$5.05 an Hour by 1992 : Battle Lines Forming for Minimum Wage Bill

Congress is nearing a classic showdown between liberals and conservatives over a bill to raise the federal minimum wage, unchanged at $3.35 an hour for more than seven years, to $5.05 by the beginning of 1992.

The confrontation will occur 50 years after President Franklin D. Roosevelt won a long struggle to enact a 25-cent-an-hour minimum as one of the pillars of his New Deal plan to pull the nation out of the Great Depression.

Surprisingly, the debate is remarkably similar, despite the passage of half a century. Backers of the measure say it is a modest effort to help millions of “working poor” in the lowest-paid jobs in retail stores, fast-food restaurants and nursing homes who have not shared in the upward spiral of wages.

Opponents, aided by a well-organized business lobbying campaign, contend that increasing the minimum wage by any amount would destroy jobs and rekindle inflation while benefiting only middle-class, suburban young people.

Several states--including California--have already enacted higher minimum wage scales than the federal standard. California, for example, recently raised its rate to $4.25 an hour starting next July.

The contemplated 50% increase in the federal floor under wages over a 36-month period would directly affect about 17 million workers on the margins of the labor force. A worker who earns $3.35 an hour and puts in 40 hours a week makes $6,970 a year, which is below the federal poverty level of $11,600 for an urban family of four. In contrast, the average hourly pay of the 85 million non-government workers rose in February to $9.17, almost three times the present minimum rate. Those workers earn a yearly total of $19,073.

Battle lines are forming for a bitter clash in the House next month on a bill sponsored by California Rep. Augustus F. Hawkins (D-Los Angeles) with strong backing by the Democratic leadership, organized labor, churches, women’s groups and civil rights forces. Lining up on the other side are the U.S. Chamber of Commerce, the National Assn. of Manufacturers, representatives of the health-care industry and small businesses.

Because the Republicans controlled the Senate for six of the past seven years, Democratic sponsors of minimum wage legislation were stymied in their efforts to get a bill out of the Senate Labor Committee. But now, with Democrats controlling the Senate, the situation has changed and Democrats believe that they have a chance to bring a bill to the Senate floor.

Hawkins said in a telephone interview, however, that the outcome in the House is still in doubt. “It’s a tight battle--we now have a 50-50 fighting chance. We may not pick up enough Republican votes to offset our Democratic losses,” he said, referring to Southern Democrats’ traditional opposition to such minimum wage bills.

If the House approves an increase, Sen. Edward M. Kennedy (D-Mass.) is prepared to lead the fight in the Senate for comparable legislation. President Reagan’s aides, however, have hinted that he will veto any bill that would lift the minimum to $5.05, despite the possible election-year risks for Republicans in such a course.

Version Has Sweetners

There is practically no chance that the Democratic-controlled Congress would override such a veto in view of strong Republican and Southern Democratic opposition to minimum wage increases that would prevent the proponents from mustering the required two-thirds majority.

“If we get it through both houses, we’d at least call the President’s bluff,” Hawkins said. An aide to a GOP congressman, however, said that he suspects the Democrats’ motives. “Their goal may be simply to embarrass the Republican Party” in an election year, he said.

The bill reported by Chairman Hawkins’ Education and Labor Committee in the House, however, has some sweeteners for small business and the restaurant industry, which traditionally are in the forefront of the opposition to such measures.

It would raise the tip credit from 40% of the minimum rate to 50% after two years, thus requiring that workers who get tips need be paid only half the minimum rate on the assumption that they receive the other half in the form of gratuities. Since this would save a considerable amount of money for restaurateurs, backers of the bill say it would tend to assure their support for enactment.

Another change would raise the small-business exemption for retail and service industries from $362,500 a year to $500,000 in sales volume, thus exempting more of the smallest firms from federal coverage.

The minimum wage, Hawkins said, has been increased 16 times since it was first put on the books in 1938. “History shows that pouring additional money into the economy would stimulate the creation of new jobs,” he added, “but the coalition against us, led by the Chamber of Commerce, has frightened people unnecessarily. And they are strongly organized.”

Rick Berman, an attorney who heads the business-run Minimum Wage Coalition to Save Jobs, said it opposes any increase in the $3.35 figure on grounds that it would eliminate jobs rather than raise wages for the lowest paid. He acknowledged, however, that the balloting in November might affect the outcome.

“An election year favors the proponents,” he said. “But that $5.05 figure has to come down for that bill to pass. . . . You get a different dynamic every time you change that number.”

The committee-passed bill, approved by a 19-15 vote along party lines, cannot get through both houses of Congress and be signed by the President, Berman said.

The measure calls for an increase to $3.85 an hour, starting next Jan. 1, with a rise to $4.25 on the first day of 1990, another increase to $4.65 in 1991 and the final rise to $5.05 on Jan. 1, 1992.

Hawkins said the major fight probably would occur over a Republican proposal to allow business firms to pay a “training wage,” far below the minimum, for up to 90 days. Such a subminimum, opposed by organized labor as a way of undercutting the basic wage, has been an issue in these legislative battles since the early 1960s.

Heavy Lobbying Anticipated

Meantime, the lobbying of members of Congress by labor and business is expected to be intensive during the 10-day Easter recess that starts Friday.

“Wage stability allows business to prosper and flourish and employees to benefit, too,” said a Chamber of Commerce spokesman on behalf of the opposition.

“Business establishments don’t want to pay a decent wage--they want to go backwards,” said a spokesman for the AFL-CIO, leader of the groups supporting the bill.