The MacNeil/Lehrer NewsHour

Intro JIM LEHRER: Good evening. Leading the news this Thursday, President Reagan said there is an increased possibility of a third summit meeting with Soviet leader Gorbachev. The Administration dropped a plan to sell $360 million worth of missiles to Saudi Arabia. The nation's Air Traffic Controllers voted overwhelmingly to form a new union. And a state of emergency was declared following anti government riots in Panama. We'll have the details in our news summary in a moment. Robin? ROBERT MacNEIL: After the news summary, we have major excerpts from President Reagan's news conference in Venice. Then, whether to raise the minimum wage. Assistant Labor Secretary Michael Baroody debates Congressman Barney Frank. Next, a report on a little known earthquake zone in the Midwest. And we close with a Roger Mudd essay on the Air Traffic Controllers. News Summary MacNEIL: President Reagan said today that prospects look better for an arms deal with the Soviets and a summit meeting with Mikhail Gorbachev. The President held an outdoor news conference at Venice at the end of the 7 nation Economic Summit. He was asked about the U. S. --Soviet negotiations on removing medium range missiles from Europe.

Pres. RONALD REAGAN: I hesitate to make optimistic statements -- always have. But at the same time, I can't deny that I believe there is an increased opportunity for a summit conference and an increased opportunity for actual reductions of armaments, particularly of the nuclear kind. MacNEIL: One remark by the President was hastily corrected. When asked about summit discussions on the value of the American dollar, Mr. Reagan had this to say:

Pres. REAGAN: Well, frankly, most of us believe that the dollar should remain stable. It could be within reason that there could be some lowering of the value in relation to other currencies, but we do want to control inflation -- continue to control it. MacNEIL: Shortly afterwards, with the money markets already reacting, White House spokesman Marlin Fitzwater said the President had not meant to suggest he wanted a further decline in the dollar's value. Jim? LEHRER: Mr. Reagan also talked about the Persian Gulf. He said he was pleased with the summit leaders' response to his request for support in keeping the Gulf shipping lanes open. Back in Washington today, his Administration backed off a plan to sell $360 million worth of Maverick antitank missiles to Saudi Arabia. The official notification came in a letter to the Senate Foreign Relations Committee. Sixty seven senators had signed on as cosponsors of a resolution disapproving the sale. Among them were Senators Alan Cranston, Democrat of California, and Robert Packwood, Republican of Oregon.

Sen. ROBERT PACKWOOD, (R) Oregon: I thought it was very graceful on the part of the Administration. It was clear that they were going to be defeated substantially in the Senate, substantially in the House. And I thought this was very wise on their part and they withdrew rather gracefully. Sen. ALAN CRANSTON, (D) California: The Administration hasn't made very many wise decisions lately. But they made a good one today when they backed off from a bad idea. The sale of arms to Saudi Arabia, a sworn enemy of Israel, our only certain friend, the only real democracy in the Middle East, was not a sound proposition. MacNEIL: British voters went to the polls in general election today to determine whether the Conservative Government and Prime Minister Margaret Thatcher will remain in office. Exit polling by two television networks indicated that the 61 year old leader would be returned, but with a greatly reduced parliamentary majority over the Labor and Social Democratic Alliance parties. A victory today will make Mrs. Thatcher the first British Prime Minister in history to be elected to three consecutive terms. LEHRER: Back in this country, the nation's Air Traffic Controllers have voted to form a new union. The vote was by an overwhelming two to one margin, the Federal Labor Relations Authority announced this afternoon. Eighty four percent of the eligible controllers voted; 7,494 voted for representation by the National Air Traffic Controllers Association; 3,275 voted against. The controllers have had no union since 1981, when President Reagan fired more than 11,000 union controllers who went out on strike. Today, a spokesman for the new union said that they did not want another confrontation with the government.

JOHN THORNTON, Controllers Union Official: We feel our success will be measured by our ability to work within the system, not by confronting it. We are not looking for an adversarial relationship. We are looking for a constructive relationship with the many people in the FAA who understand the system needs improvement, and that a good relationship with NATC can help improve it. LEHRER: Also today, the Federal Aviation Administration moved to ease pressure on air controllers. The Agency announced implementation of new rules which will slow air traffic into the nation's busiest airports. FAA officials said the new safety regulations may lead to more delays for air travelers. MacNEIL: In Panama, the government declared a state of emergency, suspending constitutional freedoms after two days of violent demonstrations. Yesterday police fired tear gas and beat people with rubber truncheons, as thousands of demonstrators demanded the government's resignation. The demonstrations followed allegations that the Arms Forces Commander General Manuel Antonio Noriega was involved in the death of Panama's former leader General Omar Torrijos. Opposition parties and leading industries called for more civil disobedience and the trial of current officials for alleged vote fraud, robbery and assassination. In Washington, the State Department called for free and untarnished elections, and the withdrawal of the Panamanian military from government. Meanwhile, violent anti government protests continued today in South Korea. After Seoul's worst night of violence in many years, hundreds of students remained barricaded in the compound of the Roman Catholic Cathedral. They erected barricades and battled police with fire bombs and rocks, as supporters tried to break through to reinforce them. The violence began with mass demonstrations yesterday, demanding the resignation of President Chun Doo Hwan and protesting his nomination of a successor without elections. LEHRER: Afghan rebels shot down a passenger plane over Afghanistan today, according to the official Afghan government radio. The report said 53 of the 55 persons aboard were killed. The rebels reportedly were firing U. S. made Stinger missiles. There was no confirmation of the attack by any Afghan guerilla groups. MacNEIL: That's our news summary. Ahead on the NewsHour, President Reagan's Venice news conference, the debate over raising the minimum wage, new worries about earthquakes, and a Roger Mudd essay. Facing the Press MacNEIL: With the 7 nation Economic Summit behind him, President Reagan held a wide ranging news conference before leaving Venice this morning. The outdoor setting was a picturesque hotel garden. For our first focus tonight, we have major excerpts from the news conference, beginning with the President's prepared opening remarks.

