Minimum wage bill actually cuts wages for many Americans

A Primer on the Federal Minimum Wage – NPR

Since the last federal increase in September 1997, from $4.75 to $5.15, the purchasing power of the minimum wage — after accounting for inflation — has deteriorated by 20 percent. Adjusted for inflation, the value of the minimum wage is at its lowest since 1955.

House-passed minimum wage bill cuts wages for tipped employees in seven states by as much as $5.50 per hour

The Estate Tax and Extension of Tax Relief Act of 2006, H.R. 5970, which passed the House on July 29, raises the minimum wage for most employees. But for many employees in seven states, H.R. 5970 means a wage cut. Section 402 of the bill strikes down state laws that require employers to pay a full minimum wage without relying on tips from customers to reach the minimum level. States that have those laws will see the minimum wage for tipped employees fall as much as $5.50 per hour.

Of course the Republicans, along with the restaurant lobby, are claiming that the bill would not require wage cuts.

“No provision results in the lowering of wages for any worker. The purpose of the provision is to allow employers with tipped employees to count their employees’ tips as wages for purposes of meeting their minimum wage obligation,” Brendan Flanagan, a spokesman for the National Restaurant Association, said in a statement Tuesday after Democrats began raising concerns.

Not true, according to Congress’s own research arm.

A memo by the nonpartisan Congressional Research Service on Wednesday backed up the Democratic position. Under the bill language, the seven affected states “would seem to be prohibited from enforcing the minimum wage rate provisions of their laws with respect to a tipped employee” said the memo, written by Jon A. Shimabukuro, a legislative attorney at the research service, for Sen. Barbara Boxer, D-Calif.

Forbes:Tips Caught Up in Minimum Wage Debate

So the Republicans get to destroy the Democratic talking point, put the Democrats in the unenviable position of voting against a minimum wage increase, give a big tax break to the richest of their constitutients*, and bestow a big gift on the employers of tipped workers in seven states, all in one blow. They must really be proud of this one. The strategy is worthy of Delay.

*Assuming that the 2009 exemption of $7 million per couple would be otherwise left in place, according to the Brookings-Urban Institute Tax Policy Center, the estate tax cut would give an estimated 8,200 estates an average tax break of more than $1 million. Source: Washington Post here.

Tags: minimum wage, politics