Minimum wage hike faces steep hill in Congress

By BenefitsPro


By Gina Binole

Unless President Obama is somehow able to borrow from Harry Truman’s playbook, Congress is more likely to take on issues such as immigration and government funding instead of tackling the idea of raising the minimum wage when its members return from their summer break early next week.

Despite recent protests, nationwide tweets, talk shows, speeches by the president and plenty of news coverage, no votes on the issue of the minimum wage are scheduled in Congress in the near future. Morever, the Fair Minimum Wage Act of 2013 has not yet had a hearing in the House this year. Six Democrats joined every Republican representative in opposition to raising the minimum wage when Democrats offered it up during a procedural fight over an unrelated House bill in March. That vote tally was 223-184.

The present federally mandated minimum wage is $7.25 an hour, the rate at which it has been set for the past four years. Depending on the size of a family and the city in which they live, it’s possible that even with two full-time minimum wage salaries, that family could still fall below the poverty line.

“Nobody can live on today’s minimum wage of $7.25 an hour,” former Labor Secretary Robert Reich said in a Moveon.org video. Reich, a favorite among liberals, served under former President Bill Clinton and is a subject in the upcoming documentary, “Inequality for All.”

Reich and others are pushing for what they’ve described as a “living wage.” According to an MIT living wage calculator, that figure for a single parent and their child living in Cincinnati would be $17.56 – if you include child care. The calculation for two adults without children in the same city would be $16.20 per hour. More than 15 million workers earn the national minimum wage, making about $15,080 a year – $50 below the federal poverty line for a family of two.

The federal rate has been raised a few times in recent decades, most recently in 2007, soon after Democrats gained control of the House. States and cities, however, have begun to take matters into their own hands, tying it to inflation in two states. The minimum wage in San Francisco is $10.55. According to the National Conference of State Legislatures, 18 states and the District of Columbia have a minimum wage higher than the federal level of $7.25.

In March, Sen. Tom Harkin, D-Iowa and Rep. George Miller, D-Calif., introduced a bill to raise the federal minimum wage to $10.10 over three years. Citing statistics showing that middle-class income has dropped almost 10 percent in the past 23 years, they said the legislation would ensure that the minimum wage is indexed so that it would keep up with inflation rates every year. At the time, Miller noted the average CEO pay is 900 percent higher than it was in 1985 and is 360 times the salary of the average, not even the lowest paid, worker.
“Every time we’ve raised the minimum wage,” Harkin said when the bill was announced, “the economy gets stronger, every single time.”

Conservatives, of course, strenuously object to that point.

Regardless, Obama’s call for a hike to $9 an hour, repeated last week by new Labor Secretary Thomas Perez, is considered all but dead in the water.

The idea to more than double the federal minimum wage – as in a recent push to raise the rate to $15 in the City of Seattle – is also not considered viable by many analysts and not surprisingly, business advocates like William Dunkelberg, the chief economist for the National Federation of Independent Businesses.

Dunkelberg wrote for Forbes in 2010 and reiterated in a YouTube video in late August that a higher minimum wage will make it harder for companies to survive.

“(A higher minimum wage) will not increase spending because every dollar a minimum wage person spends comes out of the same pocket of a tax-paying customer,” he said, adding that a higher minimum wage reduce employment, eliminates job opportunities for young people and provides employer incentives to replace workers altogether with new technology,

According to the U.S. Chamber of Commerce, a higher minimum wage eliminates low-wage jobs because that's how small businesses cut costs and that ends up hurting the people it was supposed to benefit.

But the idea of nearly doubling the minimum wage is not unprecedented. In 1949, Truman was able to convince a mostly doubting Congress to raise the federal minimum wage from 40 cents to 75 cents. Based on present-day inflation and costs, the 1949 increase is the rough equivalent of bringing hourly wages to $10.70 from $5.70.

The country was mired in a deep recession that year, and few thought Truman’s proposal had a chance of passage. But Truman was by all accounts a skilled politician and through negotiations and political horse-trading was able to secure the increase and sign a minimum wage hike into law in October 1949.

“This legislation, passed by the 81st Congress at its first session, is an important addition to the laws we live by. It is a measure dictated by social justice. It adds to our economic strength. It is founded on the belief that full human dignity requires at least a minimum level of economic sufficiency and security,” Truman said in a statement dated Jan. 24, 1950 as the new minimum wage law took effect.

According to historians who have studied this time and written books on Truman’s tenure, the legislation had none of the negative effects critics had predicted. Unemployment did not rise, and business activity did not diminish. According to a 1954 Labor Department study, at least 1.3 million people received immediate raises as soon as the increase went into effect.

Originally published on BenefitsPro.com