ECONOMIC VIEW

Published: September 28, 2003

REMEMBER the minimum wage? It used to go up regularly, but that stopped happening 20 years ago. We are now in the seventh year of the latest drought, and increasingly the states and lately a few cities are constructing their own ad hoc network of minimum wages.

Labor unions and activists for the poor gathered the signatures to put the proposition on the ballot. The cost of living is high in San Francisco, even by California standards, and while a voter initiative increased the state minimum to $6.75 last year from $6.25, the extra 50 cents is not enough to put bread on the table in that city.

Few will argue that it is. Even Arnold Schwarzenegger, for all his criticism of the high cost of doing business in California - workers' compensation is a particular target - has not said a word in his gubernatorial campaign against the $8.50 initiative or, for that matter, the state minimum. Of the 12 states with higher-than-federal minimum wages, only Alaska is above California, at $7.15 an hour.

"The point is that the federal minimum wage has eroded to the level of irrelevance,'' said Paul Sonn, associate counsel at the Brennan Center for Justice at New York University School of Law.

The center is providing legal support for the new thrust in minimum wages - the municipal minimum. Until last year, only Washington, D.C., had its own minimum, adopted in 1994 as an automatic $1 above the federal minimum.

An attempt in the mid-1990's to set up municipal minimums failed, and this effort might, too. More than 100 cities and metropolitan areas have adopted living-wage ordinances in recent years, some setting a minimum as high as $9.50 an hour. But these apply only to employees of companies that benefit from city contracts or subsidies - a small percentage of the low-wage workers in any city. A minimum wage, on the other hand, applies to every employee, and that is a tougher battle.

New Orleans tried first, and failed. The voters there authorized a $6.15-an-hour minimum last year, and the Louisiana Supreme Court declared it unconstitutional, ruling that a state law bans cities from setting wages. In Santa Fe, N.M., the city council early this year authorized an $8.50 minimum, effective in January, if a court challenge now under way does not intervene. In Madison, Wis., last week, a coalition of politicians and activists began circulating a petition to put a proposal for a $7.75 minimum on the primary election ballot in February. Separately, state officials are considering a $6.80 minimum for all of Wisconsin, which now adheres to the federal law.

The opposition to increasing minimum wages comes mainly from small businesses, particularly restaurants and hotels. They have been the biggest opponents of Senator Edward M. Kennedy's various attempts to have Congress increase the federal minimum by $1.50, to $6.65 an hour, in two equal steps over two years. When he tried in July to attach this proposal to another Senate bill, the Republican leadership yanked the entire bill from consideration.

NO one opposed to an increase argues that $5.15 an hour is adequate to keep body and soul together. It is not. The argument instead is that employers will not pay unskilled workers any more than the minimum. The problem with that argument is that employers are increasingly doing so. The evidence is in the statistics.

Back in 1981, when annual increases in the federal minimum wage abruptly halted under President Ronald Reagan, 15.1 percent of the nation's wage and salary workers earned no more than the minimum, Labor Department data show. That had fallen to 5.1 percent when the next increase, in two stages, brought the minimum to $4.15 in 1991. Eleven years later and 90 cents higher, only 3 percent of all wage and salary workers earn no more than the minimum. The majority of that 3 percent are adults, not teenagers picking up pocket money.

The point of a government-mandated minimum wage is to ensure that no one is impoverished on the job. Employers are recognizing the absurdity of paying only $5.15 an hour, and in the absence of congressional action, cities are joining states in trying to fix the problem.