During the same period when the federal government was extending the minimum wage into new industries, Congress created and expanded social welfare programs such as food stamps and other basic welfare benefits. These programs insulated low-skilled workers who were being priced out of job opportunities because they did not qualify for positions that were newly covered by the minimum wage. In 1996, Congress substantially reduced the size of these federal welfare programs. Thus, in 2001,Congress will be debating a national minimum wage hike that will affect low-skilled people who have dramatically fewer options if they cannot find work. Welfare reform has altered the minimum wage debate in ways that were unanticipated.
Research proves that higher mandated wages reduce employment opportunities for the least skilled.
When Members of Congress next vote on a minimum wage hike, they will be voting on a policy that is different from any wage mandate for entry-level jobs considered in the past. This distinct shift in the environment demands that Congress adopt an entirely new perspective on the minimum wage. Having been given the responsibility to bring welfare clients into the work force, governors need the flexibility to adapt their minimum wage policies to the local, economic, demographic and development needs of their states. Most federal labor laws have recognized some state involvement and flexibility in setting area standards. Without a shift in federal policy, states will find their local welfare reform efforts stymied by federal law.