The Fair Labor Standards Act: Minimum Wage in the 109th Congress
CRS Report for Congress
The Fair Labor Standards Act:
Minimum Wage in the 109th Congress
Updated October 30, 2006
William G. Whittaker
Specialist in Labor Economics
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress
The Fair Labor Standards Act:
Minimum Wage in the 109th Congress
The Fair Labor Standards Act (FLSA) is the primary federal statute in the fields
of minimum wage, overtime pay, child labor, and related subjects. In the 109th
Congress, legislation in a variety of forms has been introduced that would modify the
act in each of these areas, and that would extend the act’s minimum wage protections
to workers in the Commonwealth of the Northern Mariana Islands (CNMI).
This report deals only with the minimum wage aspects of the act. Other
components of the FLSA are considered in separate CRS products.
In 1938, following several decades of discussion and research in academic and
policy circles, Congress adopted the FLSA. The act is a living statute that Congress
has variously modified through the years in response to altered public policy and
workplace realities. It has undergone major amendment on eight separate occasions,
in addition to periodic less extensive adjustments.
Currently, the general minimum wage is $5.15 an hour, the last adjustment
having taken place in September 1997. There are, however, a number of specialized
minima: for example, a sub-minimum wage for youth, special calculation of the rate
as it affects tipped employees, and a reduced wage structure for persons with
disabilities. Through the past several Congresses, bills have been introduced that
would alter the minimum wage or change aspects of it. For example, in the 109th
Congress, see H.R. 1091, H.R. 2429, H.R. 2748, H.R. 3413, H.R. 3732, H.R. 4505,
H.R. 5368, H.R. 5550, H.R. 5970, S. 14, S. 846, S. 1062, and S. 2725, plus several
floor amendments that would similarly affect the minimum wage.
Through the years (from the initial enactment of the FLSA in 1938 up to 1996),
minimum wage legislation had been introduced and referred to the committees of
jurisdiction for analysis and, ultimately, for a possible report. It was regarded as a
singular piece of legislation. In 1996, the measure emerged as a rider to a more
general economic measure. Thus, some have asserted, it has now become traditional
(based upon the 1996 enactment) that an increase in the federal minimum wage
should be accompanied by general tax breaks and other similar considerations for
There are no time constraints (no expiration dates) built into the FLSA.
Congress is not required to take up wage/hour legislation at all — though social and
economic pressure (and other policy concerns) may render such action appropriate.
In troduction ......................................................1
Minimum Wage: Background and Comment............................3
General Policy Concerning the Minimum Wage......................4
The Socio-Economic Context of Minimum Wage................6
What Do We Mean by Minimum Wage?........................7
How Minimal Is Minimum?.................................7
To Whom Should Not Less Than the Minimum Wage Be Paid?......9
Who Should Pay the Minimum Wage?........................10
General Demographics of the Minimum Wage Workforce.............12
Who Are the Minimum Wage Workers?.......................13
The Size of the Minimum Wage Workforce....................14
Commonwealth of the Northern Mariana Islands (CNMI).............17
Minimum Wage Legislation in the 109th Congress.......................18
Establishing a Tradition?.......................................18
Minimum Wage: The Issue of Indexing...........................19
Senate Proposals To Raise the Federal Minimum Wage...................21
The Kennedy-Santorum Debate..................................21
The Kennedy-Enzi Debate......................................21
The National Defense Authorization Act for 2007...................22
Senator Enzi Reenters the Debate............................23
Senator Kennedy, Senator Warner, and Compromise.............24
Debate, a ‘Qualified’ Victory, and Procedural Withdrawal.........25
House Proposals to Raise the Federal Minimum Wage....................26
The Labor, Health and Human Services,
and Education Appropriations Bill (for 2007)...................26
Appropriations for the Departments of Commerce,
Justice, and State.........................................27
The Permanent Estate Tax Relief Act of 2006 ......................28
Internet Gambling Prohibition...................................29
Credit Agency Duopoly Relief Act...............................30
Vocational and Technical Education Act:
Miller Motion to Instruct...................................32
Pledge [of Allegiance] Protection Act of 2005......................33
Action Urged by 28 Republican House Members....................34
House Acts on Estate Tax, Incentives for Business,
and the Minimum Wage........................................35
Debating the Preliminaries......................................35
Debate on the Martial Law Rule: H.Res. 958...................36
Debate on the Rule for Floor Consideration: H.Res. 966..........36
The Bill (H.R. 5970) as Reported ................................37
The House Considers the Bill: H.R. 5970..........................38
Initial Concern: The “Tip Credit”................................41
General Issues in the Debate....................................42
Rising in Opposition......................................43
Rising in Support.........................................44
The Issue Brought to a Vote.....................................45
Other Minimum Wage Proposals of the 109th Congress ..................45
The Stabenow Proposal........................................45
The English Proposal..........................................46
The Durbin Proposal..........................................46
The Kennedy/Miller Proposals..................................46
The Andrews Proposal.........................................47
The Boehlert Proposal.........................................47
The Clinton Proposal..........................................47
The Miller CNMI Proposals........................................47
Some Collateral Issues.............................................49
The Youth Sub-Minimum Wage ................................49
The ‘Tip Credit’ Provision .....................................50
The Computer Services Professional Rate..........................51
The ‘Small Business’ Exemption.................................51
The Case of American Samoa...................................52
Health Care Concerns and the Issa Bill............................53
List of Tables
Table 1. Federal Minimum Wage Rates, 1938-2006......................3
Table 2. Status of State Minimum Wage Rate (as of spring 2006)...........5
Table 3. Poverty Guidelines, All States
and the District of Columbia (2006)...............................8
Table 4. Number and Percent of Workers
Paid Hourly at the Minimum Wage or Less.........................15
The Fair Labor Standards Act:
Minimum Wage in the 109 Congress
The Fair Labor Standards Act (FLSA) of 1938, as amended, is the primary
federal statute in the area of minimum wages and certain related labor standards
issues: e.g., overtime pay and child labor.1 Various bills related to the FLSA have
been introduced in the 109th Congress. Thus far, none of these measures has been
There are no expiration dates embedded within the FLSA, and thus, Congress
is under no obligation to act on amendments to the statute — though the declining
value of the minimum wage could provide an impetus for action. Were Congress to
take up minimum wage legislation, it could focus narrowly upon an increase in the
base rate: raising the floor above the current $5.15 per hour level. But, it could act
more expansively, dealing with a variety of minimum wage-related issues and,
perhaps, revising certain other aspects of the act such as its overtime pay or child
Some, during recent years, have urged that changes in wage/hour standards
should be coupled with tax and other benefits for business. While such linkage
seems to have become a popular issue for discussion, there is no structural reason
to proceed in that manner. Broadening the scope of the FLSA legislation (including
overtime pay, child labor, and assorted other economic issues within a single
comprehensive bill) could reduce the likelihood that any measure in this area would
ultimately be adopted; but conversely, depending upon the overall content of such a
package, it could expand the measure’s appeal.2
The FLSA is an umbrella statute that deals with a series of labor standards
issues. These fall, roughly, into three categories: first, minimum wage (Section 6 of
the act); second, overtime pay (Section 7); and, third, child labor (Section 12).
Section 3 of the act defines the concepts used throughout the statute and, thereby,
1 For a quick summary of current proposals relating to the FLSA, see CRS Report RL32901,
Minimum Wage, Overtime Pay, and Child Labor: Inventory of Proposals in the 109th
Congress to Amend the Fair Labor Standards Act, by William G. Whittaker.
2 Proponents and opponents of an increase in the minimum wage have, variously, discussed
the potential impact of such a approach — pro and con. Some view additional provisions
(for example, “comp time” or an expanded “small business exemption”) as an appropriate
strategy. Others regard such collateral measures as a poison pill intended to scuttle
minimum wage revisions.
limits or qualifies its wage/hour and child labor provisions. Traditionally, Congress
has mandated broad general coverage and, then, has specified select groups or
categories of workers who are not to be covered by the act. Section 13 provides a
body of exemptions (or special treatment) for segments of industry and/or groups of
workers. In the latter areas, the Secretary of Labor has been granted wide interpretive
powers — though these have not been without limit.
