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GIVE MORE VALUE TO THE ERODED MINIMUM WAGE

With Republicans pushing a tax-cut bill that does virtually nothing for the working poor, it's clearer than ever that the only way to make work pay for those at the bottom of the ladder is to make work pay more.

That's what Sen. Edward Kennedy wants to do with a bold multiyear plan to restore all of the purchasing power that the minimum wage has lost to inflation over the years.

The plan is sure to be controversial, given the huge fight over the hike in the minimum wage last year -- the first time it was raised since 1989.

While welcome, the 1996 action -- hiking the hourly minimum from $4.25 to $4.75 last fall, with another 40-cent increase due Sept. 1 -- did not give low-wage workers the buying power they had two decades ago.

Kennedy would remedy that with a bill that would hike the wage floor by another $2.50 over the next five years, bringing it to $7.25 at the end of that time. There would be 50-cent increases in the first three years, followed by 30-cent increases in the final two years.

The increases sound large, but that is only because the minimum wage has been allowed to erode in value. The Kennedy bill would be playing catch-up.

The increases would help low-wage workers recover some of the ground they've lost as inflation ate away at the minimum wage. Congress did not make the adjustments necessary to keep up with it.

Kennedy, D-Mass., is not going into the fight unarmed. His call for a living wage for those who work every day and play by the rules comes on the heels of an analysis of last year's hike conducted by the Economic Policy Institute, a liberal think tank.

Opponents of hiking the minimum wage invariably protest that it will force employers to reduce work forces and end up hurting the poor rather than helping them. But the institute's analysis shows this hasn't proved to be true.

The think tank looked at the employment rates of teens and young adults -- cited by critics as the primary victims of any minimum-wage hike -- in the six months before and after the minimum wage increase took effect last Oct. 1.

It found a 46.6 percent employment rate for teens before the wage hike took effect and a 40.8 percent employment rate in the six months afterward. However, that falloff reflected traditionally lower teen employment in the fall as students who worked during the summer returned to school.

Looking at the same period a year earlier to get a valid comparison, the institute found that the 5.8 percent drop in teen employment after the minimum wage rose was actually less than the 6.9 percent drop that had occurred during the same period in the year before the wage was hiked.

"So, after controlling for the seasonal employment effect, the data suggest that teen-age employment actually increased after the minimum wage rose," the study reports.

It isn't clear what trends caused that increase. But what is apparent is that hiking the minimum wage did not hurt employment as critics had predicted.

Kennedy's current bill would make work pay off for more poor people and provide more of an incentive for some to leave welfare more quickly. And it would put money in the pockets of those who are not likely to gain anything from congressional tax cuts and credits that low-income workers don't earn enough to receive.

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