Pres. REAGAN: I said last year that the Tokyo Summit was one of the most successful I'd attended, because we had launched new initiatives in the areas of trade, agriculture and economic policy coordination. If that's the case, then Venice must be seen as going one better, because it put form, substance and institutional framework on those initiatives, and locked in a process which will better enable us to navigate the dynamic new world of international economics. Now, let me add that in addition to these economic matters, we also had an opportunity to deal with two other pressing international issues. First, I'm pleased with the support our allies have shown for a united position in the Persian Gulf. Actually, a commitment to keeping the sea lanes open in that area is a vital strategic objective. As many of you know, American's allies have a very sizeable presence in the Gulf. Great Britain, for example, has nearly 18% of its naval vessels committed there, and has escorted more than 100 ships since the beginning of this year through the Straits. France, too, has a strong naval commitment there, and all of our allies have reaffirmed their support for keeping the trade routes opened, the oil flowing, and moving toward a negotiated resolution of the Iran Iraq war. As most of you also know, we are currently engaged in a highly sensitive discussion with the Soviets that could lead to an historic arms reduction treaty on U. S. and Soviet intermediate range missiles. Progress has been made here in Venice, and today and tomorrow, Secretary Shultz will be meeting with the NATO Foreign Ministers in Reykjavik. I'll be anxious to have his report about the views and recommendations of our allies, so I'm particularly grateful I had this opportunity in Venice not only to discuss these arms reduction efforts with our allies, but to agree again on the importance of reminding the Soviet Union of the progress that needs to be made in other arms negotiations -- especially the reduction of strategic intercontinental nuclear forces. MacNEIL: Now, substantial excerpts from the news conference proper, focusing on the President's answers to questions about the Iran contra matter, and his policies in the Persian Gulf.

