[Congressional Record Volume 142, Number 67 (Tuesday, May 14, 1996)]
[Extensions of Remarks]
[Pages E795-E796]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              RAISING THE MINIMUM WAGE HAS TOO MANY COSTS

                                 ______


                           HON. WAYNE ALLARD

                              of colorado

                    in the house of representatives

                         Tuesday, May 14, 1996

  Mr. ALLARD. Mr. Speaker, with the political season winding into high 
gear, Republicans and Democrats are facing off over another highly-
charged issue: raising the minimum wage. As the rhetoric and 
accusations fly, let's not lose sight of the real goal at hand: to put 
more money in our workers' paychecks.
  Some people think we can do that by boosting the minimum wage by 90 
cents in 2 years. I think we can raise take-home pay by reducing the 
tax burden on our citizens in a number of ways, foremost by balancing 
our national budget. Another boost would be the $500-per-child tax 
credit.
  The effects of raising the minimum wage have been analyzed by 
countless economists, and the results vary widely, often according to 
the political leaning of the experts. We have to ask ourselves what 
risks are we willing to take, and do the benefits outweigh them?
  After looking over different estimates and analyses, I am concerned 
that raising the minimum wage will have more negative effects.
  I know firsthand the effects of raising the wage. When I owned my 
veterinary clinic, I had to let go of a part-time worker when the wage 
was increased. I know other small business owners will not be able to 
maintain their current levels of employment if the wage is raised.
  Instead of earning an extra $36 a week, some workers will be laid off 
and end up earning nothing, or have their hours cut and earn less.
  Raising the wage is also likely to force owners and managers to raise 
wages at other levels as well. Unless they keep salaries proportionate, 
owners may sow worker discontent and salary inequity. Raising 
everyone's salary, however, could lead to an inflationary spiral, and 
offset the gains made by increasing the bottom wage.
  A number of people in the service industry are likely to be laid off 
as well. Instead of paying people the minimum wage to pump gas, for 
example, we now rely on self-service. I can see this happening in other 
industries as well, such as cleaning and lawn care, and even such 
simple jobs as washing animals in a pet hospital.
  Although small businesses and the private sector are going to be hit 
by a minimum wage increase, they are not the only ones who will feel 
the effects. One reliable study estimates that State and local 
governments will have to pay an additional $1 billion from 1996 to 2000 
in salaries if the increase is approved. Unless Federal assistance is 
provided to offset these added expenditures, Congress will be forcing 
another unfunded mandate on the States in violation of a new law.
  Who makes minimum wage? In 1994, roughly 4.8 million workers were 
paid at or below $4.25 an hour. All these workers were over 16, and 63 
percent of them were over 20. Of these, 58 percent were women and 47 
percent of them held full-time jobs. Today, about 12 million people 
make less than $5.15 an hour.
  In fact, a vast majority of economists agree that the Democrat plan 
to raise the minimum

[[Page E796]]

wage will hurt the people most in need: low-skilled workers, women, and 
inner-city residents.
  Historically, we can see how raising the minimum wage affects the 
economy and unemployment.
  In the past 20 years, the minimum wage has been increased nine times, 
each time phased in over 2 years. During every 2-year period the wage 
was increased since 1973, unemployment also increased. This happened 
regardless of whether the economy was growing or shrinking.
  The only exception was in 1977-79, when the economy grew at a rate of 
5.6 percent. We are looking at a 21-percent increase in the minimum 
wage over 2 years now. The economy's annual rate of growth was 2.8 
percent in the first quarter of 1996, and 2 percent for all of 1995.
  That kind of growth doesn't appear strong enough to support such a 
high wage increase without causing more unemployment.
  On the surface, raising the minimum wage might look like a nice thing 
to do for those workers at the bottom of the pay scale. But only on the 
surface. The potential effects on the economy overall, not to mention 
on the people we are purporting to help, could be devastating.
  Instead of trying to score easy political points, we should institute 
policies that will have a lasting, positive effect on everyone in the 
economy. Balancing the budget would have the most profound lasting 
effect, by lowering interest rates on homes, cars, and credit cards.
  Furthermore, we can also approve the $500 per child tax credit, 
marriage penalty relief, adoption tax credits, and reduce the Federal 
gas tax.
  That's the kind of relief we need, and the kind of relief President 
Clinton has vetoed.

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