Free the minimum wage

August 01, 2006

After nine long years, a much-needed increase in the federal minimum wage is finally on the fast track on Capitol Hill. But the price was a devil's bargain that paired a $2.10-per-hour pay boost for workers earning less than $11,000 a year with an estate-tax exemption for couples worth up to $7 million.

Described as the handiwork of retiring Senate Majority Leader Bill Frist, the deal approved last week by the House has a political symmetry: Democrats have adopted the minimum wage as a signature campaign issue, while Mr. Frist, a presidential hopeful and wealthy man himself, is using the tax exemption to play to the GOP base in seeking the 2008 Republican nomination.

Beyond that, the link between the two proposals is offensive. In order to require employers to raise wages enough so that 6.6 million workers can merely catch up with inflation, lawmakers would also grant 8,200 people an average tax cut of $1.4 million - a $600 billion hit on the federal treasury.

If senators can't separate this economic odd couple, the whole package ought to be voted down.

As a would-be president, Mr. Frist should recognize the value of making these bottom-rung jobs more attractive. For starters, more Americans might be willing to take them, reducing the demand for illegal immigrants.

Raising that bottom rung also creates upward pressure on salaries for more-experienced or more-skilled workers, putting a little more money in the pockets of folks who put it right back into the economy.

Dire warnings from business leaders about how raising the minimum wage stunts economic growth or results in layoffs of the very workers targeted for help have proved inaccurate. Certainly, the last federal minimum-wage increase, approved in 1997, made no dent in those boom times. Studies have shown that sometimes jobs are added, sometimes they are reduced, but overall raising the minimum wage has little impact.

Congress has dallied so long in updating the 1997 wage of $5.15 that many states, including Maryland, have raised the minimum wage on their own. But that's just a stopgap.

Mr. Frist should allow his colleagues to vote on a national minimum-wage bill unencumbered by poison pills. Congress has raised its own pay by more than $30,000 since low-wage workers last got a bump up. Little suggests the lawmakers are more deserving.

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