While the act is often treated as an integrated unit, it can also be approached in
terms of its three general component parts — and of individual sub-units of each.
This report focuses narrowly upon the federal minimum wage. Other related issues
(e.g., child labor and overtime pay) are considered separately in other CRS products.3
Under the FLSA, Congress has established a basic minimum wage (since 1997,
$5.15 per hour) that must be paid to most covered workers. However, the level of
the wage floor may vary from one group of workers to another with various
exceptions and sub-minima built into the statute. Thus, the issue may be which
minimum wage rate is applicable and to which workers it should be applied.4
Through the past century, the minimum wage (alone or with other wage/hour
issues) has sparked partisan comment and assertion. The issue has not been solely
whether there is an appropriate federal role in wage/hour regulation (that continues
to be debated), but what that role ought to be. At what level should the minimum
wage be set? Should it be indexed? How broad should minimum wage coverage be?
And if there are exemptions (which there are), upon what foundation should they
rest? For example, should small firms be able to pay their workers at a lower rate
than large firms? Should wage rates be productivity-based or respond to the needs
and personal lifestyles of the workers involved? Might the wage floor depend upon
an employee’s nonwork status: e.g., whether the worker is the sole earner in a
family, a secondary earner, or a student? As under current law, should the rate vary
with the age of the worker — even where the work performed and productivity level
among workers may be comparable?5
3 See, for example, CRS Report RL31501, Child Labor in America: History, Policy and
Legislative Issues; and CRS Report RL31875, Compensatory Time vs. Cash Wages:
Amending the Fair Labor Standards Act? (the comp time issue has not reemerged as freeth
standing legislation in the 109 Congress), both by William G. Whittaker. See, also, CRS
Report RL30927, The Federal Minimum Wage: The Question of Indexation, by Gerald
Mayer, and CRS Report 98-278, The Gender Wage Gap and Pay Equity: Is Comparable
Worth the Next Step?, by Linda Levine.
4 Several aspects of minimum wage coverage may need to be taken into account. First:
Many states have state-mandated minimum wage standards. These may be roughly parallel
to the federal minimum wage: They need not be — and often are not. Second: Not all
workers are covered under the FLSA — nor under state wage/hour standards. These
coverage patterns (including patterns of exemption) need to be taken into account when
considering the potential impact of changes in federal wage/hour law. Third: Because of
variations in coverage (with extensive administrative rules governing implementation and
enforcement of wage/hour law), it may be perilous to suggest who is (or is not) covered by
the requirements of statute. Too many variables affect coverage to allow easy assessment.
5 Under current law, there are special rates for youth workers, for full-time students who
Minimum Wage: Background and Comment
When the FLSA was enacted in 1938, its coverage was largely limited to
industrial workers engaged in interstate commerce. Retail, service, and agricultural
workers, generally, were not protected — nor were persons employed by state and
local governments. On eight separate occasions through the years (see Table 1), the
act has undergone general amendment, which has normally included language
dealing with overtime pay and/or child labor, as well as with modification of the
wage floor. On numerous occasions, the FLSA has been subject to more narrowly
focused single purpose amendment.
Table 1. Federal Minimum Wage Rates, 1938-2006
Public lawEffective dateRate
P.L. 75-718 (Enacted June 25, 1938)October 1938$0.25
P.L. 81-393 (Enacted October 26, 1949)January 19500.75
P.L. 84-381 (Enacted August 12, 1955)March 19561.00
P.L. 87-30 (Enacted May 5, 1961)September 19611.15
P.L. 89-601 (Enacted September 23, 1966)February 19671.40
P.L. 93-259 (Enacted April 8, 1974)May 19742.00
P.L. 95-151 (Enacted November 1, 1977)January 19782.65
P.L. 101-157 (Enacted November 17, 1989)April 19903.80
P.L. 104-188 (Enacted August 20, 1996)October 19964.75
With the original enactment, Congress was feeling its way: i.e., learning how
to deal with constitutional impediments to federal involvement in private sector labor
standards regulation. Coverage patterns during the 1940s and 1950s remained
relatively flat, with only minor adjustment. Then, in the 1960s and 1970s, there was
work no more than part-time, for disabled persons, and for others. That these rates (except
nominally for the disabled) are related to productivity may not be entirely clear.
substantial expansion of coverage with intermittent increases in the level of the
minimum wage. Since 1977, change has been restricted largely to increases in the
basic wage rate and modification of existing FLSA provisions. Amendment has
often been contentious, conditioned by economic considerations and political
compromise.6 Generally, expansion of coverage has been opposed by employers and
supported by workers — reflecting, in the short term, who benefits from an increase
in the minimum wage and upon whom the costs fall.
The basic federal minimum wage rate is statutory and will remain at its current
level until Congress takes specific action to alter it. Again, Congress has no specific
obligation to revisit the minimum wage and thus may not do so. However, over the
long term, congressional inaction could have the effect of repeal through attrition.
Fewer and fewer workers would likely earn the minimum wage (its value having
been reduced through inflation), and the requirement, eventually, could become
relatively meaningless. Conversely, Congress could index the minimum rate,
assuring a constant real value without further congressional intervention.
Some states have a minimum wage requirement that is higher than the FLSA
requirement. Where that is the case, the higher standard normally prevails. (See
Table 2.) In addition, the minimum wage for American Samoa is set through a
commission appointed by the U.S. Secretary of Labor, and has been, generally, lower
than the otherwise applicable federal rate under the FLSA. In the Commonwealth of
the Northern Mariana Islands (CNMI), the insular government currently exercises
authority with respect to wage standards — an issue of ongoing contention.
General Policy Concerning the Minimum Wage
For the past century, the minimum wage has been a focus of public policy
discussion. Advocates for each side in the debate — academicians (notably,
economists), policy analysts, and persons from the media — have argued with great
vigor. Although the literature is extensive, the result is by no means definitive.
FLSA historian Willis J. Nordlund, writing in the late 1990s, observes that
... one would presume that enough was known about the program to formulate
a defensible strategy depicting effects of program change. This is not the case.
There is no more agreement about these effects today than there was at the7
program’s inception [with passage of the FLSA] fifty years ago.
6 See Congressional Record 30, 1937, p. 7876. More generally, see CRS Report 89-568,
The Fair Labor Standards Act: Analysis of Economic Issues in the Debates of 1937-1938,
by William G. Whittaker (out of print but available from the author).
7 Willis J. Norlund, The Quest for a Living Wage: The History of the Federal Minimum
Wage Program (Westport, Conn.: Greenwood Press, 1997), p. xvii.
Table 2. Status of State Minimum Wage Rate
(as of spring 2006)
Jurisdictions with minimum wage rates higher than the federal FLSA
Alaska ($7.15)Illinois ($6.50)Oregon ($7.50)
California ($6.75)Maine ($6.50)Rhode Island ($7.10)
Connecticut ($7.40)Maryland ($6.15)Vermont ($7.25)
Delaware ($6.15)Massachusetts ($6.75)Washington ($7.63)
District of Columbia Minnesota ($6.15)Wisconsin ($5.70)
Florida ($6.40)New Jersey ($6.15)
Hawaii ($6.75)New York ($6.75)
Jurisdictions with minimum wage rates at the same level as the federal FLSA
Arka nsas Missouri Okl ahoma
Colorado Montana Pennsyl va nia
IndianaNew Mexico Utah
KentuckyNorth DakotaWest Virginia
Jurisdictions with minimum wage rates less than the federal FLSA
American SamoabKansas ($2.65)Virgin Islands ($4.65)
Jurisdictions with no state minimum wage requirement
Alabama LouisianaSouth Carolina
Ar izona Mississippi T ennessee
Source: U.S. Department of Labor, Wage and Hour Division, Employment Standards Administration,
[http://www.dol.gov/esa/minwage/america.htm], Apr. 3, 2006.
a. Coverage patterns vary from one jurisdiction to another. Some jurisdictions have a structured
minimum wage system (i.e., different rates for various industries, sizes of firms, etc.). The table
refers to the highest standard applicable under the law of the jurisdiction. In some jurisdictions,
the rate (but not necessarily the pattern of coverage) is linked to the federal FLSA.
b. For American Samoa, the minimum wage rate is set administratively, and varies from one industry
to another at rates lower than the federal minimum wage.
