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Minimum Wage Increase Likely to Remain Tied to War Bill

Caitlin G. Johnson

NEW YORK - A Congressional plan to give the United States' lowest-paid workers their first raise in nearly 10 years was put on hold earlier this month when U.S. President George W. Bush vetoed the Iraq War spending bill.

A minimum wage clause appended to the war bill would have guaranteed all U.S. workers a salary of at least $7.25 per hour by 2009. The current federal minimum wage has been set at $5.15 per hour since 1997.

The American Friends Service Committee and Let Justice Roll, a nonpartisan coalition of more than 90 faith and community organizations, have launched a campaign to ask Congress to remove the minimum wage bill from the war funding legislation, saying, "a minimum wage raise deserves to move forward on its own merits." More than 650 business owners and executives have signed on to the affiliated Business for Shared Prosperity campaign.

But it is not clear that a stand-alone minimum wage bill would gain speedy Congressional approval.

Earlier this year the U.S. Senate and House of Representatives both voted to raise the federal minimum wage, but differed over accompanying tax breaks for businesses; the Senate bill contained $8.3 billion in business-related tax breaks, while the House rejected all but $1.3 billion in its version. Instead of reconciling the two into one bill, a version with a negotiated $4.8 billion of tax breaks was attached to the war supplemental funding bill passed by Congress.

Katy Heins, program coordinator with Let Justice Roll, says the minimum wage plan was attached to the war supplemental bill because the latter is considered "must-pass" legislation that will move quickly, despite the controversy over a timeline for withdrawal in Iraq.

"We understand that Congressional leadership felt Senate Republicans would filibuster a stand-alone minimum wage bill without the tax breaks they want, and it was included in this bill in order to keep it moving," says Heins.

"We are now asking the Congressional leadership to take a stand and start negotiating the bill on its own. If it gets vetoed again, we will be back at ground zero with this bill that is important for millions of workers," she says.

Since the Let Justice Roll campaign launched efforts on May 9 to press for a stand-alone minimum wage bill, the group says it has generated 1,200 calls to Congress and nearly 9,000 emails.

Still, the fate of the federal minimum wage increase remains unclear. The office of Sen. Edward Kennedy (D-MA), who sponsored the Senate minimum wage bill, expects it to remain attached to the war spending bill. "That's the best vehicle to get it into law this year," a Kennedy spokesperson told OneWorld.

Another version of the bill may reach President Bush's desk at the end of May or early June.

While lawmakers continue to disagree over the economic impacts of a minimum wage increase, a recent study from the nonpartisan Fiscal Policy Institute found no evidence that a higher minimum wage would adversely impact small businesses. Since 1998, the number of small businesses and the number of workers employed by small businesses have grown faster in states with a higher minimum wage than in those requiring only the federal minimum wage, the study found.


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And it's not just teens with summer jobs who would benefit from a minimum wage hike, says the Washington, DC-based Economic Policy Institute, debunking a common argument against the legislation. Of the estimated 13 million workers who would see their salaries rise, 79 percent are adult breadwinners, the think tank says, adding that nearly half of families headed by a low-wage worker rely solely on those earnings.

Yet even the proposed minimum wage increase would not provide low-wage workers in the United States the earning potential they enjoyed decades ago.

"There's a sad irony in the pending bill to increase the minimum wage," says Jodie Levin-Epstein, deputy director of the Center for Law and Social Policy, a nonprofit research group that advocates on behalf of low-income Americans. "Namely, while a win makes a big difference for the 2.2 million workers who earn at or below the current wage, the raise will not get them what minimum wage earners got back in the '50s and '60s."

Back then, says Levin-Epstein, the minimum wage was roughly half of the average wage of the typical worker -- or the equivalent of about $8.40 today.

Today, inflation has left the minimum wage at its lowest real value in over 50 years. The nonpartisan Center on Budget and Policy Priorities says a family of four with a full-time minimum-wage earner stills lives below the poverty line, even after food stamps and the Earned Income Tax Credit (EITC) are factored in.

A bump up to $7.25 per hour in 2009 would still leave that family of four about $7,400 short of the poverty line unless it receives food stamps, the EITC, and the Child Tax Credit.

For this reason, the American Friends Service Committee and Let Justice Roll say a federal minimum wage raise should be just a first step.

"It is an important step that would put millions of dollars in the pockets of low-wage workers and make a real impact on poverty," says Roberta Spivek, who coordinates the American Friends Service Committee's national economic justice program. "But $7.25 is not the ultimate goal of this campaign. It's far below what families actually need in just about all parts of the country."

In addition to the federal law, the campaign is supporting state and local efforts to raise state minimum wage levels or enact "living wage" laws that take into account the actual cost of living in a certain area, and often include annual increases for inflation.

To date, 32 states and the District of Columbia have set their minimum wages above the federal level, according to the Economic Policy Institute.

"While Congress has not done what it needs to do for low-wage workers, people at the grassroots have moved it forward in states," says Spivek. "There is tremendous momentum for this."

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