Minimum Wage Increase Passed In Senate; Now Senate/House Must Compromise

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The Senate has voted to increase the federal minimum wage to $7.25. However, the Senate's bill also gives $8 billion in tax cuts to small businesses, whereas the House's bill is 'clean'.

Senate signs off on minimum-wage, small-biz tax breaks bill - Feb. 1, 2007

Senate passes minimum-wage, tax break bill
Conflicting bills to put House, Senate Democrats at odds over amendments.
By Christian Zappone, CNNMoney.com staff writer
February 1 2007: 6:06 PM EST

NEW YORK (CNNMoney.com) -- The Senate voted 94-3 Thursday to increase the federal minimum wage in three steps from $5.15 to $7.25 in a bill that also gives $8 billion worth of tax cuts to small business.

The bill, following an exhaustive debate that brought dozens of proposed amendments mostly by Republicans, now goes back to the House of Representatives, where the original bill passed on Jan. 10 with no amendments.

The difference between the Senate bill and the "clean" House bill will become a test of the Senate's and the House's will to compromise.

Sen. Sherrod Brown (D-Ohio) invoked civil rights leader Martin Luther King in a press conference after the vote: "MLK said equality means dignity and dignity demands a paycheck that lasts throughout the week," Brown said. "This is a small down payment on social justice."

But both sides claimed victory.

"This is a testament to what we can accomplish when we work together to move critical legislation forward," said Senate Minority Leader Mitch McConnell (R-Ky.). "We look forward to working with the House of Representatives to send a final bill to the President that will be a victory for both those who earn the minimum wage and those who pay it."

The added tax breaks are an attempt to compensate small businesses, which many argue will bear the brunt of a minimum-wage increase. To pay for those tax breaks, the Senate bill includes provisions closing corporate tax loopholes and provisions that would also cap the amount of tax-deferred compensation executives are entitled to.

The House technically has the right to set aside any tax or budget bill that come from the Senate.

Rep. Charles Rangel (D-N.Y.), chair of the House Ways and Means Committee, had earlier reiterated his prerogative to "blue-slip" or set aside indefinitely such a bill coming from the Senate.

Senate Republicans and President Bush, however, have said they wouldn't support a minimum-wage bill without tax breaks for small business.

House Democratic staffers say the mood in the House is to let the Senate do what it needs to do in order to get a bill passed there.

Democratic senators were optimistic about compromise. Sen. Edward Kennedy (D-Mass.), a longtime advocate of the minimum-wage raise, said, "with a vote of 94-3 this is going to happen," noting, however, that he hopes it happens sooner rather than later.

A minimum-wage hike, which hasn't occurred since 1997, has been a key piece of the first 100 hours of legislation promised and passed by the newly elected Democratic majority in the House.

A minimum-wage hike would directly affect 6.6 million workers currently earning the $5.15 wage, according to the labor-backed Economic Policy Institute.

The hike could also increase the wages of another 8.3 million who earn just above the minimum. Workers in 28 states plus Washington, D.C., already have a higher minimum wage. A number of those states have automatic increases for inflation.
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I can't believe the min. wage is as low as it is in some states. In MT it's 5.15, that's not even poverty wage. There is no way people can live on that little.
I'm all for a fed. min. wage hike, and I'm glad I now live in a state where the minimum is at least close to a realistic living wage.
 
it is about damn time. it is absurd that this country thinks people can live off of $10k salary, thats way below the poverty line. it didn't make sense that the poverty line was at one point, and the minimum wage was at another. shouldn't they be the same number?
 
^ They should, if the government gave a shit about poor folks, which they most definitely don't.
 
MrBrau1 said:
Did the Senate tack on a pay raise for themselves?
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FYI those times when the pay raise passes, many of the members refuse to accept the higher pay.


Anyway, yeah the govt needs to stop turning a blind eye to those struggling to survive in this country. We'll see how this goes.
 
Makes sense politically I suppose, but economically, minimum wages never make sense. If they really provided a living wage with no untoward economic effects, why don't poor countries around the globe just "minimum wage" themselves out of poverty?
 
Here's a different perspective on the minimum wage bill:

It's going to damn near destroy our economy here in Saipan (which will be included in the minimum wage increase).

Until now, we've been allowed to have our own labor dept. with our own minimum wage--which has been at--get this--$3.05 an hour for years. Well now, our wage independence is over, we are going to be on the same minimum wage rate as the U.S. and within the next few years our minimum wage will skyrocket, more than doubling to $7.25, and devastating local buisness and our already wobbly economy. It is literally the biggest news event happening in our islands right now.

There's a some dissension here. Obviously minimum wage workers are excited (though I don't think they realize that most of them are going to either be fired or watch the companies they work for go under and then they'll be getting NO wages), but there's a lot of opposition, especially from the business community. Even the mission school where I work is trying to figure out what to do. None of us make much, all of us make much, much less than those that teach in other private schools or public schools (though we get perks like a car to use and a steeply discounted rent on our apartmetns)--I myself net about $8000 annually. Now with the minimum wage being raised my wife (who is the principal of the school) is trying to figure out who she's going to meet payroll for our minimum age workers (like our preschool teachers) who within a year will be making more than the certified teachers in our school.

Most of the people who work for minimum wage workers in Saipan are guest workers from countries such as the Philippines and China, as most of the local population doesn't want to work for that little and there are "normal" salaried jobs to be had in the government, primarily. So I suppose a lot of those folks will have their contracts terminated and be sent home, which is rough for them because they came here precisely because the wages they make here are far better than anything they could make in their home countries.