The available data and analysis, it would seem, are fragile and often contradictory.
Still, critics and proponents of a minimum wage floor continue to praise and to
critique the concept in unusually strong and, often, unqualified terms.
Few questions in the continuing debate are new. They are raised with little
agreement concerning basic concepts. Many of the assumptions are implicit: not
fully enunciated and, perhaps, not even recognized. Minimum wage debate, perhaps
more than other economic issues, may have a psychological component, reflecting
community values and fears. There continues to be an outpouring of minimum wage
literature — some of it analytical but much of it political advocacy.
The Socio-Economic Context of Minimum Wage. The minimum wage
is often presented as a mechanism through which to assist the working poor: usually
a non-union worker with few skills and little bargaining power.8 Some advocates of
a minimum wage view it not only as socially useful but, also, as economically useful:
promoting socio-economic equity; providing a floor under wages; stimulating
demand for goods and services; expanding employment; and, with other measures,
bolstering the general economy.
Some critics of the minimum wage, conversely, have viewed it as an inefficient
approach to income redistribution — and an unjustified intrusion into the operation
of the free market. They contend that minimum wage increases have an inflationary
impact, restructure employment patterns, may reduce aggregate employment, and
impose an unnecessary burden upon employers and consumers. Such critics often
view the wage floor as economically harmful, especially for the unskilled and new
workforce entrants who, critics say, may be priced out of the job market.
Economists and policy analysts continue to disagree about the impact of changes
in the minimum wage and about what the effects of the minimum wage have been.
The issues are both socio-economic and ideological, and have changed little since the9
debates of 1937-1938.
8 Concerning early interest in the minimum wage, see Lawrence B. Glickman, A Living
Wage: American Workers and the Making of Consumer Society (Ithaca, Cornell University
Press, 1997); George E. Paulsen, A Living Wage for the Forgotten Man: The Quest for Fair
Labor Standards, 1933-1941 (Selinsgrove, PA, Susquehanna University Press, 1996);
David A. Moss, Socializing Security: Progressive-Era Economists and the Origins of
American Social Policy (Cambridge, Harvard University Press, l996); and Jerold L.
Waltman, The Politics of the Minimum Wage (Urbana, University of Illinois Press, 2000).
In her study, Civilizing Capitalism: The National Consumers’ League, Women’s Activism,
and Labor Standards in the New Deal Era (Chapel Hill: The University of North Carolina
Press, 2000), Landon R. Y. Storrs discusses both the origins of minimum wage legislation
and the socio-economic/reform context from which the federal legislation emerged.
9 See, for example “New Minimum Wage Research: A Symposium,” Industrial and Labor
Relations Review, Oct. 1992, pp. 3-99; “The Minimum Wage: Some New Evidence” (a
symposium) Journal of Labor Research, winter 2002, pp. 1-67; David Card and Alan B.
Krueger, Myth and Measurement: The New Economics of the Minimum Wage (Princeton:
Princeton University Press, 1995); and Oren M. Levin-Waldman, The Case of the Minimum
Wage: Competing Policy Models (Albany: State University of New York Press, 2001).
What Do We Mean by Minimum Wage? When people speak of a
minimum wage, they often speak in terms of “a livable wage” or “a decent wage” or
“a fair wage,” or suggest that the working poor ought to be able to live “in reasonable
comfort” and enjoy economic “dignity.” Early in the century, it was common to
speak of a “living, family, saving wage.” But when individuals use such terms, is
there any reasonable assurance of a consistent meaning?
In statute, the minimum wage is clearly defined: $5.15 per hour for most (but
not all) covered workers. The FLSA does not translate that dollar amount into social
or human terms. Is $5.15 an hour actually a “livable wage” — and livable by whose
standard? Does “reasonable comfort,” for example, mean safe and adequate shelter
with modest amenities? How are “safe” and “adequate” and “modest” defined?
If one thinks in terms of a “family” wage, how should the family be structured?
Should both spouses engage in paid work? Should one spouse reside at home: his
or her companion earning the livelihood for the family? Might there be children in
the household? If so, how many: two or four or six? See, for example, the
calculations in Table 3.
Some may view “minimum” as the lowest wage an individual will accept (a
“reservation wage”) or the highest amount an employer is willing to pay. Some urge
repeal of a legislated wage floor altogether — and define the “minimum” as whatever
rates are set by supply and demand in a free market economy: i.e., a “market wage.”
How Minimal Is Minimum? Minimum wage debates contain frequent
references to the “poverty level” for a family of two or three or more. If Congress
intends the minimum wage to be set at a level high enough to move a family out of
poverty (as some suggest), then some measurement of family size and of total
household income is necessary in assessing the adequacy of the FLSA minima. If,
instead, the minimum wage is productivity-based (i.e., resting upon the contribution
of the worker), then family size and non-wage income (support, for example, from
other household members or through sources of income not related to the individual’s
employment) would seem irrelevant.10
Under current law, a minimum wage worker employed full-time and full-year
(40 hours per week for 52 weeks at $5.15) would earn $10,712. A full-time worker,
under age 20 and paid at the statutorily permissible sub-minimum rate ($4.25 per
hour), could earn $8,840 — for the same hours of work and for performing the same
duties. After 90 consecutive days with an individual employer, however, his or her11
sub-minimum rate would ordinarily increase to $5.15 an hour. These amounts are
10 Some may argue that basing a wage rate on the productivity of the worker may be, itself,
misleading since in large measure, worker productivity is based upon the skills of
management and upon management-controlled elements such as work organization,
availability of appropriate equipment, morale, ambience, and other similar factors.
11 This suggests some of the problems in calculating minimum wage earnings. While a
worker under age 20 can be paid $4.25 per hour through the first 90 consecutive days with
any employer, his wage after 90 days would have to be increased to the full $5.15 per hour
prior to any deductions and exclusive of any fringe benefits. Table 3 sets forth the
level of income regarded as a poverty threshold, at various family sizes, for eligibility
for certain federal assistance programs. The extent to which the poverty guidelines
are realistic can be, and has been, debated. The guidelines have no direct connection
with the federal minimum wage, but they are frequently cited in discussions of the
minimum wage and are used by some analysts as a measure of the adequacy of the
Table 3. Poverty Guidelines,
All States and the District of Columbia (2006)
Size of family unitStates and District of ColumbiaAlaskaHawaii
1 $9,800 $12,250 $11,270
Source: U.S. Department of Health and Human Services, “Annual Update of the HHS Poverty
Guidelines,” 71 Federal Register 3848-3849, Jan. 24, 2006.
Note: For family units with more than eight members, add $3,400 for each additional member. For
Alaska, add $4,250, and for Hawaii, add $3,910. Poverty guidelines are not defined for Puerto Rico,
the Virgin Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, or
other U.S.-related insular jurisdictions.
Since much minimum wage work is also part-time and/or part-year, estimating
actual annual income for minimum wage workers may be problematic. Some
workers, normally earning the minimum wage, find, either through their own designs
(school and sports, for example) or through the absence of minimum wage-type
work, that their year-long income may fall substantially below an annualized figure.
