Senate approves minimum wage hike

freedomlover · #1 (**permalink**) 02-01-2007, 07:10 PM

Senate ups wage to $7.25 over two years By JIM KUHNHENN, Associated Press Writer
39 minutes ago

WASHINGTON - The Senate voted overwhelmingly Thursday to boost the federal minimum wage by $2.10 to $7.25 an hour over two years, but packaged the increase with controversial tax cuts for small businesses and higher taxes for many $1 million-plus executives.

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The increase in the minimum, the first in a decade, was approved by a 94-3 vote, capping a nine-day debate over how to balance the wage hike with the needs of businesses that employ low-wage workers.

A top priority of Democrats, the wage hike has both real and symbolic consequences. It would be one of the first major legislative successes of the new Democratic-controlled Congress.

"Passing this wage hike represents a small but necessary step to help lift America's working poor out of the ditches of poverty and onto the road toward economic prosperity," said Sen. Edward Kennedy (news, bio, voting record), D-Mass.

President Bush urged the House to support the measure, including the tax help for small business. He said, "The Senate has taken a step toward helping maintain a strong and dynamic labor market and promoting continued economic growth."

The bill must now be reconciled with the House version passed Jan. 10 that contained no tax provisions. House Democrats have insisted they want a minimum wage bill with no strings attached, though some have conceded the difficulty of passing the legislation in the Senate without tax breaks.

Republicans stressed the importance of the business tax breaks in the bill, though it was a significantly smaller tax package than Republicans had sought during previous attempts to raise the minimum wage.

"The Senate's reasonable approach recognizes that small businesses have been the steady engine of our growing economy and that they have been a source of new job creation, a source of job training," said Sen. Michael Enzi (news, bio, voting record), R-Wyo., who helped manage the debate for the GOP.

The bill presents a challenge to Democrats who must navigate between the demands of labor and other interest groups and the realities of the Senate, where Republicans hold 49 of 100 votes. House and Senate Democrats will try to negotiate a way out of the potential standoff.

House Speaker Nancy Pelosi (news, bio, voting record), D-Calif., has said she supports some of the tax provisions in the House package, but she also has said she would prefer they be put in a separate, House-initiated tax bill.

A spokesman for Senate Majority Leader Harry Reid (news, bio, voting record), D-Nev., said the tax breaks are necessary to overcome a potential GOP filibuster.

"Of course, Democrats would prefer to pass a clean increase in the minimum wage," said the spokesman, Jim Manley. "The fact is that Republicans have made it very clear that the only way we will pass a modest increase in the minimum wage is with tax breaks for small business."

Besides increasing the minimum wage from the current $5.15 an hour, the bill would extend for five years a tax credit for businesses that hire the disadvantaged and provide expensing and depreciation advantages to small firms. The tax breaks would be paid for by closing loopholes on offshore tax shelters, by capping deferred compensation payments to corporate executives and by removing the deductibility of punitive damage payments and fines.

Senators also adopted an amendment that would bar companies that hire illegal immigrants form obtaining federal contracts. That measure was designed to encourage companies to participate in an employee identification program that can weed out undocumented workers.

While the tax breaks have won the support of small business groups as well as retailers and restaurant owners, they have drawn opposition from larger businesses that would bear the brunt of the revenue provisions. Several business groups also opposed the immigration measure.

After the House passed its bill on Jan. 10, the White House issued a statement insisting that final legislation include small business tax breaks. It subsequently issued a statement supporting the Senate version, but said the revenue measures were not necessary.

According to the Labor Department, 479,000 workers earned exactly $5.15 an hour in 2005, the most recent estimate available. Most are young and unmarried and more likely to be women, minorities and part-time workers. According to the liberal Economic Policy Institute, the increase would affect 5.6 million who make less than the proposed minimum of $7.25.

More than two dozen states and the District of Columbia have minimum wages higher than the federal level. The political potency of the issue was evident last November, when proposals to raise statewide minimums passed in all six states where they came to a vote.

Rep. George Miller (news, bio, voting record), D-Calif., a close ally of Speaker Pelosi, said he has talked to key Democrats in the House and Senate to make sure the differences in the bills don't derail the effort to raise the minimum wage.

