The American Underclass

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more evident promise of further promotion—or not hire at all. The minimum wage, says Sociologist Riesman, is the product of "an alliance of the better situated labor unions with the liberals against the deprived and the elderly, whom people would otherwise employ for household or for city work that now doesn't get done." Adds Stanford University Labor Economist Thomas Sowell, a black: "Talk about people being unemployable is just so much rubbish. Everybody is unemployable at one wage rate, and everybody is employable at another." Perhaps not quite everybody. In a free economy, there will always be some small fraction of people who lack the skills or discipline to work. But there is a lot of work that needs doing—cleaning up parks, repairing abandoned buildings, taking part in the burgeoning service trades—at reasonable wages.

Congress has been considering a proposal to reduce the minimum wage for all teen-agers to 75% of the adult minimum, but that might just inspire employers to hire well-schooled middle-class youth at the expense of older workers. A better compromise, suggested by Harvard Economist Martin Feldstein, would be for the Government to subsidize minimum-wage payments to the youthful unemployed. Directed specifically to the underclass, the program would allow businessmen to pay a fraction of the cost for jobs that they might otherwise refuse to fill. Another wise Government investment would be to shift some federal funds to more and better mass transit, which, beyond all its benefits to the environment, would give the underclass access to all the new job opportunities in the suburbs.

Without increasing the federal budget, the Government might sensibly redirect some of its stimulative spending—a bit less for the booming Sunbelt, a bit more for the Northern and Midwestern states, where the urban underclass is concentrated. In 1975, for every tax dollar sent to Washington from the Midwestern states, 760 returned; the Northeastern states got back 860; but the South collected $1.14 and the West $1.20. One reason for the disparity is that many corporations have their headquarters in the Northeast and Midwest, from which they pay taxe based on their total national sales. But there are other factors, including the success of persuasive Southern and Western Congressmen in winning defense funds and pork-barrel projects for the folks back home.

President Carter has struck to the root of one debilitating problem by proposing his "profamily, pro-work" welfare reform bill, which aims to get people off the dole and encourage them to work (TIME, Aug. 15). By offering cash grants to the so-called working poor, it encourages underclass fathers to stay in the home instead of leaving so that their families can collect welfare. The plan offers tax incentives for those who find jobs in the private sector instead of public service. For those who cannot, it proposes to create 1.4 million positions in training programs and in service jobs such as assisting teachers, providing child care, controlling rats and escorting the aged in high-crime areas. In all, the tax incentives and jobs provisions would cost $13.2 billion—and raise the Federal Government's overall welfare bill (now including cash payments, food stamps, etc.) from $28.9 billion to at least $30.7 billion. The change seems well worth the price.

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