Similarly, choosing a wage rate that will comport with the work patterns of minimum
wage earners and still provide “a living wage” may prove daunting. Further, while
— unless he moved on to a second, third, or fourth employer, or dropped out of work for
a period of time and broke the “consecutive” days pattern. Were he a full-time student
working no more than part-time, he could be subject to a different sub-minimum wage
option. Were he partially disabled and employed under Department of Labor (DOL)
certification, he could be paid at any rate found to be commensurate with his productivity
— however low that might be.
some minimum wage work may provide a fringe benefit component, such fringes are
often not available until a worker has been engaged for a minimal period of time (a
period that a minimum wage worker quite possibly cannot reach). Minimum wage
work often provides only cash income and little more. Under present law, the
concept of a minimum wage is limited to a cash wage.
To Whom Should Not Less Than the Minimum Wage Be Paid?
FLSA minimum wage requirements have always been subject to exceptions,
sometimes excluding from coverage those likely to be the most poorly paid workers.
Upon what basis has Congress included — or excluded — workers from minimum12
wage protection under the FLSA?
When a Member of Congress (or that body collectively through legislation)
speaks of the “minimum wage worker,” to whom is reference made? Is the minimum
wage worker viewed as a single individual? A parent? A single parent? The sole
economic support for a family? A teenager? Is the FLSA minimum intended to be
a wage floor for all workers, urban and rural — for employees only of large firms, or
for those employed by small businesses as well? Should any non-work or
non-productivity factors be taken into account when setting the wage floor — for
example, age (a youth or senior citizen), student status, or family size? Whom does
a legislator have in mind when setting the federal minimum wage at, for example,
$5.15 per hour? Is that mental image consistent with the demographic reality of the
minimum wage workforce?
Various social and demographic distinctions have been cited to justify minimum
wage rate differentials. For example, the FLSA, under certain conditions, allows a
full-time student “employed in a retail or service establishment, agriculture, or the
institution of higher education that such student attends” to be paid a lower minimum
wage than that required for a non-student (even for equal work) — so long as the
student works only “part-time” (defined by the statute). The wage level, here, may
be conditioned less upon productivity than upon how the worker spends his off-duty
hours: i.e., that he is a student and is enrolled in academic course work. If he drops
out of school but keeps his job, the law requires that his hourly rate of pay be raised
to at least the full applicable minimum. Similarly, even while remaining an
employed full-time student, if his hours of work increase to more than part-time, he
must be paid at the full applicable minimum rate. Applicability of the student sub-
minimum rate (Section 14(b)) is dependent upon maintenance of full-time student
status and not more than part-time employment. What is the rationale for paying a
part-time worker less, on a per-hour basis (here, a sub-minimum rate), than a full-
time worker — even for the same work performed under the same conditions and
equally well? What assumptions about “need” and “productivity” are implicitly built
into the student sub-minimum wage option — and are these assumptions valid?
Some may argue that this wage structure creates an incentive for young persons
to leave school or to shift their primary focus from study to work. The rationale for
sub-minimum wage treatment, however, is that it may offset the problems young
12 See, for example, discussion during the 1938 debate on the original FLSA. Congressional
Record, June 14, 1938, p. 9257.
persons have in finding work that will match their academic schedules: i.e., making
them cheaper and, thus, more attractive to employ.
It can be argued that younger persons, by definition, are less experienced and,
therefore, less productive than “prime age” adults. This conclusion, however, may
not be valid for minimum wage-type work and, indeed, an argument can be made that
for low-skilled entry-level positions, young persons may be more productive: i.e.,
more vigorous, more nearly satisfied with such routine activity. What criteria should
be taken into account with respect to the elderly (who may be less — or more —
productive in minimum wage-type work) or the disabled?
Should minimum wages be needs-based or productivity-based? If a worker has
an affluent spouse (or parents), should he (or she) be payable at a sub-minimum rate
because his (or her) combined family income is relatively high? Should one who
spends his wages on luxury items (designer clothes, CDs, beer and pizza) be paid at
a lower rate than one who spends his earnings on tuition, baby formula — or for
food, rent, or transportation? If needs-based, then should the minimum wage be
pegged to family size: the more children, the higher the minimum wage rate? Are
such distinctions useful or workable and do they lend themselves to public policy
Who Should Pay the Minimum Wage? How the minimum wage worker
is defined and the intent of Congress in establishing/maintaining a federal minimum
wage are critical to consideration of by whom the minimum wage ought to be paid.
Speaking Generally. Is the minimum wage intended to be sufficient to
sustain a worker (however defined by Congress): i.e., a single person without
dependents or a sole breadwinner for a family? If so, should an employer be
obligated to pay a wage of at least the amount needed to sustain the worker (and,
where applicable, his or her dependents) — an amount that could, presumably, be
affected by the assumptions built into the definition of a minimum wage worker?13
If a productivity-based minimum wage is not sufficient to sustain a worker (and
his or her dependents, if any), then by whom (if anyone) should the deficiency be
made up? Should it be paid by the employer who directly benefits by paying low
wages (through utilizing the services of a low-wage workforce) — and, indirectly,
by the consumer of the goods and services such low-wage workers provide —
through an increase in the minimum wage rate? Or should the difference between
one’s wage and one’s need be subsidized by the taxpayer?
The Minimum Wage -v.- the EITC. In 1975, Congress established the
Earned Income Tax Credit (EITC), which, as amended, provides a tax credit to
certain low-wage workers. Beginning as a relatively small program (about 6.2
13 Since workers compete with each other in the labor market, paying a needs-based rate
could encourage an employer to hire single persons without dependents and, thus, to keep
labor costs (wages) low: to avoid hiring persons who are married with children. Similarly,
youth workers, paid at a sub-minimum rate, are often thought to be, potentially, economic
substitutes for older workers who must be paid a full minimum scale.
million recipients), it has since expanded, with various additions, to about 22.1
million tax filers (2003). To qualify, a family must reside in the United States
(unless absent for military duty). While oriented toward persons with children, some
childless adults may also qualify. But the program can also be complex and has
been, historically, subject to significant over-claims (or, on some occasions, perhaps,
under-claims) of benefits.14
Some laud the EITC for helping “to lift ... working families above the poverty
threshold and to provide a greater work incentive to low-income workers.”15 But the
EITC can also be viewed as a wage supplement, not only for workers but also for
low-wage employers who may continue to pay low wages to their workers and profit
from utilization of such low-wage employees while tax revenues (through the credit
mechanism or through other public subsidies) assist their workers in meeting basic
living costs. Thus, arguably, the routine cost of doing business is shifted from the
individual employer to the general taxpayer. Similarly, the EITC can be viewed as
a subsidy to the consumers of the goods and services produced by low-wage workers.
Conversely, some argue, the EITC affords firms that operate on a slim margin
an opportunity to remain in business and to provide employment, even if at low
wages. However, the EITC is conditional upon the low earnings of the worker, not
the marginal profitability of the employer. It makes no distinction between
businesses (employers) that are struggling economically and those that are doing
well. Speaking generally, some view the EITC as a supplement to the minimum
wage, predicated upon the needs of a worker rather than upon his productivity;
others, as a substitute for future minimum wage increases. Employer/business
acceptance of the EITC and hostility toward the minimum wage may reflect an
economic reality: with the EITC, the taxpayer subsidizes the employer’s wage costs;
with the minimum wage, those costs fall directly upon the employer or
businessperson and indirectly upon the consumer.
Small Businesses. The FLSA’s small business exemption allows certain
qualifying employers to be exempt from the FLSA minimum wage requirements. In
general (though the exemption is complex), this could include firms “whose annual
gross volume of business done” is less than $500,000, though individual employees
of such firms, engaged in interstate commerce, may be covered individually. In
addition, the act contains numerous more narrowly focused exemptions.