"We just have to sort it out," Miller said. "I think it can be done. Just don't ask me how."

rob · #2 (**permalink**) 02-01-2007, 07:55 PM

Well, we will have to see if the Senate and House can agree on this. The way I see it, if no comprise can be reached, the Democrats can at least say that they tried to help the working poor.

freedomlover · #3 (**permalink**) 02-01-2007, 08:00 PM

Quote:

Originally Posted by rob

Well, we will have to see if the Senate and House can agree on this. The way I see it, if no comprise can be reached, the Democrats can at least say that they tried to help the working poor.

From what I understand the Senates bill is attached to a two year phase in and small business tax cuts. Lets see if they can work it out.

gixaholic · #4 (**permalink**) 02-02-2007, 11:53 AM

this bill looks allitle better in my eyes..... Tax cuts for business are good...but i would like to see the details before i put my stamp of aproval on it....

rob · #5 (**permalink**) 02-02-2007, 08:40 PM

Here is what the junior senator from Oklahoma, Dr. Tom Coburn said about the bill.

Minimum wage bill flawed
By U.S. Senator Tom Coburn, M.D.

Contrary to what its supporters claim, the minimum wage bill Congress recently passed is unfair to workers and, in most cases, will harm the very workers it supposedly is designed to help. In fact, most workers will experience a minimum-wage penalty rather than a minimum-wage benefit because of this bill. This bill has far more to do with increasing the political capital of politicians in Washington, D.C., rather than increasing real wages of low-income families.

It’s important to realize minimum wage was never intended to be the sole income of a family and few minimum wage earners are the sole income earners in their household. Since 1998, the number of workers earning minimum wage has precipitously declined from more than 4 million to less than 1.9 million. Of those 1.9 million minimum-wage earners, 85 percent are teens living at home with their parents, adults living alone or dual-earner married couples.

Most economists agree a minimum wage actually leads to fewer jobs for unskilled workers. In a survey from the Journal of Economic Perspectives, 71 percent of economists at America’s top universities stated a minimum wage increases unemployment among young and unskilled workers. Moreover, the Bureau of Labor Statistics indicates minimum wage increases in 1990, 1991, 1996 and 1997 led to a decrease in employment among young workers. Our free market economy has proven time and again it is more effective and more efficient than the government in allocating resources.

The Founding Fathers gave states the power in our system of government to innovate and to serve as laboratories of experimentation for governing because they are more accountable to their citizens and responsive to local needs. In the very few instances when government steps into the market place, it’s more appropriately done at the state and local level. This is precisely what’s happening in regard to minimum wage. Twenty-nine states and the District of Columbia already have a minimum wage higher than the federal standard and another 14 states are considering proposals to increase their minimum wage above the federal level. The proposed increase to the federal minimum wage is another one-size-fits-all policy that violates the spirit of our Founding Fathers.

A minimum wage increase also would mean a reduction in benefits such as child care, housing assistance and food stamps for low-wage workers. For example, in Oklahoma low-wage workers are eligible for up to $25,726 in federal assistance. Under the minimum wage increase approved by Congress, these workers would find themselves eligible for benefits worth $4,600 less than they would under the current minimum wage. Yet, their newly increased wage would only provide an increase of $4,368 per year, resulting in a net income loss of $232 per year. The system is designed to provide for the needs of low-income families when their paychecks are not large enough to support them. It’s disingenuous for Congress to tout the minimum wage increase as helping these families when in fact it will harm them.

As a small businessman who has hired hundreds of employees, I know government regulations are both costly and counterproductive. The federal minimum wage increase certainly falls into both categories. To truly raise wages and spur economic growth, Congress should allow both businesses and individuals to keep more of what they earn through their hard work. Increasing wages does little for workers if the government continues to take away earnings. American families deserve an economy in which they can prosper, not more counterfeit compassion from Washington.

freedomlover · #6 (**permalink**) 02-02-2007, 08:54 PM

Rob, thanks for the info-And I must say I agree with him. What he didn't take into account, is that most of this wage hike will be eaten up by taxes, and the rest by the rise in prices of goods. I think this hike is going to hurt the low wage earners a good deal. Excluding the working poor, it is especially going to hurt low-wage two income earners.

rob · #7 (**permalink**) 02-02-2007, 09:27 PM

I have to agree with you on this.