Senate defeats Kennedy minimum wage hike

On November 9 the Senate tabled (killed), by a vote of 50 to 48, an amendment sponsored by Sen. Ted Kennedy (D.-Mass.) to raise the current federal minimum wage of 55.15 to 55.65 on Jan. 1, 2000, and to 56.15 on Jan. 1, 2001, and supposedly help small businesses offset some of the costs of these hikes by giving $.5 billion in tax cuts over five years. Kennedy would pay for these cuts by raising other taxes on corporations-extending the Superfund tax and eliminating some business tax deductions.

Immediately thereafter, the Senate passed, by a vote of 54 to 44, a similar amendment sponsored by Sen. Pete Domenici (R.-N.M.) that would also raise the minimum wage $1, but over three years--to $5.50 on March 1, 2000, to 65.85 on March 1, 2001, and to 56.15 beginning March 1, 2002and provide $18.4 billion in tax breaks for small businesses over five years. Unlike the Democratic plan, these cuts would be paid for mainly out of future revenue, not other business tax increases.

Kennedy proposed the minimum-wage hike as an amendment to the Bankruptcy Reform bill (S 625)--a bill he opposed-arguing that quickly raising the minimum wage would save many Americans from bankruptcy. "Amending the bankruptcy bill to Increase the minimum wage will help many of the people this so-called bankruptcy reform is likely to hurt-low Income families, minorities and women. For many low-income workers, the struggle to make ends meet Is too difficult, and they find themselves facing bankruptcy."

The Kennedy proposal was tabled by a straight-line party vote, and the Republican plan was passed almost along party lines. Only Sen. George Voinovich (R.-Ohio) opposed both wage-hike proposals.

Kennedy's plan would have established a 64,000 tax deduction for businesses to set up pension plans and would also have raised the estate tax, or "death tax" exemption by nearly a half-million dollars for family-owned businesses and farms.

Domenici's plan would make it easier for employers to give hourly workers tax-exempt pe1ated bonuses that salaried workers currently enjoy. The measure would provide full deductibility for health-insurance costs for the self-d and health-care costs for the uninsured. The amendment would also offer tax credits to employees who hire workers straight off the welfare rolls. These deductions are intended to help employers handle the cost of mandatory wage increases. Domenici's plan would also increase the annual contribution limits for 401(k) and other retirement purrs from $10,000 to $15,000 by 2005.

Democrats tried to win support for a quicker hike in the minimum wage by telling stories of parents working overtime just to be able to pay bills, and they chastised those senators who would raise their own pay by over $4,000, and not require employers to raise their wages by as much as $1 an hour more quickly. The reality is that today Workers making the minimum wage-heads of households, single heads of households with a full-time job--earn about $10,700. That is about $2,500 below the poverty level for a tarmy of three. So essentially, what we are telling workers who are going into the workforce with minimum-wage jobs is that they will not be able to get out of poverty," Kennedy said.

Sen. Don Nickles (R-Okla), who supported Domenici's slower wage-hike, stressed the dangers of mai the minimum wage too quickly. If businesses cannot adjust in time, he argued, they will be forced to fire many workers whom they cannot afford to pay the higher wages. "There are some employers that may not be able to pay ... $6 an hour. Sen. Kennedy's proposal says in 13 and a half months you have to be paid $6.15 an hour or it is against the law for you to have a job."

Every minimum wage hike in history, Republicans said, has been immediately followed by an increase in unemploymentmainly among youths and minorities-and the Congressional Budget Office predicts that the Democratic wage-hike proposal could cost between 100,000 and 500,000 jobs. Democrats, however, pointed out that 8.7 million jobs have been created since the last minimum-wage increase in 1996.

A "yes" vote was a vote to table, or kill, the proposal by Ted Kennedy to increase the minimum wage by $1 hike over 13 months while shifting some $9.5 billion in tax burdens, mainly from smaller businesses to larger corporations. A "no" vote was a vote against tabling and was, in effect, a vote in favor of Kennedy's measure.

FOR THE TABUNG: 50

REPUBLICANS FOR (50): Abraham, Allard, AshcroftBennett, Brownback, Bond, Bunning, Burns, Campbell, Cochran, Collins, Coverdell, Craig, Crapo, DeWine, Domenici, Enzi, Fitzgerald, Frist, Gorton, Gramm (Tex.), Grams (Minn.), Grassley, Gregg, Hagel, Hatch, Helms, Hutchinson (Ark.), Hutchison (Tex.), Inhofe, Kyl, Lott, Lugar, Mack, McConnell, Murkowski, Nickles, Roberts, Roth, Santorum, Sessions, Shelby, Smith (N.H.), Smith (Ore.), Stevens, Thomas, Thompson, Thurmond, Voinovich and Warner.

AGAINST THE TABUNG: 48

REPUBLICANS AGAINST (4): Chafee, Jeffords, Snowe and Specter.