Over time, there has been pressure from the small business community to
expand its exemption. Proponents have argued that small firms may be adversely
affected — or even driven out of business — by having to pay their workers the
minimum wage. However, some may argue that no test of profitability has been
proposed with respect to firms benefitting from the small business exemption: It is
14 “A childless adult must be at least 25 years of age, but not more than 64 years of age to
be eligible for the EITC, and cannot be claimed as a dependent on another person’s tax
return.” See CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview,
and CRS Report RS21477, The Earned Income Tax Credit (EITC): Policy and Legislative
Issues, both by Christine Scott.
15 Bureau of National Affairs, Daily Labor Report, Aug. 23, 1993, p. A10.
enjoyed by prosperous and struggling businesses alike. But, where small businesses
are free from a minimum wage obligation, the question remains: How will workers
employed by small businesses sustain themselves and, where applicable, their
families? Further, what are the implications of a “small business exemption” with
respect to competition between small firms and mid-sized or larger firms?
Needs of the Minimum Wage Worker. Much of the debate over increasing
the minimum wage has focused upon the low-wage worker. Does he (or she) really
need the increased income? Is he productive enough to justify (to earn) a higher
minimum wage? Does he have other sources of income: for example, a working
spouse or an employed parent? How will the worker spend his earnings: for
essentials or for luxuries? In short, is he (or she) merely working for pin money?16
Comparable issues have not been raised about business. Does the small
businessperson really need the increased profits from employing low-wage (sub-
minimum wage) workers? Could he (or she) reasonably pay a higher wage? When
assertions are made with respect to the limited resources of an enterprise, should a
means test be prescribed for such employers?
General Demographics of the Minimum Wage Workforce
Data concerning the minimum wage workforce are difficult to develop with
precision. Not everyone is covered by the minimum wage. Some low-wage workers
may be paid at or below the federal minimum wage; but because of exemptions built
into the statute, they may not be affected by the changes that Congress may make.
In such cases, their pay may continue (at whatever levels) without being influenced
by Congressional action. Conversely, some employers may choose to pay the
statutory minimum because it is a convenient and generally recognized basic rate for
low-wage employment — even where their workers may not be subject to the act’s
minimum wage provisions.
In addition, persons employed at or below the federal minimum wage may
change jobs (and economic status) with some frequency, moving into and out of
work in response to non-work-related factors: school, pregnancy or, perhaps, a
change in marital status. Some workers may be multiple jobholders.17
Not all workers covered under the FLSA are covered in precisely the same way.
Thus, statistical data in this area may be somewhat imprecise and we may, often, be
speaking of the low-wage worker rather than the minimum wage worker covered
under the FLSA.
16 The term, pin money, historically, was frequently used with respect to women’s wages:
i.e., to provide a little something extra but not for the essentials of a household.
Increasingly, the term is now used, mostly disparagingly, with respect to youth workers who
have various alternative sources of income and do not really need to be employed — or who
are doing so as a lark.
17 Surveys of income may collect information only with respect to a worker’s main job.
Who Are the Minimum Wage Workers? In 2005, about 1.882 million
workers, paid at hourly rates, earned at or below the federal minimum wage of $5.15
per hour: About 479,000 were paid at the minimum rate and about 1.403 million
were paid below the minimum.18 These are workers who are 16 years of age or older.
In absolute numbers, according to data provided by the Bureau of Labor
Statistics (BLS), persons working at or below the minimum are about as likely to be
adults as youth (see the discussion below), more likely to be female than male, and
more likely to be white than of another race. Further, persons working at or below
the minimum wage are more likely to be working part-time than full-time.
Critics of the minimum wage often point to a minimum wage worker who is a
young person, working for “pin money” and being supported by a suburban
middle-class family. Conversely, proponents of a higher minimum often view the
low-wage workforce as largely adult and, thus, suggestive of more serious needs.
Statistics can be used to support either interpretation. If, for example, using
2005 data, one defines a youth as someone between 16 and 19 years of age, then
about 26.1% of workers, paid hourly at or below the minimum wage, are youths and
about 73.9% are adults. If one’s definition is more expansive, defining youth as
between 16 and 24 years of age, then about 53.3% of persons earning at or below the
minimum wage are youths and only 46.7% are adults. Thus, even with an expansive
definition of youth (16 to 24 years of age), close to half of the minimum wage/sub-
minimum wage workforce is 25 years of age or over.19
For minimum wage type work, the two demographic groups may well be in
competition, with youth workers readily substitutable for older workers and with
younger workers having an employment advantage. Even where covered by
minimum wage requirements, youth workers may often, legally, be hired at a sub-
minimum wage — and, often, at hours of work (fragmented part-time employment)20
that could not sustain a family or even a single adult.
18 About 75.6 million workers, out of a civilian noninstitutional workforce of around 150
million, were paid hourly rates in 2005. In transmitting numbers of minimum wage workers,
the Bureau of Labor Statistics states, “It should be noted that it is not possible to determine
whether workers surveyed in the CPS [Current Population Survey, upon which BLS relies]
are actually covered by the Fair Labor Standards Act or by individual State minimum wage
laws. Thus, some workers being reported as earning an hourly wage of $5.15 may not, in
fact, be covered by Federal or State minimum wage laws; at the same time, the presence of
a sizable number of workers with wages below the prevailing Federal minimum wage does
not necessarily indicate violations of the Fair Labor Standards Act or applicable State laws,
because of the numerous exemptions to these wage statutes.” (Emphasis added.)
19 It is difficult to assess needs, in the context of minimum wage work; but one might
speculate that persons who continue to be employed in very low-paying jobs, over time, may
have a pressing need for the income earned.
20 In addition to their legally allowable lower wage rate, other arguments can be made for
the competitive advantages of youth workers. They may have more energy than older
workers and may be more flexible. They are normally short-term employees who do not
join unions, do not vest in pension programs, do not earn vacation benefits, and are less
Among hourly workers, paid at or below the general minimum rate, about
65.6% were women and about 34.4% men. Although the data are imprecise because
of definitional questions with respect to race and ethnicity, it is clear that the majority
of workers earning at or below the federal minimum wage are white.21
In 2005, about 59.8% of workers at and below the minimum wage were
employed on a part-time basis; about 39.9% were full-time. Some 71.1% of part-
time workers were female. (Some statistical variation may result from a small
number of multiple jobholders.) Low-wage employment may tend to be less stable
than more highly compensated employment, with workers suffering involuntary
joblessness or moving in and out of the labor force because of discouragement,
quitting to seek better wages and working conditions, or for other personal reasons.
Full-time employment is not synonymous with full-year employment. Estimating
the annual income of minimum wage workers may be problematic since many full-
time minimum wage workers may not be employed on a full-year basis. There may
be periods when they are not working (or not working at the minimum wage).
Beyond uncertainties about combinations of part-time or full-time, part-year or
full-year employment, one must recall that the minimum wage is a cash wage. Fringe
benefits earned by a minimum wage worker are likely to be less than those of more
highly paid persons, widening the gap between the economic well-being of the
minimum wage worker and others. On the other hand, minimum wage workers may
have other sources of income.22
The Size of the Minimum Wage Workforce. In 2005, as noted above,
there were roughly 1.882 million workers, paid at hourly rates, who earned at or
below the federal minimum wage of $5.15 per hour. They constituted only about
2.5% of hourly paid workers from an aggregate of about 75.6 million hourly paid
workers. This figure constitutes the smallest percentage of persons earning at or
below the minimum wage in the United States in recent times.23 (See Table 4.) An
important question is: Why?
likely to be ill or suffer job-related strains that one might associate with long-term
employment or age. Conversely, the argument can be made that they are less disciplined,
have fewer skills (though few skills are required for minimum wage-type work), are less
dependable, and may be less acclimated to the culture of the world of work.
21 BLS divides the low-wage workforce into “white,” “black,” and “Asian” within the
context of race and provides a separate classification of “Hispanic or Latino.” The various
shadings of color are becoming increasingly difficult to categorize. Concerning this
classification, see Mary Bowler, et al., “Revisions to the Current Population Survey
Effective January 2003,” Employment and Earnings, Feb. 2003, pp. 4-7, and 14.
