Senate Passes 90-Cent Hike in Minimum Wage

The Senate voted Tuesday to give the nation’s lowest-paid workers a 90-cent raise over the next two years, resolving an election year standoff in which leaders of the Republican majority found themselves on the losing side of public opinion.

By a lopsided 74-24 vote, the Senate approved a two-step increase in the federal minimum wage, first from $4.25 an hour to $4.75, and a year later to $5.15. Although the legislation called for the first raise to take effect July 1, a House-Senate conference committee is expected to delay the increase until sometime around Labor Day, Sept. 2. The committee must resolve differences between House and Senate versions of the legislation.

About 10 million Americans are expected to benefit from the wage hike, the first increase in the base wage since 1991.

The bill includes a package of tax relief worth about $6.5 billion over 10 years to small businesses, which lobbied unsuccessfully for an exemption from the wage hike. The tax breaks would create more liberal business expense rules, simplify pension regulations and provide other tax breaks for small employers.

Twenty-seven Republicans joined 47 Democrats--including Californians Barbara Boxer and Dianne Feinstein--in voting for the bill. Twenty-four GOP senators were opposed. Boxer said that the 90-cent increase would mean $1,800 a year to 1.3 million Californians.

“At long last, we can tell every person on minimum wage: ‘You will get a raise,’ ” said a jubilant Senate Minority Leader Tom Daschle (D-S.D.). “We’re extremely pleased with the outcome of today’s vote. It exceeded our expectations.”

Democrats have maintained that inflation has reduced the purchasing power of the minimum wage to a 40-year low and surveys have shown overwhelming public support for an increase. Republicans, backed by some economists, have argued that the wage hike would reduce the number of low-wage jobs in the economy.

Senate approval of the measure, which passed despite a fierce campaign by GOP leaders to reduce the scope of the increase and delay its effective date, represents a key election year victory for Democrats and organized labor.

The House passed its version of the legislation in May, 281 to 144. The differences between the two versions of the bill chiefly involve the tax relief provisions for small business and are not expected to prevent final passage.

While both bills had set July 1 as the effective date for the first increase, Republican leaders do not want to make the wage hike retroactive. Key Republicans and Democrats seem inclined to get the bill to President Clinton quickly enough to allow the increase to take effect by Labor Day.

Before the final roll call was taken, the Senate defeated two amendments--one offered by Republicans and another by Democrats--designed to appease the parties’ key constituents.

Aided by four Republican crossovers, Democrats defeated on a 52-46 vote a GOP amendment that would have shielded businesses from the immediate impact of the wage increase. White House officials had threatened a Clinton veto if the amendment had passed.

Offered by Sen. Christopher S. Bond (R-Mo.), the amendment would have delayed the first step of the increase until Jan. 1, 1997, and the second step until Jan. 1, 1998. It would have exempted altogether small businesses generating less than $500,000 in annual revenue and created a sub-minimum wage for all workers during the first six months on a new job.

Daschle said that defeat of the Bond amendment was “the key vote” on the minimum wage. Its passage, he said, “would have gutted everything that we intended to do.”

Republicans responded by defeating an amendment sponsored by Sen. Edward M. Kennedy (D-Mass.) by a similar 52-46 vote. Kennedy’s proposal would have eliminated provisions in the House bill that organized labor opposed. Three Democrats supported the Republicans, and one Republican voted with the Democrats on the Kennedy amendment.

After the Senate vote, Clinton stepped outside the Oval Office briefly to urge lawmakers to send the wage increase legislation to him immediately for his signature.

“The way has now been cleared for final passage of a minimum wage bill,” Clinton said during an impromptu news conference.

“There’s no reason that minimum wage workers should have to wait any longer for their raise,” he said. “This is not a time to nickel-and-dime our working families.”

Times staff writers Janet Hook and Edwin Chen contributed to this story.

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U.S. Minimum Wage

The minimum wage, which had held steady since 1991, lags far behind the nation’s average hourly wage.

Average hourly earnings of production workers in all private industries.

*--*

Minimum wage Average hourly wage ’38 $0.25 ’56 $1.00 $1.80 ’74 $2.00 $4.24 ’81 $3.35 $7.25 ’90 $3.80 $10.01 ’96 $4.25 $11.72*

*--*

* Average of first six months

Source: U.S. Dept. of Labor, Employment Standards Administration