Congress votes to increase minimum wage, House, Senate pass $2.10 increase as part of Iraq spending bill Options

[moebary]

http://www.msnbc.msn.com/id/18847929/

WASHINGTON - America’s lowest-paid workers won a $2.10 raise Thursday, with Congress approving the first increase in the federal minimum wage in almost a decade.

President Bush was expected to sign the bill quickly, and workers who now make $5.15 an hour will see their paychecks go up by 70 cents per hour before the end of the summer. Another 70 cents will be added next year, and by summer 2009, all minimum-wage jobs will pay no less than $7.25 an hour.

For years, the idea of increasing the minimum wage has been stalled by partisan bickering between Republicans and Democrats.

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That almost became the fate of this year’s proposal. Democratic leaders attached the provision to the $120 billion Iraq war spending bill, which was vetoed by the GOP-controlled White House on May 1 because Democrats insisted on a pullout date for American troops.

But with the House passing a rewritten bill 280-142 and the Senate 80-14, the end is likely near for the longest stretch without the federal pay floor rising since the minimum wage was established in 1938.

Sen. Edward M. Kennedy, D-Mass., called the increase one of “the proudest achievements of this new Congress.”

“We’ve overcome many obstacles — and faced every procedural trick in the book — to get this minimum-wage increase across the finish line,” Kennedy said. “Democrats stood together, and stood firm, to say that no one who works hard for a living should have to live in poverty.”

Bush announced earlier this year that he supported an increase in the minimum wage.

“We pushed for and very much prefer that it be paired with appropriate offsets for small businesses who would be disproportionately impacted by the minimum-wage increase,” White House spokesman Tony Fratto said. “Unfortunately, the offsets in this bill don’t accomplish that.”

This would be the first change since the minimum wage went from $4.75 to $5.15 on Sept. 1, 1997, under former President Clinton and a Republican-controlled Congress.

The liberal-leaning Economic Policy Institute, a research group in Washington, estimates that 5.6 million workers — or 4 percent of the work force — earn less than $7.25.

“This is a great day for America’s middle class,” said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee. “America’s workers have been waiting for a raise for a long time.”

Currently, a person working 40 hours per week at the current minimum wage of $5.15 makes about $10,700 a year. An increase to $7.25 would boost that to just over $15,000 a year.

The full increase, according to Miller, is enough to pay for 15 months of groceries for a family of three.

More than two dozen states and the District of Columbia already have minimum wages higher than the federal level. Minimum wage workers are typically young, single and female and are often black or Hispanic.

Raising the minimum wage was a key part of Democrats’ midterm election platform. To help make it palatable for Republicans, they added $4.84 billion in tax relief for small businesses to help them hire new workers and offset any cost associated with an increase in the minimum wage.

Republicans had complained earlier that the tax cuts in the House and Senate bills that led up to the final agreement were insufficient, but the inclusion of the provisions in the Iraq war spending bill made it difficult for them to stop them.

“From a small-business standpoint, the House bill was a peanut shell, the Senate bill was peanuts, and the conference agreement is a single shriveled peanut. It is a missed opportunity,” said Sen. Charles Grassley, R-Iowa.

According to the National Restaurant Association, the last minimum wage increase cost the restaurant industry more than 146,000 jobs and restaurant owners put off plans to hire an additional 106,000 employees.

“A minimum-wage increase will cost our industry jobs, and the vital discussion of how to minimize this job loss is getting lost in the debate,” said Peter Kilgore, the group’s acting interim president and chief executive officer.

[zetec]

http://www.epinet.org/Issuebriefs/ib149/ib149.pdf
http://www.epinet.org/briefingpapers/151/bp151.pdf
http://www.eoionline.org/MinimumWage/MW-Re...8.htm#Issue%209

and of course, there's allways a quick google search:
http://www.google.com/search?ie=UTF-8&...cause+inflation

Doesn't cause job loss either.
Same links.

[JRockTTU]

http://www.epinet.org/Issuebriefs/ib149/ib149.pdf
http://www.epinet.org/briefingpapers/151/bp151.pdf
http://www.eoionline.org/MinimumWage/MW-Re...8.htm#Issue%209

and of course, there's allways a quick google search:
http://www.google.com/search?ie=UTF-8&...cause+inflation

Doesn't cause job loss either.
Same links.

I just skimmed over all of your links and do not see evidence in them saying that Minimum wage increase doesn't increase inflation or cost of living. The first link on your google search has a somewhat wishy-washy answer to the question

http://www.wisegeek.com/does-raising-the-m...e-inflation.htm

It is not always easy to obtain objective information when it comes to a politically charged issue such as raising the federal minimum wage. Proponents and critics alike tend to bolster their positions by publishing the opinions of economists who share their political bent. Does raising the minimum wage have a measurable effect on the rest of the economy, including the issue of inflation? Yes. Can a rise in the inflation rate be attributed directly to a rise in the minimum wage? Not necessarily. Both sides of the federal minimum wage debate do present persuasive arguments, but these arguments may be based on skewed or purely theoretical assumptions.