22 Data, here, have been drawn from unpublished sources provided by the U.S. Bureau of
Labor Statistics. The bureau has used information drawn from the Current Population
Survey (CPS), provided by the U.S. Census Bureau.
23 The early history of the FLSA was marked by a relatively sparse coverage which, through
the 1960s and 1970s, was generally broadened giving the act, roughly, its present form.
Table 4. Number and Percent of Workers
Paid Hourly at the Minimum Wage or Less
Workers paid hourly rates
Total paid the minimum wage or less
YearNumber in thousandsAs a percentage of hourly paid workers
1979* 6,913 13.4
1980* 7,773 15.1
1981* 7,824 15.1
1982 6,496 12.8
1983 6,338 12.2
1984 5,963 11.0
1985 5,538 9.9
1986 5,060 8.8
1987 4,697 7.9
1988 3,927 6.5
1989 3,162 5.1
1990* 3,228 5.1
1991* 5,283 8.4
1992 4,921 7.7
1993 4,332 6.7
1994 4,127 6.2
1995 3,655 5.3
1996* 3,724 5.4
1997* 4,754 6.7
1998 4,427 6.2
1999 3,340 4.6
2000 2,710 3.7
2001 2,238 3.1
2002 2,168 3.0
2003 2,100 2.9
2004 2,003 2.7
2005 1,882 2.5
Source: United States Bureau of Labor Statistics.
* Years in which a legislated change in the federal minimum wage took effect.
This numerical decline is not necessarily indicative of improved economic status
for the low-wage worker. Rather, it may be that, as the value of the statutory
minimum shrinks in terms of constant dollars, fewer workers are employed at or
below the rate reflected in the reduced value of the statutory minimum. Nor does this
imply that the economic status of those who have moved to a rate a little in excess
of the statutory minimum has improved: i.e., those who are above the statutory
minimum but who are still low-wage workers. Rather, their wage may have kept
pace with inflationary pressures while the statutory minimum did not — suggesting
little or no actual change of economic status.
In policy terms, this would appear to have several implications. If the statutory
minimum wage remains at its current level while the general wage level rises because
of inflation and/or productivity improvements, the number of minimum wage
workers could reasonably be expected to experience a further decline. Fewer and
fewer people could be expected to be employed at the low wage level — even though
their economic condition may not have improved. Thus, were Congress to take no
action with respect to the minimum wage, allowing its value to continue to decline,
the size of the minimum wage workforce could reasonably be expected to decline
until it virtually disappears. This would not mean that the low-wage workforce had
shrunk, but merely that an increasingly large number of such persons would be
employed at wages above the declining real value of the statutorily defined
Under this scenario (which is generally consistent with the trajectory of
legislated increases in the statutory minimum wage since its peak year, 1968), the
minimum wage would have been effectively repealed by attrition.24 In that context,
an argument might be made that since so few would actually be employed at rates at
or below the statutory minimum (its relative value notwithstanding), the problem of
the working poor could be handled through other more narrowly targeted means —
possibly through transfers of income rather than through strictly work-related
earnings. This, however, may run counter to public policy that income from work
is generally preferable to transfers or entitlements that must be financed through
Finally, as noted on Table 2, state minimum wage rates have, in some respects,
moved in to fill the gap of a declining federal minimum wage. However, such
considerations have been uneven. Eighteen states and the District of Columbia have
rates higher than the federal standard, but most of these are on the West Coast and
in New England. Illinois, Delaware, Maryland, the District of Columbia, and Florida
provide exceptions — and, even here, Florida might not be classified as a traditional
Southern state. Speaking generally, the Midwest and the Old South have either gone
along with the federal rate (they would have had little choice since the federal rate,
if the standard is higher, takes precedent over a state rate), or they have simply stood
apart. To the extent that there is a disparity in earnings, this might be viewed by some
as contributing to a certain fracturing of the national economy with relative levels of
wealth and of poverty among America’s workers.
24 See CRS Report RS20040, Inflation and the Real Minimum Wage: Fact Sheet, by Brian
Commonwealth of the Northern Mariana Islands (CNMI)
In the mid-1970s, the CNMI entered into a quasi-autonomous relationship with
the United States. By the Commonwealth agreement, regulation of overtime pay,
under the FLSA, is enforced by DOL — but the minimum wage is governed by
CNMI law. The CNMI also controls its own immigration policy. Finally, the CNMI
is regarded as within the U.S. customs area. The result has been the development of
industries based upon low wages and alien contract labor, the product of which
carries a “Made in America” label and competes with other American-made goods.25
Through the past decade, human rights and labor standards in the CNMI have
been the subject of DOL investigations, congressional hearings, and proposed
legislation. In the 105th Congress, the Committee on Energy and Natural Resources
voted to report legislation co-sponsored by Senators Daniel Akaka (D-Hawaii) and
Frank Murkowski (R-Alaska) that would, inter alia, have created a U.S.-controlled
insular minimum wage structure.26 The legislation died at the close of the 105th
Congress, but the CNMI issue was the subject of further hearings by the Committee
during the 106th Congress. Several general minimum wage proposals of the 106th
Congress included language that would have brought the CNMI wage floor into
conformity with that of the states, had they been adopted.
In the 107th and 108th Congresses, there was continuing interest in the CNMI,
with a number of bills introduced that would have extended FLSA minimum wage
protection for workers employed in the insular jurisdiction. Normally, these
proposals would have phased in the full national rate through a series of incremental
steps. In related action, on June 5, 2001, the Senate Committee on Energy and
Natural Resources reported legislation to amend immigration law as it applies to the
CNMI under the Covenant of Association between the Islands and the United States.
(See S.Rept. 107-28.) The bill died at the close of the 107th Congress.
The issue of minimum wage protection for workers in the CNMI, in part
because of the alleged concentration of sweatshop industry in the islands, remains on
the wage/hour agenda of the 109th Congress. (See the legislative section of this
25 See CRS Report RL30235, Minimum Wage in the Territories and Possessions of the
United States: Application of the Fair Labor Standards Act, by William G. Whittaker.
26 U.S. Congress, Senate Committee on Energy and Natural Resources, Northern Mariana
Islands Covenant Implementation Act, report to accompany S. 1275, 105th Cong., 2nd sess.,
Minimum Wage Legislation in the 109th Congress
Early in the 109th Congress, various proposals were introduced that would have
raised the federal minimum wage and/or made other changes in the FLSA. Some
were single-issue proposals; others were part of broader legislative packages.
Establishing a Tradition?
The original FLSA proposals of 1937-1938 were in the form of freestanding
legislation: focusing narrowly upon labor standards but covering the entire field of
wage/hour and child labor protections. As a procedural matter, the next seven rounds
of minimum wage increases (1949, 1955, 1961, 1966, 1974, 1977, and 1989), though
each provided for other changes in the FLSA itself, took the form of freestanding
legislation. Non-FLSA or non-wage/hour issues were not addressed as part of a
package with minimum wage and related concerns. Any “trade-off” to assist
employers in dealing with the impact of wage/hour enactments (for example, the “tip
credit” or youth/student sub-minimum wage provisions) were considered within the
context of wage/hour legislation per se.
In 1996, minimum wage and related FLSA amendments were brought to the
floor in the House as an amendment to a broad package of non-wage/hour proposals
mostly associated with tax matters of interest to industry. Indeed, the FLSA was a
relatively small part of the overall package. While some components of the
wage/hour portion of the bill had been the subject of hearings during the 104th
Congress, others had not been — nor had the body of FLSA-related provisions been
considered by committee as a unit. During the spring and summer of 1996, the joint
minimum wage/tax revision measure moved through Congress, and was signed by
President Clinton on August 20, 1996 (P.L. 104-188).27
When minimum wage legislation came to the floor during the 106th Congress,
it largely followed the 1996 pattern. It combined tax revisions in behalf of the
business community with changes in the FLSA — including an increase in the
minimum wage.28 By this point, the two issues — a minimum wage increase for low-
paid workers and tax breaks for employers (whether or not they employed workers
paid at the minimum wage) — had become linked in policy terms: i.e., that the
former could not go forward, it seemed, without the latter.
