Minimum wage increase muddled by politics

Posted: Sunday, August 13, 2006

The federal minimum wage has reached a 50-year low in buying power. For 10 years, it has languished at $5.15 an hour even while energy costs have skyrocketed and other costs of living have increased. For decades, a minimum wage worker was able to earn enough in a year of full-time work to lift a family of three out of poverty, but today, the earnings for full-time minimum wage workers fall almost $5,000 below poverty level.

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Last week, Congress was finally set to gradually increase the minimum wage by $2.10 to $7.25 an hour by 2009. Some 5.6 million workers would have benefited.

What should have been a straightforward vote - increasing the minimum wage for the first time in 10 years - became convoluted with the worst politics can offer. The House raised the minimum wage for an estimated 5.6 million workers nationwide, but in a cynical move attached two very onerous provisions to the measure.

The first granted a sharp reduction to estate taxes, benefiting only 8,200 estates. Dubbed the "Paris Hilton Estate Tax," it is estimated that each of the beneficiaries would receive $1.3 million in tax breaks. By contrast, the beneficiaries of the minimum increase working full-time could earn nearly $1,200 more over the year.

The second onerous provision would have actually cut the salaries of service sector employees in seven states by imposing a tip credit. Seven states - Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington - exclude all of a tipped employee's tips from being considered as wages in determining whether or not the employee was paid the minimum wage. The Republican amendment would have erased the protections of any minimum wage law for an estimated five million employees

These employees would have actually seen a pay decrease under the provision. With the tips counting against their salaries, tipped employees would eventually see smaller unemployment checks and smaller social security checks.

Fortunately the Senate rejected this legislation. But how would have Alaskans fared under the proposals? The Center on Budget and Policy Priorities estimates that as many as 19 Alaskans could benefit under the estate tax break for the wealthy. Contrasting that small number, hundreds if not thousands of Alaskans would see their wages decreased by this action.

Given the fact that Alaskans stood to lose much over the vote, it was profoundly disappointing to learn that our entire Alaskan delegation - normally protective of state's rights - voted in favor of increasing the minimum wage but at the expense of Alaskan waiters and waitresses by nullifying a key provision of our state minimum wage law.

The Juneau Democratic District and the Democratic Party want to bring attention to this important federal issue. The proposal will likely surface again, and we call upon everyone to stand together on behalf of Alaskan hard-working wage earners.

• Cindy Spanyers is a Juneau resident, and was a delegate to the Democratic National Convention in 1996, 2000 and 2004.

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