Senate Approves Hike in U.S. Minimum Wage

The Senate approved a Republican-backed measure Tuesday to raise the $5.15-an-hour federal minimum wage by $1 by early 2002, but the provision may not make it into law before Congress adjourns for the year.

The 54-44 vote, adding the minimum-wage proposal to a bill to tighten the nation’s bankruptcy laws, essentially followed party lines. Democrats had sought to substitute a two-stage hike that would become effective in 13 months, but that was defeated, 50 to 48.

The GOP-backed measure faces formidable obstacles. President Clinton, calling the legislation “a serious mistake,” threatened to veto it unless it is changed, mainly to delete some tax breaks for business that the Republicans included. “I cannot let this bill become law in its current form,” he told reporters.

At the same time, the Senate struggled with a spate of other amendments to the bankruptcy bill that could delay final action on the measure--and the minimum-wage provision that lawmakers have now added to it--possibly until next year.

The outlook in the House is even murkier. Republican leaders there have served notice that they will not bring a minimum-wage bill to the floor until they are sure it will pass. Currently, the House Ways and Means Committee and a bipartisan coalition of other lawmakers have rival proposals.

If approved later by the House, the minimum wage increase would be the first enacted by Congress since October 1996, when lawmakers approved a two-stage, 90-cent-an-hour hike, up from $4.25 before. That increase had been the first in five years.

Labor Department analysts said that the full impact of the proposed increase would be uncertain. Although as many as 11.4 million workers could be affected by the wage boost, many are unlikely to see any increase because their occupations are exempt or their wages are not reported.

Some states already have minimum wages that are higher than the federal government’s--California requires employers to pay workers at least $5.75 an hour. But an increase in the federal minimum could boost the wages in some of these states as well.

The proposal approved by the Senate on Tuesday would raise the federal minimum wage in three stages, increasing it to $5.50 an hour on March 1, 2000, to $5.85 an hour on March 1, 2001 and to $6.15 an hour on March 1, 2002.

It also contains $18.4 billion worth of tax relief for small business, designed to help offset the cost of paying higher wages. By contrast, the Democratic bill would have provided $9 billion in tax relief over the same period.

The push to boost the minimum wage traditionally has been a tried-and-true issue for Democrats, who have contended that the increases are necessary to enable low-wage workers to maintain their standards of living.

Republicans usually have opposed any increase as counterproductive, arguing that it would heighten business costs and force companies to crimp hiring. More recently, however, the GOP has supported minimum-wage hikes, provided the legislation contains tax subsidies to help business.

At the same time, the importance of the minimum wage in the U.S. economy has diminished in recent years as rising demand--and private-sector wages--have pushed pay in many entry-level jobs well above the federally mandated minimum.

Barry P. Bosworth, a Brookings Institution economist, said that increases in the minimum wage “don’t have as much impact” as they once did. He said that changes in demographics and the structure of the economy have reduced political support for frequent increases as well.

Even so, senators from both parties sought to use Tuesday’s minimum-wage fight to position themselves for the 2000 election.

Democrats lambasted the GOP proposal as “watered-down” and a “raw deal” for low-wage workers, while Republicans defended their plan as one that would provide a badly needed pay raise while mitigating the impact on small business.

California’s two Democratic senators, Dianne Feinstein and Barbara Boxer, voted for their party’s proposal and against the Republican-sponsored provision.

The minimum-wage measure was attached to a bill designed to overhaul the nation’s bankruptcy laws to make it more difficult for individuals to erase their debts entirely when they file for bankruptcy. The Senate is expected to pass that bill today.

A few hours after the Senate acted, the House Ways and Means Committee approved similar legislation, along with $30 billion in tax breaks for business. The breaks include a proposed $16.2-billion cut in the estate tax.

But House strategists conceded that they still have no indication when--or even whether--the bill will go to the floor, and liberal Democrats seem almost certain to vote against a tax-cut package that large.

Deleted by the Ways and Means panel was a provision contained in the rival bipartisan measure that would have provided a tax credit to encourage independent movie and TV producers to make films in the United States instead of going abroad to cut costs.

Ways and Means Committee Chairman Bill Archer (R-Texas) had complained that the tax credit was unnecessary, and some conservatives had feared that makers of pornographic films might inadvertently qualify for the tax breaks.