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ers affected by this bill, unforunately, will, under the pressure of today's economy, lose their jobs or have to work shorter hours.
Mr. Williams. The Senator comes from a State that is known for its institutions of higher learning. I had the benefit of learning my economics at Oberlin. I have learned enough to study those who are economists and every economist has said that no increase in the minimum wage has caused unemployment.
Mr. Taft. We had testimony exactly to that point from Dr. Adie of Ohio University.
Mr. Williams. They did not say that other increases in past years did. They were suggesting that this bill would. Dr. Adie was projecting, but it was not on the basis of experience.
Mr. Tart. He and the other economists on the panel agreed that as a classic economic opinion on the subject of minimum wage increases generally-not merely this particular bill. He was talking about what economists generally feel about a minimum wage increase. I am not saying we should not have one, but we have to recognize it is inflationary in certain aspects.
Mr. Williams. Well, we will deliberate overnight on our resources here and come in tomorrow morning and compare authorities. I think that on the authority that has come to us, we have relied heavily on the Department of Labor over the years on this one question of the relationship between increasing the minimum wage and unemploy. ment following that increase. My conclusion is drawn from the
Mr. Tarr. Is the Senator talking about unemployment or inflation!
Mr. WILLIAMS. Unemployment and also inflation. These are two of the factors that have been presented to us, that unemployment does not follow an increase in the minimum wage.
Mr. Taft. Unfortunately, unemployment of youth is clearly shown from the figures cited, and can be affected by an increase in the minimum wage. This is a specialized group. I have said that I do not think the unemployment of youth particularly affects adult unemployment.
As a matter of fact the 1969 Annual Report of President Lyndon Johnson's Council of Economic Advisers warned about the unemploy. ment effect of excessive minimum wage increase, as follows:
Although increases in the minimum wage are likely to be reflected in higher prices, society should be willing to pay the cost if this is the best way to help low-wage workers. Yet, excessively rapid and general increases in the minimum can hurt these workers by curtailing their employment opportunities.
Since 1956, the federal minimum has gone up about in line with average hourly compensation, while coverage has progressively expanded to cover lowwage industries. In considering the future rate of increase for minimum wages, careful scrutiny should be made of the possibility of adverse employment effects. The benefits of higher minimums should be weighed against alternative ways of helping low-wage workers.
Mr. WILLIAMS. Mr. President, I ask unanimous consent to have printed in the Record a table showing the seasonally adjusted unemployment rates of persons 16 to 19 years of age and 20 years and over on the effective date of changes in the minimum wage under the Fair Labor Standards Act, and 1 year before, 6 months before, 6 months after, and 1 year after such changes."
There being no objection, the table was ordered to be printed in the Record, as follows:
SEASONALLY ADJUSTED UNEMPLOYMENT RATES OF PERSONS 16 TO 19 YEARS OF AGE AND 20 YEARS AND OVER ON THE EFFECTIVE DATE OF CHANGES IN THE MINIMUM WAGE UNDER THE
FAIR LABOR STANDARDS ACT, AND I YEAR BEFORE, 6 MONTHS BEFORE, 6 MONTHS AFTER, AND 1 YEAR AFTER SUCH CHANGES, UNITED STATES, 1950–73
Unemployment rate, 20 years and over
Effective date of change
Unemployment rate, 16 to 19 years
change before change date of change after change
1 year after 1 year before 6 months On effective 6 months
change change before change date of change after change
1 year after
Jan. 25, 19501
Source: U.S. Department of Labor, Bureau of Labor Statistics, "Employment and Earnings."
1 Change in minimum rate for previously covered employees only. ? Change in minimum rate for previously covered and newly covered employees. 3 Change in minimum rate for newly covered employees only.
Mr. Williams. I point out that Secretary Hodgson said in his 1972 report:
On balance, the wage increases granted to 1.6 million workers to $1.60 minimum wage standard had no discernible adverse effect on overall employment levels relatively little impact on overall wage or price trends.
This was Secretary Brennan's predecessor, but I will say that he is the custodian of the most comprehensive national records on the figures dealing with employment and price trends.
Mr. Taft. As I pointed out earlier, we were dealing with a particular time and with a particular economic situation at that point. We were in a war-time economy.
Also, the Secretary of Labor's 1972 report to Congress, pursuant to section 4(d) of the Fair Labor Standards Act, recognized the need to carefully consider the inflationary impact of minimum wage increases, cautioning against the excessive increases proposed in S. 1861.
Mr. Williams. We have considered them carefully and they are not excessive. I do not think I am going to convince the Senator from Ohio, and, conversely
Mr. Taft. This discussion has been going on for some months, and I am delighted to carry on the colloquy with the chairman. I think the colloquy started with the discussion as to why there might be a veto; and I would like to come back to that point. I have learned nothing in the last few days that does not persuade me that that veto is a very likely possibility on a number of points.
Nr. Williams. That is very likely.
Again, if we try to guess every element that might go into a veto I doubt that we would get our job done as we should. We are a branch of the Government and have our job to do; and if it is vetoed, we know that we have to take other action.
Mr. Tarr. I do not completely agree. I feel that there is a duty on the part of the legislative branch and the executive branch to try to solve problems in a spirit of compromise, not to make a political issue by putting a bill on the desk of the President which he then vetoes.
