schmitt,John. The State of Working America: 1996-97. Washington, D.C.:Economic Policy Institute, 1996.