27 See CRS Issue Brief IB95091, The Minimum Wage: An Overview of Issues Before the
104th Congress, by William G. Whittaker (archived, but available from the author). See also
Alissa J. Rubin, “Congress Clears Wage Increase with Tax Breaks for Business,”
Congressional Quarterly, Aug. 3, 1996, pp. 2175-2177; and Julie Kosterlitz, “A Bounty For
Business,” National Journal, Oct. 26, 1996, pp. 2289-2292.
28 In the Senate, minimum wage increases had been included in H.R. 833, as amended, the
Bankruptcy Reform Act of 1999; in the House, it was part of H.R. 3081, the “Small
Business Tax Fairness Act of 2000.” Though each chamber passed a version of theth
minimum wage legislation, the proposals died at the close of the 106 Congress. See CRSth
Report RL30690, Minimum Wage and Related Issues Before the 106 Congress: A Status
Report, by William G. Whittaker (archived, but available from the author).
Linkage, although a tradition only since the 104th Congress (1996) and used
only during that one occasion, has appeared to become a frequently accepted focus
of the minimum wage debate during succeeding Congresses. “We came to the table,”
observed Representative Rick Lazio (R-NY), “with the realization that a wage
increase was fair but we also came to the table with a desire to protect the small
business people who will end up bearing the direct burden of any wage increase that
we pass here today.”29 Senator Don Nickles (R-OK) concluded, looking ahead to the
107th Congress: “It kind of fits, frankly, to do it as a part of the tax package next
year.”30 Some may argue that, in practice, linkage is a matter of fairness and equity
with respect to those who are called upon to fund an increased minimum wage.
Not all observers concurred. Amy Borrus, writing in Business Week, termed the
tax/minimum wage bill “a monument to legislative logrolling,” stating that “its
veneer of virtue made it the perfect vehicle for a tax-break extravaganza.”31
Representative Charles Rangel (D-NY) seemed to sum up the views of critics of
linkage: “We should not be forced to bribe the wealthy in our society in order to
secure a simple dollar more per hour for the poorest working American families.”32
Thus, some may argue, that proposals to raise the minimum wage have become, in
practice, a vehicle for legislating economic benefits for employers and others in
higher income brackets.33 The notion continues into the 109th Congress.
Minimum Wage: The Issue of Indexing
Varying through the years, the minimum wage reached its peak in 1968 in real
(inflation-adjusted) terms and has, since then, declined in constant value. “In January
2006,” states CRS analyst Brian W. Cashell, “it would need to have been increased
to $9.05 to equal the purchasing power of the statutory minimum wage in February
29 Congressional Record, Mar. 9, 2000, p. H860.
30 Bureau of National Affairs, Daily Labor Report, Dec. 6, 2000, p. A12.
31 Amy Borrus, “Why Business Isn’t Bucking This Minimum-Wage Hike,” Business Week,
Nov. 1, 1999, p. 55. Borrus added, “And that’s how lobbyists managed to squeeze
maximum benefits for their clients out of the minimum-wage measure.”
32 Bureau of National Affairs, Daily Labor Report, Mar. 9, 2000, p. A8.
33 In general, see Bureau of National Affairs, Daily Labor Report, Apr. 25, 2001, pp. A6-A7;
and Juliet Eilperin, “Business Seeks Tax Breaks in Wage Bill: Pay Raise is Viewed as Best
Chance at Cuts,” The Washington Post, May 14, 2001, pp. A1 and A12. In an article,
“Business Coalition Holds Firm for Bush Tax Cut Package,” Congress Daily, Apr. 19, 2001,
reporters Stephen Norton and Charlie Mitchell state that trade association and business
supporters of the Bush Administration’s tax package have shown “remarkable discipline in
resisting the urge to press for inclusion of their own pet items” in the tax package, “mindful
of assurances from GOP leaders that there will be a ‘second bite at the apple’ for business-
specific provisions next year or even later this year — possibly paired with a bill to raise the
34 CRS Report RS20040, Inflation and the Real Minimum Wage: Fact Sheet, by Brian W.
Cashell. As noted here, the current minimum wage level ($5.15 per hour) can be reduced,
During the initial debates on wage/hour legislation in 1937-1938, it was
suggested that a reasonable rate (for that period) would have been 40 cents an hour
and a 40-hour work week. Under prolonged objections from southern industrialists,
the operative figures were dropped to 25 cents per hour and to a 44-hour work week
— in each instance to be raised or lowered according to statute. Thus, Congress
avoided dealing with a regional option and southern industrialists also avoided
Because the minimum wage under the FLSA is set in statute, it remains at a
fixed level, without regard for changes in the general economy, until Congress alters
it through legislation. Failure of the minimum wage to maintain parity with the cost
of living has been a continuing concern. Some have questioned whether the
minimum wage floor should remain at a fixed point, subject to action by Congress.
They suggest it might usefully be indexed to reflect changes in the cost of living (or
shifts in other economic variables), thus providing a more regular pattern of increase.
On the other side, some contend that there really isn’t a need for a federal minimum
wage at all.
Indexation was discussed during the last century as an approach to wage
stability — but was rejected. It was last a subject of extensive congressional debate
during consideration of the 1977 FLSA amendments — but was, once again, rejected,
the Congress seemingly preferring the current method of direct legislative action.35
Several states — notably, Oregon, Washington, and Vermont — have experimented
with minimum wage indexation in recent years.36
To reach the 1968 level (in current dollars), as suggested above, the federal
minimum wage would need to be approximately $9.05. The most expansive
proposal, now before the Congress, would set the minimum wage at $7.50 per hour
— to go into effect October 1, 2009.
under various segments of the law, to lower rates — including a special reduced wage for
disabled workers predicated upon their individual capabilities but with no fixed standard.
35 See H.R. 2812 (107th Congress), introduced by Representative Bernard Sanders (I-VT),
which discusses indexation.
36 See CRS Report RL30927, The Federal Minimum Wage: The Issue of Indexation, by
Senate Proposals To Raise
the Federal Minimum Wage
The general federal minimum wage is set in statute at $5.15 per hour: a cash
wage that does not take into account fringe benefits — though various provisions of
law permit payment at a lower rate.37 Thus, when the minimum wage has been
considered, there are often other — collateral — issues involved as well.
The Kennedy-Santorum Debate
During debate on the “Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005" (S. 256), minimum wage emerged twice.
First, on March 3, 2005, Senator Edward Kennedy proposed an amendment
(S.Amdt. 44) that would have raised the minimum wage, in steps, to $7.25 an hour
beginning 24 months (and 60 days) after enactment of the legislation. In addition,
the Kennedy proposal would have applied the federal minimum wage, in steps, to the38
Commonwealth of the Northern Mariana Islands. The proposal by Senator
Kennedy was defeated by a vote of 46 ayes to 49 nays on March 7, 2005.39 He
indicated that the debate would continue as other bills moved forward.
Second, on March 7, 2005, in connection with the amendments by Senator
Kennedy, Senator Rick Santorum introduced a more far-reaching proposal (S.Amdt.
128). It would have: (a) raised the minimum wage to $6.25 an hour, in steps, to have
full effect 18 months after enactment; (b) created a program of compensatory time
as an alternative to ordinary overtime pay; (c) created an enhanced small business
exemption; (d) altered the tip credit under the FLSA; and (e) provided a range of
unrelated tax and other incentives for business. The Santorum proposal was defeated
(38 yeas to 61 nays) on March 7, 2005.40
The Kennedy-Enzi Debate
October 17, 2005, during consideration of the Departments of Transportation
and the Treasury (H.R. 3058), Senator Kennedy reintroduced legislation (S.Amdt.