HELEN THOMAS, U. P. I. : Back home in recent congressional hearings, two key witnesses, General Secord and Albert Hakim, testified that they were under the firm belief that Col. North and the NSC acted with your blessing and under the full authority of you. Did they dream this up? Pres. REAGAN: Well, however they got that impression -- and I've heard some of the testimony also -- and so much of it was hearsay, one person saying about the other, that I thought they had -- I told you all the truth that first day after the -- everything hit the fan -- that -- how we had opened the negotiations that led to the things that were going on there, having nothing to do with the contras or the freedom fighters in Nicaragua. And that word had come to me that I had not been kept informed. So evidently maybe some people were giving the impression that they were acting on orders from me. Well, I wasn't giving those orders, because no one had asked or had told me what was truly happening there. THOMAS: Mr. President, you took the oath twice to faithfully execute the laws of the United States. Do you think the law barring direct or indirect military aid to the contras applied to you? Pres. REAGAN: I not only think it didn't, but I don't think that the law was broken. We're talking about a case of people that on their own -- individuals and groups -- in our country sought to send aid to the freedom fighters. This has gone on for quite a long time in other areas. We can go clear back to the Lincoln Brigade and the Spanish Civil War. I did not solicit anyone ever to do that. I was aware that it must be going on, of course. But never solicited either countries or the other, and would point to the law that is being cited -- one of the five versions of the Boland Amendment -- that that specifically suggested that the Secretary of State should solicit help from our friendly countries, friendly neighbors. THOMAS: Did you know about Col. North's involvement in sending these arms, all these airlifts, and the airstrip, and so forth? Pres. REAGAN: No. CHRIS WALLACE, NBC News: Mr. President, Assistant Secretary of State Elliott Abrams repeatedly misled Congress. And yet Secretary of State Shultz said that he's a good man and he can keep his job. Is Shultz right? Can Elliott Abrams keep that job as long as he wants? Pres. REAGAN: I know the statement that was made by the Secretary of State, and that is the Administration's position. And I know the reference that you are making to the particular point in which he himself volunteered that he had made a misstatement. But I accept the Secretary's statement on this. WALLACE: Sir, you're the President, and in the end Mr. Abrams worked for you. A couple of specifics: he specifically misled Congress about whether or not he had solicited money from Brunei. He told Congress that that the downed flier Eugene Hasenfus had no tie to the U. S. Government. He did. You're the boss. Are you comfortable with him working for you? Pres. REAGAN: I have told you. That is the Administration's position. LOU CANNON, Washington Post: Have you found that the disclosures of the Iran affair and your efforts to get the American hostages out of Lebanon have harmed you here in Europe in efforts to extradite Mr. Hamadei from Germany, and in general in trying to get the Europeans to take strong action against terrorism? Pres. REAGAN: No. As a matter of fact, we have all been united. We have even strengthened our purpose since we've been here with regard to terrorism. But with regard to Hamadei in West Germany, who's been arrested there, as you know, for carrying some ammunition -- Helmut Kohl and I may have had some talks about this, and I think it's interesting to note that the only question that remains is will Hamadei be tried for murder and hijacking in the United States or will he be tried for murder and hijacking in Germany. Because that is what they intend to do. Now, there's been no decision made yet as to whether there would be extradition or not. But whichever way, he is going to be tried for the crime of killing our young navy man in that hijacking. CANNON: I'd like to follow up -- your spokesman told me yesterday that Mr. Kohl had in fact rejected the plea for extradition, and Mr. Hamadei would be tried for murder, but in West Germany. Is he incorrect in saying that? Pres. REAGAN: I do not know whether there's been a decision. He has never said outright to me, ''No extradition. '' He said, ''This is what remains to be determined, just where is he going to be tried. '' But I have not put any -- attempted to put any pressure on him either. KEN WALKER, ABC News: Mr. President, the -- Robert McFarlane, your former National Security Advisor, testified that the plan to bribe, or in the words of the White House, to ''rescue'' the American hostages in Beirut that involved the DEA had not been the subject of an intelligence finding. My question then, Sir, is why do you feel, if you approved it, that operation did not require a finding, or notification to Congress. Pres. REAGAN: All I knew about that particular thing was that I was told that there was something going on in which it might be possible to free one or more hostages of ours, and they would be delivered to the beach north of Beirut, if we were able to take them off that beach. And I said, ''But of course. With a Mediterranean fleet there, you bet we can take them off. '' And it wasn't until all this exposure that then I heard that what it was about was supposedly some money for bribing some people that they thought could effect the rescue of one or more of our hostages. And that had to be the thing. But it never happened, and no one ever arrived on the beach north of Beirut. WALKER: Well, something else you also may not have heard, sir. During the testimony it became clear that Col. North, in addition to spending money that had been raised presumably for the contras, also apparently was about to receive, or arrangements had been made for him to receive, $200,000 from the Secord Hakim operation. Do you believe that North was on the take? Whether or not you do, do you still believe that he is an American hero? Pres. REAGAN: One cannot quarrel with his military record and (unintelligible) established him as such with the awards that he received for his heroism in combat. But I'm going to wait until he's had his day in court also, and I'm not going to prejudge on the basis of all that has been going on for these countless hours. SAM DONALDSON, ABC News: Sir, before you came here, many people on Capitol Hill said that they wanted you to ask our allies to help with -- more physical help in the Persian Gulf. And many of your officials said that you would do that. Did you specifically ask any of the leaders to give us more help in the way of ships or money to keep the sea lanes open in the Persian Gulf? Pres. REAGAN: We spoke of the need for having a kind of single approach to maintaining the international waters there as international waters and so forth. And we're gratified completely by the response. I think it has been excellent. But there was no criticism from any of our allies about this. And as I've told you there were other countries -- as I have said here in my opening statement -- England and France have forces there. Two of the allies, it is true, are bound by their constitution and could not do anything of that kind. But there was complete support for what we're trying to do, because they understood. We're not trying to provoke any kind of hostility. We are trying to maintain peace, and we are all solidly together in our desire to bring about an end to the Iran Iraq War. DONALDSON: Sir, if I may, I think then the answer to my question is ''No'' you did not specifically ask the allies for more physical help in the Gulf. Pres. REAGAN: No, we were very satisfied with what they're prepared to do. The young lady in the blue dress. JULIE JOHNSON, Baltimore Sun: Mr. President, (unintelligible) Venice, your Chief of Staff has identified the Soviet Union, along with the United States as co trustees for peace in the Persian Gulf. Do you share that view, and if so, what is the role the Soviet Union can play in your view in the area (unintelligible)? Pres. REAGAN: Well, the Soviet Union has some vessels there and has made it plain they're going to escort their own ships, mainly carrying oil, and therefore they have a stake, too, in peaceful shipping and the openness of the international waters. JOHNSON: Well, then how do they serve as co trustees for peace and also do you envision any sort of coordinated role between the United States and the Soviet Union in escorting ships to their regions? Pres. REAGAN: We would like to ask them, because we've appealed to the U. N. Committee on which they are a member. We've appealed to the United Nations to ask for or demand a peaceful settlement of this war that's been going on too many years. And that if there is not peaceful settlement that all of us will take actions such as sanctions and so forth against them. BILL PLANTE, CBS News: Mr. President, does that mean that you are endorsing a role for the Soviets in the Persian Gulf as co guarantors with the United States? Pres. REAGAN: No. I've never thought of them that way at all. But I think it should be pointed out that they are also there because they have ships transiting that -- in commercial shipping. JACK NELSON, Los Angeles Times: Mr. President, you said there was no criticism from the other summit leaders of your Persian Gulf policies. But a French Government spokesman said that your policy was so confusing they didn't know what you were asking them to support. Can you tell us what -- how your military policy in the Gulf is, and does it include the possibility of a preemptive strike if Iran does deploy the Silkworm missiles? Pres. REAGAN: I don't think they'll feel that way after they've had a chance to talk to me and hear what I'm saying about it. What I am saying -- that all of us have a stake in maintaining a body of international water, open to trade. It is of vital importance to a number of countries, and more so than to us because of their needs in the energy field. But also I think they're assured now that we're not there to -- as I say -- provoke some kind of increased hostility. We're there to deter that very thing. NELSON: (unintelligible) -- would that make you consider the possibility of a preemptive strike? Pres. REAGAN: When you get down to actual tactics and things that might be done, you're in a field that I can't answer, nor do I think I should answer. This is like talking about tactics before -- NELSON: (unintelligibe) -- that it would be considered a hostile act and would run the risk of reprisal. Pres. REAGAN: Well, as I say, I'm just not going to answer questions on that. MARGARET WARNER, Newsweek: Mr. President, as you know the joint statement on the Persian Gulf did not mention the possibility of imposing sanctions on countries that violated the proposed Security Council Resolution. Your Secretary of State told us that it was a common understanding among the seven heads of state that in fact you were talking about mandatory sanctions. But other spokesmen for other governments said that was not the case. What is your understanding, and if you all did mean to endorse mandatory sanctions, why didn't the communique or statement state that? Pres. REAGAN: Discussion came up between the choice of the words ''enforceable'' and ''effective. '' And it was decided -- a case of semantics here -- it was decided ''effective'' meant the other, and we didn't need the other word -- and so it was agreed that we would use ''effective'' measures. WARNER: Would you say that you had some persuading to do with the other countries before you get them to agree to this idea of sanctions? Pres. REAGAN: Not among the seven who are here. We're pretty united on it. MacNEIL: As we reported in the news summary, the President also commented on arms control negotiations with the Soviets. He said there was an increased opportunity for an agreement on removing medium and short range nuclear missiles from Europe and for a summit conference with Mikhail Gorbachev. Mounting Minimum LEHRER: There has been an official minimum wage in this country for 50 years. It was 25 cents an hour when it began. It's been raised six times since, and now stands at $3. 35 an hour. There is a move in Congress to raise it a seventh -- to $4. 65. There were hearings yesterday in the Senate on the proposal, and today in the House, and again now with us. Ours begins with this background report from correspondent June Massell.

