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Congress begins its 'Kabuki dance' over wage increase

By CHRISTINA REXRODE
Published January 10, 2007


Raising the federal minimum wage - something that hasn't been done in a decade - is high on the Democrats' agenda now that they control Congress.

Today, said Mike Flynn, a spokesman for the Employment Policies Institute, "is the start of this huge Kabuki dance." It's when the process to approve the wage increase should start rolling.

 

What's happening today in Congress concerning the minimum wage?

The House of Representatives is scheduled to vote on a bill raising the federal minimum wage from $5.15 an hour to $7.25. Also today, the Senate's Finance Committee will hold a hearing on what tax incentives for businesses it could add to its version of the bill.

 

Why is the Senate but not the House considering those concessions?

The Democrats have a substantial majority in the House, 233 to 202, and don't need any Republicans on board to get the bill passed. Democrats have a much slimmer majority in the Senate, 51 to 49.

 

What does the House's bill propose?

It would divide the increase into three phases over about two years: Sixty days after enactment, the minimum wage would increase to $5.85. One year later, it would increase to $6.55, and one year after that, it would increase to $7.25.

 

Would the president sign this into law?

President Bush has said he would, but only if it is accompanied by tax and regulatory incentives for small businesses.

 

How would the wage increase affect Florida?

Not as much as it would affect some states. That's because Floridians voted to amend the state Constitution in 2004, so that the minimum wage would rise each year in conjunction with the Consumer Price Index. On Jan. 1, the state minimum wage rose from $6.40 to $6.67.

In fact, the federal bill might not affect Florida at all. Assuming that the consumer price index increases at a similar rate for the next two years, Florida could easily reach a $7.25 minimum wage by the time the last phase of the federal bill takes effect.

And since Florida's minimum wage increase, unlike the proposed federal increase, is tied to the Consumer Price Index, it would continue to stay ahead of the federal minimum wage after that.

 

Who would the wage increase affect?

It depends on whom you ask.

Proponents paint the increase as a way to help struggling families that are working full-time, year-round.

The Economic Policy Institute, which supports the wage increase, says that 13-million people would benefit from the increase, adding in spillover effects.

According to that institute, 79 percent of the people who would benefit are over the age of 20. But the Economic Policy Institute also says that only 53 percent of those beneficiaries work full time, and only about 26 percent are parents with children under 18.

 

So what's the other side?

Minimum wage workers are not meant to stay in those jobs, said Flynn, the spokesman for the Employment Policies Institute, which opposes the increase. Most minimum wage earners are teens or people who are the second or third earner in a family, he said.

That's especially true in Florida, said Warren May, a spokesman for the state's Agency for Workforce Innovation. Because of the state's low unemployment rate, almost no one is earning $6.67, he said, except "teenagers working in fast food."

 

What are the potential benefits of a wage increase?

The wage increase would bring more people into the work force, encourage employers to invest in their workers, and encourage workers to be productive. It would give low-wage workers more money to spend in the local economy. And it could curb government spending on food stamps and Medicaid.

"Skipping the moral question," said Bruce Nissen, the research director at the Center for Labor Research and Studies in Miami, "it's still in society's economic and social interest to have a living wage."

 

What are the potential disadvantages of a wage increase?

It's doubtful that any small businesses would be forced to shut down, but they might have to hire fewer people. And that, Flynn said, would hurt the very people that the wage increase is supposed to help.