Louisiana's Board of Elementary and Secondary Education has just come out with "report cards" for Louisiana's public schools, basing the grading, on LEAP scores, achievement test scores and on attendance and dropout rates. While Louisiana's dropout rate is near the bottom in the U.S., it is encouraging to see that schools will be rewarded for cutting their dropout rates. As we in Louisiana attempt to cut our dropout rates, Congress is close to making that task more difficult.

Republicans and Democrats in Congress are on the verge of making a deal that would raise the minimum wage from its current $5.15 an hour to $6.15 an hour, spread out over two years. Now think about that high school junior who doesn't care much for school (I would guess that the high school junior you imagined has plenty of company). He may be contemplating quitting school and getting a job, but either option is about the same to him, but for the moment he is leaning toward staying in school, even though he could make $206 per 40-hour week at a minimum wage job.

Now think about that young man faced with roughly the same choice, but with 19% more pay per week, if the minimum wage were raised to $6.15. In many cases, the extra $160 a month more is significant to change his mind. That minimum-wage increases lead to higher dropout rates is exactly what Texas A&M economist Finis Welch found. Now that's a revelation, higher wages attract people into the workforce.

Another interesting bit of research on the minimum wage is from several economists associated with the National Bureau of Economic Research, John Abowd, Francis Kramarz, Thomas Lemieux and David Margolis (an overview of their work can be found at www.nber.org/digest/apr98/w6111.html). They examined the effects of the minimum wage in France and in the U.S. In 1994 the French minimum wage was more than the equivalent of $6.50.

What Abowd and company did was look at the increases in the minimum wage in France (after correcting for inflation) and the decreases in the minimum wage in the U.S. (after correcting for inflation). They examined work records of French men ages 25 to 30 who were working before a minimum-wage increase at wage rates between the old minimum wage and the new wage. If we did that in the U.S. for the upcoming increase in the minimum wage, we would select those who are now making between $5.15 an hour and $6.15 an hour. They found that for every 1-percent increase in the minimum wage their probability of holding onto their jobs fell by almost 5 percent--minimum-wage increases price some workers out of jobs.

As proponents of higher minimum wages have pointed out, inflation has eroded the buying power of the minimum wage. While the dollar amount of the minimum wage has increased over the years, minimum wage has not kept up with inflation. Since the minimum wage has fallen (in buying power) Abowd and company did just the opposite with young U.S. workers. They looked at workers who earlier couldn't find jobs before inflation took its toll on the minimum wage. They found that for every 1-percent decrease in the minimum wage due to inflation, workers chances of getting hired increased by more than 2 percent--minimum-wage cuts price young workers into jobs.

The minimum wage bill is being tied onto a Republican-backed measure to make it tougher to declare bankruptcy. This is particularly ironic since one of the leading causes of bankruptcy is the loss of a job. In other words, Congress is about to put some workers out of jobs, pushing them into dire financial difficulties, and at the same stroke make it more difficult for them to file for bankruptcy.

While minimum wage increases the number of high-school students who drop out, it makes getting a job and keeping it that much more difficult. It is no wonder then that the 1990 census showed that in Louisiana more than 70 percent of high school dropouts were out of work.

Let's hope that our school districts will come up with creative and effective ways of cutting our dreadful dropout rates. We know that they will get no help from Congress.

More on dropouts

Too many people tell high school students that a GED is as good as a high school diploma. The research I have seen over the years suggests that it isn't. In terms of incomes, those with GED's with no further education or training and those dropouts without a GED, on average, earn roughly the same incomes, which is significantly lower than what high school graduates earn. Of course, a GED will get one admitted to open-enrollment colleges and vo-tech schools, but it is that further training that is key to higher earnings. Having a GED does say that the person can do high school level work. But a high school diploma says that the person can do the work and doesn't give up. Given the choice, most employers will hire the high school graduate.