JUNE MASSELL: Jeff Rosen is 31 years old. A third generation co owner of Rosart Industries, a small Bloomfield, New Jersey, manufacturer of children's art supplies. They've been making crayons, finger paints, and chalk boards for 63 years. Last year, sales topped $10 million. Despite that, Jeff Rosen is feeling the effects of competition, both domestically and from abroad. And these days, his business worries are aggravated by the possibility of an unwelcome increase in minimum wage. JEFF ROSEN: Without being overly dramatic, it means layoffs across the board. It has to happen. It reaches a point where you can no longer manufacture in the U. S. at certain rates.

MASSELL: Rosart employs 150 workers. About 35% of them earn the minimum wage. A proposed increase would raise the wage from $3. 35 an hour to $4. 65 in increments over the next three years. After that, the Department of Labor would continue to raise the minimum according to a formula based on half the average earnings of private sector workers. Mr. ROSEN: The thing we hear throughout the world, especially in Asia as well as even Mexico, now is ''Come on here. This is a better business climate. Our wages are much lower than U. S. wages. We'll be competitive into the 21st century. Do your investment here. Put your capital here. '' We will have to consider resourcing and sourcing in foreign countries, and basically promoting employment abroad to maintain whatever market edges we've established here at home.

MASSELL: A full time minimum wage earner makes less than $7,000 a year. That's 25% below the poverty level established for a family of three. Nationwide, there are two million workers in that position. Jeff Rosen claims cheap labor is essential to his profit margin. But those who want to increase the minimum wage say that inflation has reduced a $3. 35 hourly wage down to $2. 45 an hour in the last six years. Belinda Scott is 36. A single mother with two teenage daughters, she works at the Chinn School, a Newark day care center located less than 10 miles from the Rosart plant. Belinda Scott was a high school drop out but is now a teacher's aide. She makes $4. 00 an hour, slightly higher than minimum wage. (to Ms. Scott) How do you make ends meet? BELINDA SCOTT: It's really difficult. You know, with two teenage girls, and they're both in school. You don't want to send your kid to school looking like something out of the gutter, you know. It's hard, trying to keep food on the table, a little change in their pockets, because you don't want them to become thieves or anything. So it's really hard. MASSELL: What's the worst part of it? Ms. SCOTT: Keeping all -- keeping them at least satisfied with life and going to school so they wouldn't have tostruggle so hard like I have.

