As part of the Democrats’ first 100 hours agenda, the attempt to expeditiously pass legislation to increase the federal minimum wage has hit a snag in the U.S. Senate over tax breaks for small business owners.
The legislation called the Fair Minimum Wage Act of 2007 (H.R.2) went before the U.S. Senate on Jan. 24, and was struck down in a 54 to 43 cloture vote, citing the bill’s failure to include tax cuts for businesses that would be heavily impacted by minimum wage increases. A cloture vote is a method of closing a debate and causing an immediate vote to be taken on an issue.
“The cloture vote was used to see if the House’s clean bill would pass without the tax breaks,” said Carol Guthrie, U.S. Finance Committee Communications Director, in a recent telephone interview. “Because it didn’t, it now will be amended.”
The act, authored and introduced by Congressman George Miller (D-Calif.), cleared the House of Representatives on Jan. 10, by a 315-116-4 vote. It was designed to require employers nationwide to increase the minimum wage by three increments of 70 cents over a two-year span. Currently, the federal minimum wage is $5.15 an hour and has not been increased in nearly a decade.
The House vote did not go without attempts to thwart it.
Howard “Buck” McKeon (R-Calif.) proposed alternative minimum-wage hike legislation that would have created a small business health care plan. The motion was defeated on a voice vote.
Currently, 22 states are at or below the federal minimum wage standard.
Kansas and Oklahoma offer among the lowest in minimum wage. Low-wage workers in Kansas, for example, make $2.65 an hour.
The current bill, for the first time, would address federal minimum wage in the Northern Mariana Islands, a U.S. territory that was shielded from Federal Labor laws for years because of the efforts of now-imprisoned lobbyist Jack Abramoff and his Republican allies in Congress.
“In Kansas, workers are stuck at that wage level when their gas prices are higher than their hourly wage,” said Brad Sherman (D-Calif.) “That’s not acceptable.”
The proposed legislation seeks to increase the national minimum wage by 41 percent.
“[The goal is] to pay workers $7.25 an hour by 2009,” Sherman said.
“No one wants to work for $5.15 an hour. It will encourage people to take jobs that they wouldn’t take before.”
Concerns brought forth by critics that the proposed act will hurt businesses, increase costs to consumers and force employers to cut hours or staff is at the heart of the controversy.
In a recent statement released by the White House, President Bush said he “supports increasing the minimum wage by $2.10 over two years, but opposes H.R. 2 in its current form because it fails to provide relief to small businesses.”
In order for the Democrats to get the needed support to pass the legislation, an amendment to include tax cuts was drafted by Max Baucus (D-Mont.), who is the chairman of the U.S. Finance Committee. His amendment offers a variety of tax breaks and incentives and is called the Small Business and Work Opportunity Act of 2007.
“After each proposed tax break is debated, the Senate will vote on a reworked bill that will include tax cuts, and send it back to the House,” Guthrie said. “The Senate will probably vote on it (soon).”
“I’ll take a look at what is in the tax portion of the bill when it comes up,” said Sherman, who was elected to office in 1997.
Since the federal minimum wage has remained unchanged for the last decade, 28 states have taken action on their own, and increased their minimum wages. A number of those states’ have automatic increases for inflation. California is not one of them. “Governor Schwarzenegger failed to approve the minimum wage to increase with the cost of living,” Sherman added.
In California the minimum wage is now $7.50 an hour and will be $8 an hour by 2008.
Business owners and professors agree with critics and say that if the bill passes that there will be job cuts and higher consumer prices.
“The wage increase could have an effect on entry level jobs,” said Dr. William deRubertis who has been teaching political science at Pierce College for 37 years. “Low entry jobs are sometimes easily replaced with capitol. For example a person who has a job to sweep the streets could be replaced with a street sweeper machine. There will be some trade offs.”
Rollin Engelsen who owns Offside Sports in Tarzana, a team outfitters screening and embroidery business, said the increase will force him to pass the increases he will incur onto his consumers and his employees.
“I usually give my employees two raises a year up to $1, now I will only be able to give one.”
Engelsen said suppliers he buys from would most likely increase their prices.
“Because I won’t lower my standards or quality in workmanship, I will have to increase my prices,” he said.
Danielle Vaughn, 22, who works at Marie Callender’s in Sherman Oaks as a server and is paid minimum wage plus tips said although she is happy about the increases,
she does not think it will have too much of an impact on her life.
“I think it needs to be increased because the cost of living increases no matter where you live,” Vaughn said, “But by the time I get it, the cost of living will have increased.
Maybe I can get health insurance or take a drive up north, but I don’t see myself going to Hawaii or planning for retirement.”
Vaughn also added she is seeing the increases being passed on to the customers and is now required to take a break for a shorter shift.
“Prices on the menu went up,” she said. “We have to take breaks to get the cost of labor down. A five-hour shift now requires a 30-minute break.”