posted January 10, 2007 04:30 PM              

House Dems Move to Boost Minimum Wage
By JEANNINE AVERSA, AP

WASHINGTON (Jan. 10) - Tackling a top priority, House Democrats pushed a $2.10 an hour increase in the federal minimum wage toward passage Wednesday, calling it only a partial restoration of purchasing power for America's lowest-paid workers.


The legislation proposed by House Democrats -- and tagged as one of their top priorities -- boosts the federal minimum wage from $5.15 to $7.25 an hour over 26 months.
Win McNamee, Getty Images
The legislation proposed by House Democrats -- and tagged as one of their top priorities -- boosts the federal minimum wage from $5.15 to $7.25 an hour over 26 months.

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As their second bill since taking control of Congress, the Democratic-written legislation would raise the federal wage floor from $5.15 to $7.25 an hour in three steps over 26 months. The federal wage hasn't budged for 10 years.

House Majority Leader Steny Hoyer, D-Md., said passing the boost "is simply a matter of doing what's right, what's just, and what's fair."

"If the minimum wage had been adjusted with the cost of living on an annual basis since 1968, a minimum wage worker would not be making $5.15, not be making $7.25, would be making $9.05," he said.

Organized labor and other supporters pitched the bill as coming to the aid of the working poor. Business groups and other opponents said it could lead to higher prices for goods and services, force small companies to pink-slip existing workers or hire fewer new ones, and crimp profits.

"In America we can either have maximum opportunity or we can have minimum wages. We cannot have both," said Rep. Jeb Hensarling, R-Texas.

The bill would raise the wage floor in three steps. It would go to $5.85 an hour 60 days after signed into law by the president, to $6.55 an hour a year later, and to $7.25 an hour a year after that.

"For 10 years the lowest-paid Americans have been frozen out. They have been working at a federal poverty wage, not a federal minimum wage," said Rep. George Miller, D-Calif., author of the legislation.

President Bush said he supports a wage boost paired with "targeted tax and regulatory relief" to help businesses - which would have to pay for the higher labor costs - stay competitive. As currently written, the House bill doesn't include any such tax or regulatory breaks.

House Democrats are denying Republicans any chance to amend the minimum wage bill. Rep. Howard McKeon, R-Calif., complained that constituted a "a series of colossal missed opportunities"

The Senate is expected to move quickly - perhaps in the next few weeks - on a similar bill. Business groups and some Republican lawmakers, however, hope they will be able to get some business-friendly provisions into the Senate package.

The last time the federal minimum wage rose was in 1997. That's the longest stretch without an increase since the minimum wage was established in 1938. Inflation has eroded the minimum wage's buying power to the lowest level in about 50 years.

The Labor Department says 479,000 workers paid by the hour earned exactly $5.15 in 2005, the most recent estimate available.

The federal minimum wage is like a national wage floor, though some people can be paid less under certain circumstances. States can set minimum wages above the federal level; more than two dozen states plus the District of Columbia do.

People who are paid the minimum wage tend to be young - under age 25 - never married, more likely to be a woman, a minority and work part time, according to a recent analysis of 2005 data by the Labor Department.

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If the federal wage does rise in 26 months to $7.25 an hour, about 5.6 million people - 4 percent of the work force - who make less than this would be directly affected, according to the Economic Policy Institute, a liberal leaning group. The group estimates that another 7.4 million workers would benefit indirectly as raising the floor would ripple through the work force.

That means higher payroll costs for employers.

"It is an economic reality that if the federal minimum wage increases by 41 percent, it will put upward pressure on all labor costs for small businesses, which continue to be the engine of economic growth in the United States," the National Retail Federation complained in a letter Tuesday to House Speaker Nancy Pelosi of California.

The retail group expressed concern about the "lack of balance" in the House bill because it doesn't include other provisions to help ease the economic impact on companies.

Many businesses want the pot sweetened, perhaps by faster depreciation or other tax breaks or letting small businesses band together to buy health insurance for their workers.

But AFL-CIO President John Sweeney shot back saying: "An increase in pay for America's lowest-paid workers should not have to depend on additional payoffs to business."

Both the House and Senate minimum wage bills also would extend the minimum wage - on a separate time table - to employers on the Northern Mariana Islands, a U.S. territory.

Recent attempts to boost the federal minimum wage had failed when Republicans had control of Congress. But prospects changed after the Nov. 7 midterm elections put Democrats in charge in both the House and Senate.

1/10/2007 12:41:36 EST

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