MASSELL: Jeff Rosen feels he has burdens as well. One of them is the type of employee he says he must hire. Mr. ROSEN: There are definite profound challenges to management in the 1980s and dealing with this kind of worker clientele. It's not uncommon for us to get employees who have trouble working the full 40 hour work week, who have to for the first time -- meet a regimented schedule. Most of our work force is not high school educated. These are entry level workers into the work force, who've had difficulties perhaps getting employment elsewhere, or basically tackling employment for the first time as an experience. And what Rosart represents in many cases is an indoctrination -- to working, to coming on time, to fulfilling quotas and needs, working in a work environment. Ms. SCOTT: If their salaries were like that, and they had children to take care of, and trying to keep their children looking like other children, they wouldn't say that. They couldn't say that and really mean it. To me they're just out for themselves. Out for their business. Mr. ROSEN: When we look at our people, our people are not starving. Our people have shelter. In some cases they have cars. They have clothes. I'd say the American minimum wage worker is probably the highest paid low wage earner on the planet. And I have no shame about that. Ms. SCOTT: That's mumbo jumbo from people with money in their pockets, their own businesses, and they want to make it bigger -- which I don't fault them for that, but don't take it out on us poor working people. We work hard. They walk around in their plants and see how hard people have worked. I think we deserve more money. LEHRER: We continue the debate now with a Reagan Administration official who opposes the minimum wage increase, Michael Baroody, Assistant Secretary of Labor for Policy. And a congressman who supports it, Barney Frank, Democrat of Massachusetts. You agree with the woman who just spoke, correct, congressman? Rep. BARNEY FRANK, (D) Massachusetts: Well, I agree that we ought to raise the minimum wage in increments to something more nearly approaching -- it will still be below -- but more nearly approaching a decent living. LEHRER: Why? Rep. FRANK: I think it's a matter of social justice. LEHRER: It's a moral issue? Rep. FRANK: Yes. That doesn't mean the people who are against it are immoral, because people can legitimately differ about the best way to reach moral end. But it's a matter of social justice. It's a matter of a fairly wealthy society -- ours -- deciding that there is a level below which we don't want to let people sink. Partly we do that by government programs and assistance. But we all agree it's preferable for people to work. The problem is that if you have a fulltime worker at minimum wage, and they are the primary wage earner in the family -- and that's not everybody in the minimum wage category, but it's a substantial number -- they don't live at a decent level. To be honest, there are no perfect solutions. There may be some marginal negative effect on some low wage manufacturing industries. On the other hand, most of the people at the minimum wage are not in manufacturing industries -- they're in service industries where international competition isn't the major factor. People can't decide to get a hamburger down the street or in Tokyo. They tend to get the hamburger where they are -- or have their building cleaned by people from Taiwan. And if there is -- as there may be -- a slight, very slight increase in the cost of living for other people so that hardworking people at the very lowest rung of the ladder more nearly approximate a decent wage, I think that's a matter of social justice. LEHRER: Is it a matter of social justice to you, Mr. Secretary? MICHAEL BAROODY, Labor Department: If it were as simple as the congressman suggests, I think so. But it's not that simple. The principal reasons why we oppose this increase in the minimum wage are two. The short answer is: One, it hurts young people. And two, it doesn't reduce poverty. Raising a minimum wage does not reduce poverty. LEHRER: Let's start with the young people. Why does it hurt young people? Mr. BAROODY: It has what I think what is by now an unassailable effect. Unassailable because the thing has been studied frankly to death for the last 20 years. And everyone agrees to what is the common sense proposition. That if you have to pay more for entry level, no skills workers, you tend, if you're a businessman not to hire them in the first place. This is called the disemployment effect. We don't predict -- no one any longer predicts that that will manifest itself as a rise in unemployment for young people, as if all of them will be fired. But instead, the job opportunities that would be there at the lower wage are gone at the higher wage -- LEHRER: So new jobs won't be created, is that right? Mr. BAROODY: That's right. LEHRER: And you say history has proven that to be the case. Mr. BAROODY: I think so. LEHRER: Do you agree with that? Rep. FRANK: Only very marginally. You get into the over argument stage there. There will be a marginal effect on some jobs. We are talking about a minimum wage going -- of course, you understand that these are not arguments against raising the minimum wage. These are arguments against having it at all. So that presumably under this theory, if you could hire a kid for 86 cents an hour, you should hire him for 86 cents. Mr. BAROODY: I'm not proposing that. Rep. FRANK: No, but that's the logic of your argument. And you ought to be straightforward like you usually are. The argument for not raising the minimum wage is an argument for people who don't think there ought to be one at all. LEHRER: Let's be specific. Rep. FRANK: In this case, one, the loss of new jobs I think will be quite small. LEHRER: But you do concede that there will be, though. Rep. FRANK: Yes. And the tradeoff is that a lot of kids will get more money than they otherwise would have. There are no perfect answers, and -- LEHRER: The kids who get the jobs will be getting more -- Rep. FRANK: They'll be getting $3. 85 instead of $3. 35, and they'll be more nearly making a reasonable wage. Mr. BAROODY: I'll try to be straightforward, Barney, I'm trying to be. Rep. FRANK: But you know that the people are against any minimum wage at all in your Administration. Mr. BAROODY: But we aren't proposing repeal. What we're saying is that 430,000 -- whether it's 300,000, 600,000 -- the estimates are all strangely -- Rep. FRANK: -- all over the (unintelligible) -- Mr. BAROODY: No -- strangely uniform. It's hundreds of thousands -- Rep. FRANK: Three hundred thousand to six hundred thousand? Mr. BAROODY: Hundreds -- Rep. FRANK: That's a funny uniform -- Mr. BAROODY: Well, it's one to three percent. LEHRER: Those are the number of jobs that will not be -- that will be lost. Mr. BAROODY: That's the number of young people who will not get their crucial first opportunity to get a job, find out the satisfaction of making their own income. LEHRER: Like the man on the tape was talking about. Mr. BAROODY: Exactly. And I was struck by the woman on the tape, too. Let's not forget that she was concerned as all parents are concerned, not just about her immediate circumstance, but about the future for her kids. And what we think is that the future for her kids -- I've got a nine year old. He's going to be in the work force in the year 2000. I'm gonna make darn sure he's prepared for the world of work tomorrow. And she is concerned about the same thing. The kids of today, if we raise that minimum wage, at least several hundred thousand of them -- not a marginal amount, hundreds of thousands -- will be denied that opportunity. Rep. FRANK: That I do disagree with. In the first place, the statistics, nobody can be sure of. And you say it's uniform. It's one to three percent. That's a pretty big variation. That's a 300% difference. Secondly, it doesn't mean they'll never get a job. It may mean they may get one a little bit later. The point, though, is that yes, there will be a marginal delay in some kids getting their first job. The alternative, however, is -- the payoff to that is -- a large number of kids will be getting more money. See, you can't have it both ways. They try to argue this is inflationary, because it will force wages up. But also that it's going to make people not to have jobs. It can't be both. If it's going to mean the people being laid off and not getting jobs in the first place, it wouldn't be inflationary. There is an element of transfer here from those of us who do pretty well in this society to people at the lowest level. It's not a perfectly efficient transfer, but -- some of them will be delayed in their first job. But you will put some money in the pockets of people who desperately need it by raising the minimum. Mr. BAROODY: With all respect, that's sort of a good news/bad news joke, and it's kind of cruel. The good news is that some of you are going to be better off. The bad news is some others of you are not going to have any jobs at all. Rep. FRANK: Yes. And it's a very important part point. Because overwhelmingly, it will be the people who are employed will be better off. No one has argued in my looking at the statistics that the number of people who might be delayed in getting a job will be anything remotely approaching the very large number at the minimum wage level or just above it -- Mr. BAROODY: I'd like to (unintelligible) that argument, if you'll allow me. LEHRER: Be my guest. Mr. BAROODY: The principle argument, I think, is that on the face it sounds right -- that raising the minimum wage will reduce poverty. I'd be hard pressed to dispute that, because it sounds so right. Except that the last time that we did it -- and I've got a chart I'd like to take just one second to put up on the screen -- the last time we raised the minimum wage, it went up. That's one line going up. The dotted line -- LEHRER: That's the solid line. The minimum wage line. Mr. BAROODY: That's correct. Now, that began in 1978. The dotted line i the poverty rate, which began to rise at about the same time. Right after the first increment of the minimum wage. And you can see that throughout the whole period that that minimum wage was being raised, poverty was going up. What's interesting about it, Jim, is that's the first time the poverty rate has gone up in this country in the entire post war experience. It was a steady decline from 33% -- a third of the nation ill clad, ill housed, ill fed -- that Roosevelt talked about. It was still that after the war. Steady growth brought that down to 11. 2%. I'm not saying that the minimum wage started it up again, that the increase started it up again. The point is it didn't stop it. LEHRER: All right. That's the logical question. How do you know -- have you been able to establish a connection between those two lines? Rep. FRANK: May I respond to this? LEHRER: Well, let me just get his points, and then you can -- Mr. BAROODY: I want to be clear, I am not saying -- LEHRER: I see you over there -- I see you over there -- Rep. FRANK: I (unintelligible) to see me, I want you to hear me -- LEHRER: Okay (laughter) Mr. BAROODY: I'm not saying that the minimum wage by itself caused that rise in poverty. Far from it. I wouldn't make that argument. The point is different. The rise in the minimum wage did not fight that rise in poverty. It doesn't work as a poverty reducer. Rep. FRANK: I appreciate -- I mean this sincerely -- the honesty of Mike's formulation. In fact, single factors don't cause single results in economics, because a lot of things are happening at the same time -- inflation and job training programs, etc. It is also the case -- and those figures will show you that the job loss that people predicted -- if you're going to look at gross statistics -- doesn't happen. That is, as the minimum wage goes up, you don't get in the teenage years (unintelligible) job loss. Of course, also Mike gave us a very restricted period -- 1978 to 1986. We've had a minimum wage for 50 years. What would your chart (unintelligible) for eight years. The key point, though, is common sense is clear here. No -- the minimum wage being increased in and of itself does not reduce poverty. Given other things in the economy, it may be increasing it. But I do believe that a rise in the minimum wage will offset other things that might be increasing poverty. There are many workers at the minimum wage who are part of multi earner families. They're not in poverty. There are also many people who are in poverty -- a large number -- who are at or very near the minimum wage. Because when you raise the minimum wage, we agree, you don't just help the people right at the minimum, there's a bump up effect, that has both negative and positive effects. So clearly, we're talking about some people in our society who are at the very lowest end who will benefit if we will raise minimum wage. I don't think anyone denies that. The question is the tradeoff. Will you be doing more benefit to the people at the lowest level or hurting some of those marginal. Mr. BAROODY: That's absolutely right. And we think that the tradeoff represents on the one hand for those who are able to hold onto their jobs despite the disemployment effect, an increment, and I don't mean an insubstantial one, in their income. But it risks for hundreds of thousands of young people no job opportunity. And we can't risk jinxing another generation with the lack of job skills. Rep. FRANK: Part of my problem is -- and I don't mean to denigrate the value of the work -- but if you have people working at the level -- and by the way, if you adopt part of what this Administration has been for, then you have a subminimum wage for teenagers -- so that you could have theoretically two people working side by side with exactly the same experience, or exactly the same work, and one being paid substantially less just because he or she is younger-- I don't think that inculcates good work habits. I don't think paying people a wage that it's impossible for them to support themselves on, and particularly paying young people must less than you pay an adult, is the best way to instill motivation. Mr. BAROODY: One of the problems we've got -- we have this persistent and growing problem of youth unemployment. It has been a constant trend, and it's most an irritant in the minority community. Twenty five years ago, the black unemployment rate for young males was 22%. The minimum wage was there, it's existed those whole 25 years. And the black unemployment rate doubled in the 20 years. Rep. FRANK: I think you're disproving your point. The problem has gotten worse, hasn't it, in the last few years? When the minimum wage has in fact in real terms been dropping. We haven't had an increase in minimum wage in a substantial period of time. Mr. BAROODY: Oh, no, we've created 14 million jobs, and -- Rep. FRANK: We're talking about young people. And the problem of youth unemployment -- again your statistics, you've gotta go both ways on them. When we've had this period of minimum wage, it has in real terms dropped over the past eight or nine years. Mr. BAROODY: That's true. Rep. FRANK: And that has not produced a great upsurge or any significant upsurge in youth employment that you might have predicted. In other words, the argument that if it weren't for the minimum wage, there'd be a lot more kids working cannot be demonstrated statistically. As the minimum wage has been held way below the inflation rate in the last eight years, there's been no great increase in youth employment. Mr. BAROODY: Well, two things. There has been an increase in youth employment, and as the minimum wage has not changed in the last few years, and we've created 14 million jobs in this longest expansion -- second longest -- in history. The number working at the minimum wage has declined. There are two million fewer people working at the minimum wage now -- Rep. FRANK: Of course it has, because the minimum wage has been rendered substantially irrelevant because we haven't raised it when inflation went up. My point is, however, that this argument that if we discarded minimum wages, when it's effectively done we'd get -- increases greater youth unemployment -- hasn't happened. LEHRER: Speaking of arguments -- ours here in the studio is over. The one between the two of you and all others who feel differently or together will go on. Gentlemen, thank you both very much. Danger Zone MacNEIL: Late yesterday, there was a strong earthquake centered near Lawrenceville, Illinois, measuring 5 on the Richter Scale. It shook buildings in 14 states and parts of Canada, but caused little damage. The quake occurred along the little known Wabash River Fault zone, which runs along the southern border of Illinois and Indiana. For some time, seismologists have been expecting a large earthquake to occur in the lower Mississippi Valley, along the so called New Madrid Fault zone, which is only 150 miles southwest of yesterday's quake. We take a second look at that earthquake potential in a report by correspondent Tom Bearden.