Mr. WILLIAMS. We are not in quite that close a discussion or negotiation process once the bill is here on the floor. That precedes. But the negotiations here toward meeting the possibility of a veto are not as they were earlier, before we got to the floor of the Senate.
Mr. Tarr. I do not want to say that the reasons I have given would be the only reasons that might result in a veto, and I think the veto would be sustained. There are other provisions.
While I go along with it—and the Senator from Colorado has-I think the Senator from New Jersey knows that this was indicated as an area of disagreement
Mr. WILLIAMS. I do not think it is the rate of the extended coverage. It seems to me that the major problem is the youth differential, and here it is just a matter of adjusting no further. We will vote up or down on that issue.
The problem is that the substitute of the Senator from Ohio takes the whole thing and gives us one vote on all these propositions, and that is one of the regrets I have about that approach.
Mr. Taft. Am I to understand that the chairman, would support a separate amendment offered if the substitute should fail, regarding the youth differential question?
Mr. WILLIAMS. I have adjusted my thinking on the student differential. We now have an accommodation here, and we have extended the youth differential to students at Institutions of higher learning. This is an extension of a differential, and that is in the bill I have introduced with Senator Javits.
The Fair Labor Standards Act currently permits the employment of full-time students at a wage rate not less than 85 percent of the applicable minimum wage.
This subminimum rate applies to part-time employment during school time or full-time employment during vacations and holidays in retail and service establishments and in agriculture.
The subminimum wage can be utilized by employers upon the issuance of a certificate by the Secretary of Labor.
According to the Department of Labor, almost 50 million hours were authorized for the employment of full-time students at subminimum rates by certificates in effect on June 20, 1972.
A 1970 Department Analysis of Certificate Utilization shows that only 42 percent of the man-hours authorized at 85 percent of the statutory minimum wage were used.
Even more significantly, the analysis shows that one-fifth of the establishments holding certificates did not use them. Evidently, employers did not view the certificate application as a burden when they applied even when they had no immediate need.
Furthermore, the Department of Labor estimates that less than 2 percent of the applications for student certificates were denied in fiscal 1972.
S. 1861 expands the full-time student certificate program to apply to educational institutions, thereby increasing student employment opportunities.
The bill retains the certification procedure because it has proven to be a proper mechanism for insuring that students will not be used to displace other workers.
The youth subminimum contained in the amendment under discussion would violate the basic concept of the act which represents an "economic charter" for the lowest paid workers.
The only exceptions to the wage base concept have been full-time students, learners, apprentices, and handicapped workers.
To achieve its objective the minimum wage must be an irreducible minimum below which wages for workers will not be allowed to fall.
For this reason, the rate has always been set conservatively below the level which could be justified by economic data.
For example, the minimum wage rates specified in S. 1861 are considerably below the $3.55-$3.70 hourly rate which the Bureau of Labor Statistics “lower budget” would have required in autumn 1972.
The $2 an hour minimum wage rate which is set for the effective date of S. 1861 will mean wage increases for only 71/2 percent of all covered workers.
The $2 an hour minimum rate is only half of the average hourly earnings for production workers in manufacturing.
Obviously, such a rate is intended only for the young, the unskilled and the untrained.
Frequently these workers are members of minority groups. Mature, skilled and trained workers are paid considerably more.
In this period of unacceptable unemployment, we should not, in my judgment, jeopardize the employment of adults by a subminimum wage rate for young people.
Secretary of Labor Brennan expressed his views on this problem at the hearing on his nomination.
The Secretary stated :
I am aware of the problem of youngsters, many of whom have to pay their way through school, but I am fearful if we have a difference of wages with the youngsters and their fathers in the area where minimum wage is so important, this could create problems.
If they are going to perform the same duties, the same responsibilities, I do not see why there should be any difference in the rate.
In the hearings on such proposals in 1971, former Secretary of Labor Hodgson said:
I recognize that there may be some concern that a lower minimum wage for young people under age 18, for full-time students, and for young job-starters may reduce employment opportunities for older workers.
There may be some risk in marginal cases.
It is well known that the minimum wage worker is typically regarded as a “marginal” worker.
The Secretary's 1971 statement is hardly reassuring for the minimum wage employee who must bear the risk of losing his job because of a youth subminimum wage.
The proposed amendment would make it the Government's policy to move unemployed 16 to 17-year-olds to the front of the hiring line by allowing employers to pay them substandard wages while placing older unemployed workers at a competitive disadvantage, even though their problems of getting jobs once unemployed are far more serious in family and social terms.
Such a policy simply makes no sense.
The argument that an increase in the minimum wage rate increases youth unemployment is unconvincing.
Although certain economists have concluded that a minimum wage increase would adversely affect teenage unemployment, others have citicized such studies on various grounds.
However, the massive study prepared by the Department of Labor in 1970 concluded that they were unable to establish any relationship between minimum wage increases and youth unemployment.
Mr. Taft. I am glad that the Senate has studied this problem. But I point out that the problem of youth unemployment is not one that only relates to fulltime students. It also relates to people who are not in school.
Mr. WILLIAMS. I do not know if it is this way in the State of Ohio, but I know that in the State I have the honor to represent, the State of New Jersey, in those areas where we have the highest levels of youth unemployment, we also have our highest levels of adult unemploy. ment.
It seems to me that there is a grave risk in going with discriminatory, cheap labor offered to youth. It would encourage teenagers to