Our view on minimum wage: Poorest Americans have waited too long for a raise
Congress finally acts, but only at the cost of a needless tax giveaway.

USA Today Editorial, 2/1/07

Voters who thought Democrats were now the unchallenged masters of Capitol Hill got a quick reality check this week as the Senate lurched toward the end of a debate on the minimum wage.

In the House, the Democrats had the political muscle to pass a long overdue increase in the minimum wage, which has been stuck at $5.15 an hour for a decade and is now badly eroded by inflation.

In the Senate, though, the Democrats' margin is too narrow to overcome a filibuster by Republicans determined to hold the minimum wage hostage to tax cuts.

Today the Senate is expected to approve a hybrid bill that raises the minimum wage at last — but ties it to an $8.3 billion package of unnecessary tax cuts for small business.

The aggressive tax-cutting that the GOP-led Congress indulged in over the last decade without matching spending cuts has already weakened the Treasury and enriched many who needed little enriching. Last year, GOP leaders tried unsuccessfully to tie a minimum wage increase to cuts in the estate tax, which affects a tiny sliver of the wealthiest Americans.

That was outrageous, but what the newly Democratic Senate is doing is only slightly less unseemly. In the same decade that the poorest working Americans have gone without a raise in the minimum wage, Congress approved an estimated $312 billion in business tax cuts, a substantial chunk of which were for small businesses. The argument that they need more relief now is weak.

Further, while some of the Senate's tax provisions are directed at restaurants and other small businesses that might hire minimum-wage workers, there's little attempt to target tax cuts to those who pay the lowest wages. And — shocking! — some of the tax cuts seem to have little or nothing to do with the minimum wage: capital gains tax treatment for S corporations, tax treatment of bank directors' stock, and so on.

The increase in the minimum wage is already designed to go lightly on businesses that would have to pay it. It would raise the minimum from $5.15 an hour to $7.25 in three 70-cent steps over two years — plenty of time to adjust. Minimum wage workers — at least 5 million by some counts — wouldn't get the full raise until the spring of 2009.

The arguments against the minimum wage are familiar and unpersuasive. Critics argue that it will cost jobs, but the economic literature suggests job losses are a minimal threat. The last increase in 1997 was followed by a surge in low-wage employment.

Some opponents argue that wages should be decided exclusively by the free market.

But the nation decided otherwise in 1938, when Congress created the minimum wage so the poorest workers would have a chance at a decent living. And it's hard to recall similar free-market complaints about the tax code, which is all about picking winners and losers — homeowners over renters, for example, or investors over workers.

As is usual when there's paralysis at the federal level, states have moved ahead on their own, and more than half now have minimums higher than the federal level — including six whose voters approved the hikes in ballot measures last November.

It's long past time for Congress to do the same and to do it without wasteful tax benefits for the unneedy.

Eventually, the House and Senate will have to agree on a final bill. Democrats, along with the five Republican senators and 82 GOP representatives who voted for a clean wage increase — should hold their ground.