TOM BEARDEN: Memphis, Tennessee. A pleasant southern city of more than million people on the banks of the Mississippi River. A city with the greatest earthquake risk of any metropolitan area east of the Rockies. When most Americans think of earthquakes in the United States, they think of the great San Francisco earthquake of 1906. The San Andreas Fault is a household word. The inevitability of major earthquakes in California is well known. But there is another fault in this country -- a fault that spawned some of the greatest earthquakes in the history of the world -- the New Madrid Fault. It's located on a generally northeast, southwest line near the town of New Madrid, Missouri. Memphis is just 35 miles away. In the winter of 1811 1812, three enormous earthquakes occurred in the region. They measured 8. 6, 8. 4 and 8. 7 on the Richter Scale. Huge sections of land were uplifted. Folklore has it the Mississippi River ran backwards for two days, filling in the newly formed depressions. Scientists know the uplift created two waterfalls along the course of the great river. Vast tracts of timber were destroyed. The shock waves cracked sidewalks in Washington, D. C. and rang church bells in Boston. The quakes are not well known, because the region was only sparsely settled. Scientists now believe such earthquakes can and will happen again. It has been estimated that there is a 40 60% chance that a quake measuring at least 6 on the Richter Scale will strike the area before the year 2000. The odds of such a quake occurring before the year 2035 increase to 86 97%. A Senate Subcommittee called this hearing in the wake of the tragic earthquakes in Mexico City, to examine this country's ability to deal with a similar catastrophe. Several government agencies have been preparing contingency plans to deal with a major earthquake. They have produced a disturbing document. This report, prepared for the Federal Emergency Management Agency, evaluates the earthquake risk in the area surrounding the New Madrid Fault. It examines the potential effects of two different size earthquakes occurring at different times of the day. It projects a staggering loss of life and property -- up to 5,000 people dead and $51 billion in damage. Such an earthquake would affect the entire central United States. This map indicates the extent of damage that would be inflicted on the nation's heartland by a magnitude 7. 6 earthquake. In the outer boundary, poorly built, or badly designed structures would be damaged -- some severely. In the center, in Memphis, a catastrophe unparalleled in American history. The report indicates up to 2500 people could be killed in Memphis alone -- three times that many injured. Dr. ARCH JOHNSTON, Seismologist: It's been estimated -- actually by Dr. Nutley of St. Louis -- that enough strain has accumulated since the great 1811 1812 earthquakes -- has accumulated in the New Madrid zone, if it were all released now, to generate a 7. 6 earthquake.

