Salt of the Earth: In session April 2000

In session: legislative update
April 2000

Minimum wage increase stalled by tax cut proposal
Almost no one in Washington is willing to oppose raising the minimum wage in an election year when the country's economy is booming. The question is whether tax breaks should be attached to such an increase.

In early March the House overwhelmingly voted to pass a $1 increase from the current $5.15 over a two year period. However, President Clinton has threatened to veto the bill because of the inclusion of a 10-year, $122 billion tax cut for businesses sponsored by the Republicans.

The Senate introduced their version of the bill March 23. The proposal also calls for a $1 increase over two years, but Democrats hope to block any tax cut amendments.

"The tax breaks use up a substantial part of the budget surplus and threaten our ability to protect Medicare and Social Security and pay down the national debt," said Senator Edward Kennedy in a written statement about the House bill. "A fair minimum wage increase should not be misused as a stalking horse for special interest tax breaks and assaults on needed worker protections."

Republicans say the tax cuts would help businesses deal with the costs of a higher minimum wage. It would increase 401(k) contribution limits and allow tax deductible insurance for the self-employed earlier than in the current law.

Democrats argue that the tax cuts are meant to help the wealthy, citing estate tax cuts that mostly will affect people with incomes over $300,000.

Even if the $1 minimum wage passes it will give low-income workers only $2,000 more per year. To give minimum wage workers the same purchasing power that they had in 1968 the minimum wage would have to be raised to $7.66. Pay for a corporate chief executives has risen by an average of 750 percent since 1980, while the average worker's wages have increased by only 68 percent.—Maria Hickey
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For more information:
National Economic Council report on the minimum wage (March , 2000)
Bureau of Labor Statistics

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