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March 1, 2007 9:08 AM CST

Minimum Wage Fight is Far From Over


For the first time in over a decade, Congress has voted to increase the minimum wage, but the fight isn't over for Democrats. The current minimum wage, $5.15, has not seen an increase since 1997. The Senate finished its work on the minimum wage legislation in early February, but not before including tax breaks for businesses and an immigration provision. Despite widespread public and congressional support for a minimum-wage hike, the bill faces several hurdles before it can be sent to the President's desk.

Before the mid-term elections, Democrats made no secret that raising the minimum wage was a top priority for the party. The Democratic leadership in both chambers of Congress were able to claim victory in early February when the Senate completed its work on legislation that would increase the minimum wage by $2.10 over two years. The increase would occur in three, 70-cent increments: the first step, from $5.15 an hour to $5.85, would take place 60 days after the legislation's enactment; the second step, to $6.55, would take place one year after the first increase; and the third step, to $7.25, would occur one year later, in spring 2009.

However, the minimum wage legislation left the Senate with several amendments attached. For the first time, the federal minimum wage would extend to the Northern Mariana Islands, a U.S. territory in the Pacific Ocean. The wage would be established at a lower level, $3.55 an hour, and increase in 50-cent increments every six months until reaching the $7.25 rate. Opponents of the Senate-revised bill believe that some of the amendments were "poison pills" meant to make the bill unattractive to the House. The House and Senate must resolve their differences before sending the bill to the President's desk.

Senate Majority Leader, Harry Reid (D-NV), agreed to include an $8.3-billion package of tax incentives to garner support from Republican Senators. However, the bipartisan vote hardly signals a smooth finish for the minimum wage legislation, which previously had passed in the House in only a matter of hours. Also included in the Senate's version of the minimum wage legislation is a provision that is deeply disturbing to the construction industry: the immigration provision.

The provision was introduced by Sen. Jeff Sessions (R-AL). Sessions introduced an amendment to address what he deems to be problems with employment verification, specifically in the construction industry. During a floor speech, Sessions railed against the construction industry, maintaining the industry is in favor of immigration reform only to have access to cheap labor. If enacted, Sessions' amendment would debar companies from bidding on federal projects if they inadvertently violate immigration law. The existing federal debarment process protects the government's proprietary interests; it is not used to punish first-time offenders with what is comparable to a corporate death sentence. The current Federal Acquisition Regulations already grant the authority to debar businesses for a wide range of improper conduct, including commissions of a criminal offense or a civil judgment for conduct involving fraud. Because of the severity of the punishment, the debarment process includes a 10-part test that differentiates habitual offenders from those who have made a simple mistake.

The Sessions amendment is comparable to using the nuclear option for a paperwork violation. The amendment will have ramifications well beyond immigration law, and would open the floodgates to using the procurement system as an enforcement mechanism for even first-time paperwork violations.

Opponents of the Senate bill maintain that Sessions' efforts are meant to derail the process to stop minimum wage legislation from moving forward. Both business and union lobbyists want the proposal removed from the package, and some observers hypothesized that lawmakers might not have realized what the amendment entailed.

The House-passed version of the bill does not include any tax breaks for small businesses, nor does it include any frivolous language, such as the Sessions amendment. Republicans in the House who were extremely upset when the Democratic leadership refused to allow amendments to the wage legislation, therefore not allowing the possibility of tax breaks to be included.

House Education and Labor Committee's Senior Republican, Rep. Howard P. "Buck" McKeon (R-CA) applauded the strong Senate vote to protect small businesses and their workers as part of a broader minimum wage package.

McKeon said in a statement immediately following the Senate's vote that "after a tremendous missed opportunity in the House to extend important protections to those who represent the backbone of our economy, I'm pleased the Senate has stepped into the breach and joined House Republicans in making this issue a priority." McKeon continued, "Small businesses create two-thirds of our nation's new jobs, and they represent 98 percent of our new businesses. They and their workers are counting on Congress to consider how any minimum wage proposal would impact them, and the first time around, House Democrat leaders simply didn't."

The minimum wage legislation will be the Democrats' first opportunity to show whether or not they will in fact work in a bipartisan manner, as promised by both Reid and House Speaker Nancy Pelosi (D-CA). As previously mentioned, Speaker Pelosi guided a stand-alone wage increase through the House in January. She and Rep. Charles Rangel (D-NY) objected to the Senate's decision to attach the business tax breaks, which were written by Finance Chairman Max Baucus (D-MT). Many Senate Democrats, including bill sponsor Sen. Edward M. Kennedy (D-MA), also were not pleased with the deal reached by leaders of both parties in the Senate.

Kennedy, a longtime advocate for raising the minimum wage, vehemently opposed including the tax package with the House bill. Immediately after the measure passed, Kennedy described the vote as a "very clear message," but not a "victory."

Two Democratic presidential hopefuls calling for decisive action on the minimum wage increase joined Kennedy at a news conference.

"I think it's absolutely critical for us to make sure that we keep fighting on this," said Sen. Barack Obama (D-IL). "This should not be loaded up. This should not be complicated. ... The notion that we are still using this as a bargaining chip or dickering for various other tax breaks makes no sense. It's time to get this done."

Sen. Hillary Rodham Clinton (D-NY) noted the importance to women of an increase in the minimum wage and said Senate passage was a moment to pause and celebrate.

Even Baucus, who has said repeatedly that Democrats would not be able to pass a minimum wage increase in the closely divided Senate without some tax incentives attached, expressed hope that Democrats could find a way to clear the bill without so-called "business sweeteners."

Democrats may get their wish by invoking a procedural rule mandated by the Constitution, since the Senate may have overstepped its boundaries by attaching the tax breaks to the Senate version of the bill. Under the Constitution, all tax measures must originate in the House of Representatives. The leadership in the House has raised the possibility of lodging a constitutional objection to a tax measure originating in the Senate, but Ways and Means Chairman Rangel has said he will hold off for now. The fight over whether to raise the minimum wage is far from over. However, both Democrats and Republicans have made it clear that their desire to get minimum wage legislation passed is going to trump all other provisions that may or may not be part of the final bill.

About the Author

Jessica Johnson Bennett was the Director of Government Affairs for MCAA. She has an extensive background in public affairs and government relations. Her expertise in strategic planning, PAC management and operations help on key policy issues.


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