BEARDEN: Dr. Arch Johnston is the Director of the Tennessee Earthquake Information Center at Memphis State University. Johnston said the strain could continue to build for centuries without the occurrence of an earthquake. But he admits no one really knows. (to Johnston) So the Madrid could be quiet for another hundred years, or it could kill 2500 people in the next five minutes? Dr. JOHNSTON: Yes. We couldn't exclude either possibility with any certainty. BEARDEN: In the magnitude 7. 6 earthquake scenario, which is five times smaller than the Mexico City tremor, Memphis would be virtually cut off from the rest of the world. At least one -- and possibly both -- of the highway bridges across the Mississippi would be destroyed. Most of the hospital beds in the area would be unavailable to treat thousands of injured people. The water system would fail, making it difficult, if not impossible, to fight the fires that would be started by ruptured natural gas mains. The gas pipelines that supply the Northeastern United States would be severed. (to Johnston) Is the city of Memphis doing everything it should to protect its citizens? Dr. JOHNSTON: No. I'd have to say no. Now, we have started some initiatives here -- recent initiatives that I think are a big step forward. But certainly if you look at Memphis right now as a city, badly unprepared for major earthquake. BEARDEN: Johnston says the fundamental danger is that hundreds of buildings in Memphis would not survive an earthquake. There are no provisions in the city's building code requiring earthquake resistive design. Dr. JOHNSTON: We're not going to control earthquakes. So the best thing we can do is control the factors in an earthquake that puts people most at risk. Well, that's buildings. That's very obvious from the Mexico City tragedy. Buildings kill people in earthquakes. BEARDEN: Mexico City is built on an ancient lake bed. Loose, sandy soil, that actually amplified the shock wave. The vibrations literally shook many buildings apart. In some places, the soil liquefied and lost its ability to support a foundation. The buildings simply fell over. The same thing would happen in Memphis. MIKE BANKER, Engineer: The soil conditions in the Mexico City area are analogous to those we face here. The fact that damage to structures so far away from the epicenter of an earthquake took place, I'm sure is getting the attention of seismologists in our area.

BEARDEN: Mexico City is 200 miles from the fault. The ground motion was slow, and affected taller buildings more than small ones. Memphis is only 35 miles from the fault. Johnston says that means there will be a more rapid vibration, which will damage a greater percentage of buildings. Dr. JOHNSTON: It would also get a lot of high frequency motion, which is more dangerous to small structures. So I would think that the range of buildings damaged would be greater in Memphis than was true in Mexico City.

