http://www.workforce.com/feature/00/07/60/
Think Twice: You Do Want a Higher Minimum Wage A raise in minimum wage often comes with a basket of goodies to help offset your costs. By Todd Raphael ---------------------------------------------------------------------------- ----
Would you think I'm nuts if I told you that a minimum-wage increase this summer could be good for your business? Probably. After all, opposition to the wage floor has been the linchpin of 63 years of HR and business lobbying. The minimum wage's existence has led directly or indirectly to an entire industry of powerful lobbying groups that many of you are involved in -- the National Federation of Independent Business, the U.S. Chamber of Commerce, the National Retail Federation, and so on.
These groups believe the minimum wage is the devil's evil twin. Philosophically, it represents everything they oppose. Businesspeople believe that government shouldn't set a company's wages. On top of that, they argue that the wage floor costs jobs, not just at McDonald's and Kmart, but also for those without minimum-wage employees, because the whole wage scale is ratcheted up when entry-level wages rise artificially.
Republicans in Washington understand the laws of economics (if the price of labor goes up, you will be able to afford less of it), and therefore agree with the business lobbyists. So do most sane economists.
Democrats, on the other hand, note that -- adjusted for inflation -- the $5.15 minimum wage is far below what it was in the 1960s. The minimum wage has varied from a maximum of 76 percent of the poverty level in 1968 to only about 50 percent of the poverty level now. This comes at a time when CEOs get $37 million for quitting.
Democrats also argue that $5.15 is so paltry that a person who's supporting herself on $10,300 a year (what you earn working full-time at the minimum) isn't going to be able to eat in your restaurants and shop in your stores. And if she's supporting a family -- fuhgeddaboutit.
Most voters agree with the Democrats. The President and Congress want to get re-elected, so they're going to have to vote to raise the wage floor. The final vote could be counted this summer, and would likely increase the minimum by $1 to $6.15, over the course of a year or two. In allowing the minimum wage raise to go through, the Republicans don't want to alienate their supporters -- businesses.
Ahhhh. That's the kicker. The Republicans will add loads of sweeteners to the bill to help you to swallow the bitter minimum-wage potion. If you lobby your representatives, the final mix could include gazillions of dollars for labor-related tax cuts, and long-sought-after changes to labor laws.
Does this theory that the minimum wage will become a Christmas tree full of HR gifts sound like a cynical and convoluted idea that may or may not be true in the real world? Think again, because I'm more positive than a Robert Downey Jr. drug test.
A Washington lobbyist, after calling the Republican leadership (Senators Trent Lott of Mississippi and Don Nickles of Oklahoma), tells me that Congress might be willing to include such goodies as changes to overtime rules, which would make more salespeople exempt. They also might make the changes to the bonus rules that many of you have been fighting for. This would allow employers to pay bonuses to hourly employees without the pay increasing the employee's wages, thus triggering big overtime costs.
Your senator may even be willing to throw in a clarification of the definition of the infamous "serious health condition" in the Family and Medical Leave Act. Can't hurt to ask.
The last minimum-wage increase, which boosted the wage floor from $4.25 in 1996 to $5.15 in 1997, arrived with a bubbly pool of cash to offset employers' pain. Like $21 billion worth. And that was under a Democratic president.
"Typically, what's happened in the past is that the tax cuts have been much greater than what's needed to offset any potential impact of a minimum-wage increase," says Molly Rowley, an aide to Democratic Senate leader Tom Daschle.
Those tax cuts probably will happen again, and you'll be the beneficiary.
On June 24, 1938, the night before President Franklin Roosevelt signed the first minimum-wage bill -- 25 cents an hour -- he held one of his fireside chats. "Do not let any calamity-howling executive with an income of $1,000 a day . . . tell you . . . that a wage of $11 a week is going to have a disastrous effect on all American industry," he declared.
Roosevelt's rhetoric may have been a bit inflammatory, but his message still holds true.
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