That said, I do believe the minimum wage here should have been raised here along time ago, and if our local politicians and buisness hadn't been so short-sighted we could have our raised our own minimum wage at a more gradual rate that would have been fair and yet not shocked the island economy. But our pols refused to make the hard choices in the past and now Washington is making the choices for us, and it is hurting. I suppose in the long run it will help fix some serious dysfunctions in our local economy and gov. and will ultimately be a good thing, but in the short run, it is going to devastate us, I think.

That's the perspective on this bit of U.S. soil anyway.
 
INDY500 said:
why don't poor countries around the globe just "minimum wage" themselves out of poverty?
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Because multinational corporations looking for countries to exploit have a lot of clout with these corrupt governments.
 
BonoVoxSupastar said:


That's a pretty simplistic view.
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Are you an advocate of a much higher gasoline tax to lower consumption? (which at some level it would indeed do)

How is labor any different? If the price is too high--you sell less of it...be it gas, wine or labor.

It really is that simple.
 
Ormus said:


Because multinational corporations looking for countries to exploit have a lot of clout with these corrupt governments.
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I wonder if those workers in "multinational corporate" factories in poor countries feel "exploited" making $2 an hour knowing most others in their country make much, much less doing much more dangerous work.
 
INDY500 said:

How is labor any different? If the price is too high--you sell less of it...be it gas, wine or labor.
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Gas and wine don't have families to raise, rents to pay, medical expenses, etc.
 
maycocksean said:
Here's a different perspective on the minimum wage bill:

It's going to damn near destroy our economy here in Saipan (which will be included in the minimum wage increase).
Click to expand...

It seems like there should be a way to take that into account in a bill like this. Obviously, what constitutes a fair living wage is going to vary in different econonmic areas. It doesn't do anyone any good to raise the minimum wage to a point that the economy collapses, but at the same time the working poor in the US need a higher minimum wage. How anyone (congress! :madwife: ) could think the minimum wage should be the same in those 2 places is beyond me.
 
BonoVoxSupastar said:


Yeah it kinda does...
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Are you, then answer me this.

If raising the minimum wage to $7.25 is good, wouldn't $9.25 be even better? In fact, if raising the price of hiring people won't lower the demand, let's make the minimum wage an even $20.oo and shrink this gap between hourly employees and CEOs.
 
INDY500 said:

If raising the minimum wage to $7.25 is good, wouldn't $9.25 be even better? In fact, if raising the price of hiring people won't lower the demand, let's make the minimum wage an even $20.oo and shrink this gap between hourly employees and CEOs.
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It's more of a living wage than a minimum wage. Something like 29 states already have a minimum wage higher than the federal minimum anyway. This is the first increase in 10 years, and it's only $2 an hour. Meanwhile, CEO salaries have skyrocketed over the same period.
 
ntalwar said:


It's more of a living wage than a minimum wage. Something like 29 states already have a minimum wage higher than the federal minimum anyway. This is the first increase in 10 years, and it's only $2 an hour. Meanwhile, CEO salaries have skyrocketed over the same period.
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True, and it's very bothersome. But it's none of the governments business how much or how little businesses pay their employees or charge for their products and services.

Let's help lower wage working families, but raising the minimum wage is just as likely to go into the pockets of well-off kids working weekends at The Footlocker. Assuming they still have a job.
 
INDY500 said:


True, and it's very bothersome. But it's none of the governments business how much or how little businesses pay their employees or charge for their products and services.

Let's help lower wage working families, but raising the minimum wage is just as likely to go into the pockets of well-off kids working weekends at The Footlocker. Assuming they still have a job.
Click to expand...

How would you propose helping the working families, then, if not by raising wages?
 
INDY500 said:


Are you, then answer me this.

If raising the minimum wage to $7.25 is good, wouldn't $9.25 be even better? In fact, if raising the price of hiring people won't lower the demand, let's make the minimum wage an even $20.oo and shrink this gap between hourly employees and CEOs.
Click to expand...

Well, you have to consider that it has to be profitable.
In the beginnings of microeconomic studies you learn how to draw the demand and supply line into a graph, and find out the equilibrium. That would look like this
http://home.arcor.de/vincent_vega85/Diverses/Minimum wage.jpg

So, in this case the price is the wage and the supply the number of workers.
The minimum wage is set above the market equilibrium, because if it was set at the equilibrium point, which is where the two lines cross, it wouldn't make any sense.
So, instead of paying the workers $7 they now get $8.

Lacking some better graphs at the moment you have to be fine with this one.
If you sat the wage at, say $20, no one would produce anymore since labour cost would be too high. If possible they would substitute it by machinery, otherwise they will shut down.

I'm sure your answer was half tongue-in-cheek. :)

So, the minimum wage only makes sense when it is still profitable for the producer to work, thus it can't be set too high.
 
INDY500 said:

True, and it's very bothersome. But it's none of the governments business how much or how little businesses pay their employees
Click to expand...

I would argue it is a fair labor issue that is the government's business. It falls under the same category as child labor laws, job safety laws, and overtime laws.
 
Couple the minimum wage hike with a nice maximum wage...

I'm serious.
 
INDY500 said:
Makes sense politically I suppose, but economically, minimum wages never make sense. If they really provided a living wage with no untoward economic effects, why don't poor countries around the globe just "minimum wage" themselves out of poverty?
Click to expand...

I would tend to agree.

In Ireland, a minimum wage was only relatively recently introduced (approximately a decade ago), and currently the legal minimum wage is relatively high by international standards - but we have a very high cost of living, whereas in a much larger country like the US, there are regions where the cost of living is very high but other regions where it is really relatively low.

It's economic nonsense to suggest that raising or lowering the minimum will MATERIALLY affect actual wages paid.

That said, on ethical grounds, I am generally in favour of minimum wages provided they are set at an economically justifiable level.
 
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