BEARDEN: Residential structures in Memphis are significantly safer than those in Mexico City. Most of them are frame construction, which offers considerable resistance to earthquake motion. If the projected quake occurred at night, the estimated fatality rate declines by almost 75%. It is in the workplace that people are most vulnerable. On the surface, it would appear to be a fairly simple matter to protect against building collapse by establishing requirements for earthquake resistive design. That's under study. But in Memphis, it is a delicate political and economic issue. The city's economic base has been declining for many years. And local government has been trying very hard to attract new industry. Seismic design considerations add 5 to 10% to the cost of a new building. Leaders are very concerned about those costs driving away new investors. Warner Howe is the Chairman of the Memphis Building Code Advisory Committee. WARNER HOWE, Civil Engineer: There's no developer that's looking for additional cost in his development. And I think we're in an area where increased costs is a serious concern to the developer. The average development here is a borderline economic situation, and to be viable it can't stand too many additional requirements.

BEARDEN: Yet even without code requirements, some seismic provisions are being designed into several buildings under construction, including additions to two local hospitals. But there was a much thornier issue, only now being tentatively addressed -- what to do about existing buildings that are dangerously vulnerable? Many unreinforced masonry buildings in Mexico City proved to be incapable of withstanding lateral movement. There are thousands of similar structures in Memphis. Many of them are school buildings. The federal study predicts that if an earthquake strikes during the day, up to a third of the projected casualties would be children. It is technically possible to retrofit the schools to make them safer. But it would be enormously expensive. City officials say that Memphis simply can't afford it. Shelby County mayor William Morris says the whole nation should share that financial burden. WILLIAM MORRIS, Shelby County Mayor: The money required to save those buildings, to retrofit those buildings, would become, and should become, part of the burden of people all over the country. It has to be borne, because it's just too massive for one constituency, one small constituency, that constituency that's involved, to afford. LEHRER: A Tennessee seismologist told us that yesterday's earthquake did not diminish the pressure on the New Madrid Fault Line. Full Circle LEHRER: The Air Traffic Controllers voted two to one today to form a new union. And that is where we go finally tonight with some thoughts from our Washington essayist, Roger Mudd.

ROGER MUDD: The saga of Ronald Reagan and American Air Traffic Controllers has now come full circle, and the nation finds itself just where it was back in 1981. President Reagan's decision in August '81 to fire the 12,000 striking members of PATCO, the Air Traffic Controllers' union, produced one of his earliest and most politically rewarding victories. Pres. REAGAN: They are in violation of the law, and if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated. End of statement.

MUDD: It showed him to be tough, decisive and swift. He had sent signals to the bureaucracy, the Congress, the unions and the country that he knew how to be President. That decision, which destroyed the union, branded the strikebreakers as untouchable, and forced the Federal Aviation Administration to operate its control towers at less than full strength, has been at the heart of the Reagan Administration aviation policy ever since. The official Administration line has been that the nation's Air Traffic Control system has gotten along very well without the union. And without so many underworked controllers. And that the system is really safer now than it's ever been. Indeed, the numbers would seem to be on the Administration's side. Overall accident rates are down. And last year, no U. S. airline was involved in a fatal accident anywhere in the world. But a lot of aviation critics, investigators, air controllers, and passengers, do not believe either the numbers or the reassurances. They point to reports of near misses, or near collisions -- up 30% from last year. They point to operational errors -- errors by the controllers themselves -- up 21%. The Independent National Transportation Safety Board has accused the FAA of playing a game of chicken, and has called for a limit on flights during the summertime rush hours. The general accounting office which investigates for the Congress, not for the White House, says the FAA's safety inspection system is inadequate. In addition, the deregulation of the airline industry has produced sharp increases in passenger complaints about delays and cancellations. It all adds up to a growing public suspicion that air travel is not as easy, not as dependable and not as safe as people used to think it was. The fact is the Air Traffic Control System never fully recovered from the 1981 strike. Six years ago, there were roughly 13,000 fully certified controllers, and 7 million flights in and out of the nation's 22 busiest airports. Last year, there were roughly 10,000 controllers, and 9 million flights. But the Department of Transportation was trapped by the consequences of the President's 1981 decision to fire the controllers. It could not acknowledge it needed more controllers, and even if it wanted to, it could not rehire the strikers because Mr. Reagan had declared them person non grata. But the Congress forced the hand of Transportation Secretary Elizabeth Dole. It has mandated that as of October 1 this year, the FAA must have at least 15,000 controllers on the payroll. Last week, after years of insisting there were enough trained controllers to run the system, Secretary Dole announced plans to start hiring almost 1,000 more controllers and supervisors. It was a startling reversal. Mrs. Dole did not acknowledge it was a reversal. She said the department had underestimated by almost half the predicted future growth of air traffic, and it was the new estimate which convinced her of the need. Then, on top of Secretary Dole's switch, came this week's vote by the Air Controllers to form -- would you believe it? -- a new union. The reasons for the new union are about the same as for the old one. Long hours. Six day weeks. Understaffed. Overstressed. The newly approved union says it will demand hiring 3,000 more controllers. So now after six years, we seem to be back where we started. The Air Controllers are getting their union again. The Air Traffic Control System is getting its full strength again. It's not quite clear yet why the nation had to go through all that. MacNEIL: Once again, the main points in the news. President Reagan said there was an increased opportunity for another summit meeting with Gorbachev and a deal on nuclear missiles. Faced with strong opposition in the Congress, the Administration backed off its plan to sell missiles to Saudi Arabia. Panama declared a state of emergency after two days of demonstrations against the military government. The U. S. called for untainted elections and a return to civilian rule. Good night, Jim. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.