There is a relationship between setting the new minimum wage and inflation, but it's more of a cart before the horse situation. Many proponents of a raised federal minimum wage support the idea of matching the new base wage to the current rate of inflation, a process known as indexing. By indexing the minimum wage to the inflation rate, proponents believe the wage-earner's real spending power will also be increased. When a minimum wage hike does not keep up with inflation, which has been the case in recent years, the workers' paychecks may get a little larger but inflated prices of goods and services actually reduce the spending power of that raise.

So we know that inflation can have a detrimental effect on the real spending power of a raised minimum wage, but does a raised minimum wage cause inflation? Yes and no. From an economic standpoint, inflation can be caused by any number of new or increased costs of production, including an increase in workers' wages. If a company must increase the minimum wage of its workers by several dollars, there is obviously a new expense that must either be absorbed by the company as the cost of using human labor or passed on to customers in the form of higher prices.

Economists call this phenomenon cost-push inflation. An increase in the federal minimum wage did create an increase in production costs, which subsequently resulted in an inflated price for consumers. But critics of the cost-push inflation argument suggest that companies can always adjust their workforce to compensate for a mandated minimum wage increase. It isn't always necessary for companies to push the expenses of a higher-paid workforce onto consumers. Raising the minimum wage can create a temporary or artificial bump in the inflation rate, but so can increases in corporate taxes or a shortage of raw materials.

In short, many proponents of a raise in the federal minimum wage ascribe to the philosophy that a rising tide lifts all boats. Whenever minimum wage workers receive a boost in their take-home pay, higher-paid workers also tend to receive similar pay hikes. The rate of inflation is influenced by so many economic factors that blaming one element such as a raise in the minimum wage appears to be very short-sighted.

Much like James said, if a business selling Widgets sells 100 widgets a week for $1 each then we'll say they make $100 a week. All fixed costs are $20 a week and their only employee, Zetec, makes $1 an hour working 40 hours a week. After all is said and done, they make a $40 profit a week on their Widgets. Joe Congressman raises Zetec's minimum wage requirement to $1.50 an hour. That means instead of taking home $40 a week, Zetec will take home $60 a week, and cuts the Widget company's profits in half, down to $20. Johnny Stockholder doesn't like the idea of the company he's invested in making half of the profit they used to because they have to pay Zetec more money, so they're going to raise the cost of Widgets to $1.50 or $2.00 each. Then you've got JRock who buys a whole lot of Widgets, he likes them a lot. JRock is on salary, doesn't get paid phat, but doesn't get paid anywhere close to minimum wage. He uses his disposable income to buy Widgets, but when the minimum wage was increased JRock's employers didn't give him an increase. With the price of Widgets going up, he doesn't have the disposable income to spend twice as much on Widgets, so that's something he won't buy anymore. The price of widgets has gone up (inflation) to pay Zetec's wages, and since the middle class didn't get the same raise, they suffer because goods will cost more and they don't get paid more.

That's just the way I see it.

[Dogmeat]

I just skimmed over all of your links and do not see evidence in them saying that Minimum wage increase doesn't increase inflation or cost of living. The first link on your google search has a somewhat wishy-washy answer to the question

http://www.wisegeek.com/does-raising-the-m...e-inflation.htm
Much like James said, if a business selling Widgets sells 100 widgets a week for $1 each then we'll say they make $100 a week. All fixed costs are $20 a week and their only employee, Zetec, makes $1 an hour working 40 hours a week. After all is said and done, they make a $40 profit a week on their Widgets. Joe Congressman raises Zetec's minimum wage requirement to $1.50 an hour. That means instead of taking home $40 a week, Zetec will take home $60 a week, and cuts the Widget company's profits in half, down to $20. Johnny Stockholder doesn't like the idea of the company he's invested in making half of the profit they used to because they have to pay Zetec more money, so they're going to raise the cost of Widgets to $1.50 or $2.00 each. Then you've got JRock who buys a whole lot of Widgets, he likes them a lot. JRock is on salary, doesn't get paid phat, but doesn't get paid anywhere close to minimum wage. He uses his disposable income to buy Widgets, but when the minimum wage was increased JRock's employers didn't give him an increase. With the price of Widgets going up, he doesn't have the disposable income to spend twice as much on Widgets, so that's something he won't buy anymore. The price of widgets has gone up (inflation) to pay Zetec's wages, and since the middle class didn't get the same raise, they suffer because goods will cost more and they don't get paid more.

That's just the way I see it.

that's an excellent description I think ...

Can anyone find a confirmation on that "%4" number ....? Somone stated earlier here that only %4 of the US work force makes minimum wage..... I'd like to see where that came from.