2063) that would have raised the minimum wage to $7.25, in steps, beginning 24
months and 60 days after enactment. On this occasion, however, the Senator’s
proposal was subsequently modified to provide an increase in the minimum wage,
in steps, to $6.25 per hour — as had been proposed by Senator Santorum during the
earlier debate. Senator Michael Enzi entered a separate proposal (S.Amdt. 2115) that
37 For a quick summary of minimum wage legislation (and that affecting overtime pay and
child labor), see CRS Report RL32901, Minimum Wage, Overtime Pay, and Child Labor:th
Inventory of Proposals in the 109 Congress to Amend the Fair Labor Standards Act, by
William G. Whittaker.
38 Congressional Record, Mar. 3, 2005, pp. S1979-S1980.
39 Congressional Record, Mar. 7, 2005, p. S2132.
40 Ibid., pp. S2132-S2133.
would have provided for a number of changes: flexible schedules, an alteration of
the tip credit, and revision of various accounting provisions — among other items.
There was significant debate on each side of the issue. As the matter came to a vote,
Senator Christopher Bond raised a point of order that an increase in the minimum
wage that Senator Kennedy was advancing would be in violation of the
Congressional Budget Act of 1974 as an “unfunded mandate.” In turn, Senator
Kennedy raised a similar point of order on the Enzi amendment. As a result, each
proposal was defeated — not on its substance but, rather, on a point of order.41
The National Defense Authorization Act for 2007
On June 19, 2006, during consideration of the “National Defense Authorization
Act for Fiscal Year 2007,” an amendment by Senator Kennedy (S.Amdt. 4322)
dealing with the minimum wage was called up. The Kennedy amendment proposed
the following: (a) an increase in the federal minimum wage, in steps, to $7.25, and
(b) applicability of the federal minimum wage, in steps, to the Commonwealth of the
Northern Mariana Islands. Immediately, Senator Frist proposed a second-degree
amendment to the Kennedy amendment (S.Amdt. 4323) entitled “transportation of
minors in circumvention of certain laws relating to abortion.” The Frist proposal
called for fine and imprisonment (“not more than one year, or both”) for persons who
become involved in certain interstate abortion activity.42
“Personally,” said Senator Frist, “... I don’t believe this is the appropriate bill
on which to be addressing the minimum wage,” and so “... I second-degreed that
amendment with a child custody protection amendment.” There had been “some
discussion” about a cloture motion on either minimum wage or on child custody, but
“after further discussion,” they agreed to work out “the most appropriate manner to
bring to the floor and address these issues over the next — I am not sure how long
it will take, but figure out exactly how long that is.” Frist stated: “... I believe that
a minimum wage amendment should not be debated on this particular bill, but it
looks like it will be debated....” Finally, he suggested, “We need to look, at some
point, at the issues surrounding our overall economy ... and look at the issues
surrounding the minimum wage, but to do it in isolation on a totally unrelated bill I
don’t think is the way to go.”43
As the leaders proceeded to discuss procedure for moving forward with the
minimum wage amendment, Senator Enzi announced that he would be offering his
own amendment. “Of course,” he stated, “I am going to ask that he [Kennedy]
withdraw that amendment and I do not propose my amendment because they don’t
have to do with the Department of Defense authorization.” To those watching the
41 See Congressional Record, Oct. 18, 2005, pp. S11469-S11470, and Oct. 19, 2005, pp.
S11547-S11548. See also Daily Labor Report, Oct. 19, 2005, p. A10 and Oct. 20, 2005, p.
A15. One industry spokesperson opined: “... if an increase [in the minimum wage]
appeared inevitable, one way of softening the impact would be to include some pro-business
measures in the bill — like a corresponding increase in the deductibility of business meals.”
See Nation’s Restaurant News, Sept. 26, 2005, p. 77.
42 Congressional Record, June 19, 2006, p. S6051.
43 Congressional Record, June 19, 2006, p. S6052.
debate, Enzi stated, some may wonder how the minimum wage relates to the current
legislation. “The answer is: It doesn’t.”44
Senator Enzi Reenters the Debate. Senator Enzi, in a preliminary
statement, observed that on four occasions during the current Congress, the Senate
had taken up the minimum wage issue — and each time rejected it. (See the
Santorum and Enzi discussions, above.) Senator Enzi asserted that he would be
“...plenty willing to have the debate again.” The Senator affirmed: “We want to
have the American public making as much money as possible.” The new Enzi
proposal would provide for an increase to $6.25 in steps “over l8 months. But, more
important than the numbers, only my amendment,” he stated, “recognizes the
enormous burdens a mandate such as this would place on the backs of America’s45
Senator Enzi then proceeded to explain why an increase in the federal minimum
wage was not a good idea — presumably not even the rate of increase that he was
proposing. He extolled the small businessperson who trains individuals “with no
skills.” Such recruits, he suggested, work only for a short period (perhaps “the first
month”) at the minimum rate before moving on “to other levels.” They “get paid
more money or they go elsewhere....” Confronted with a minimum wage increase,
some employers “increase prices” (“... which they usually can’t do or face a potential
loss of customers”), reduce spending on health coverage or other benefits, or46
There is a “spiral effect” to an increase in the minimum wage. And a minimum
wage may not be justified in productivity terms. “Earned wage growth cannot be
legislated. We do a disservice to all concerned, most especially the chronic low-
wage worker, to suggest that a Federal wage mandate is the answer.” Turning to high
school students (a relative subgroup of minimum wage workers), Senator Enzi
suggested: “These noncompletion and dropout rates and poor earning capacity that
comes with them cannot be fixed by a Federal minimum wage policy.” And then
there are those who are just incompetent.
“Have you ever had a bill for $10.81 and you gave the clerk $11 and then you
gave them a penny? That is no skills, if they can’t figure out they owe you the
The minimum wage “does absolutely nothing to enhance job skills for low-wage
workers,” he stated. “In fact, to the extent it makes entry into the workforce more
difficult, and increases low-skilled unemployment, as a minimum wage hike without
44 Congressional Record, June 20, 2006, p. S6123. Neither the Kennedy amendment nor the
cited Enzi amendment had been the subject of hearings by the Senate Committee on Health,
Education, Labor, and Pensions (HELP): No hearings have been scheduled. Senator Enzi
chairs the HELP Committee.
45 Congressional Record, June 20, 2006, p. S6123.
46 Congressional Record, June 20, 2006, p. S6124.
economic relief for small business will unquestionably do, it will have precisely the
Though opposed to an increase in the minimum wage, Senator Enzi threatened
to propose such an increase as a counterpoise — were Senator Kennedy to continue
with his proposal. In addition to an actual rate increase (over time, to $6.25 per
hour), the Enzi bill would provide an updating of the small business exemption under
the FLSA to $1 million (it is currently $500,000), a system of flexible scheduling,
restructuring of the tip credit, and a series of non-wage benefits sought by small
Senator Kennedy, Senator Warner, and Compromise. Senator
Kennedy rose to respond. As to why a minimum wage amendment was being
debated as part of the National Defense Authorization, the Senator stated that our
troops “are fighting for American values, American principles. Part of American
values and principles is economic fairness, not the exploitation of poor workers in
the United States of America. That is why it is relevant.” As a more practical matter,
the Senator stated: “... we would not have another opportunity to do it on any other49
bill until the recessing of the Senate.”
The Senator from Massachusetts saw minimum wage quite differently from the
Senator from Wyoming: “Study after study finds raising the minimum wage does not
cause job loss.” Inflation, he stated, was yet “another canard” that was pointed to by
minimum wage critics; but with the small amount of the minimum wage increase
(“less than one-fifth of 1 percent of the national payroll”), any inflation would be
offset by other factors. One could expect increased morale and greater productivity
as people take “greater pride in their work,” he argued. Absenteeism would be
reduced because people “were treated with greater respect.” Minimum wage is “a
fairness issue.” It is also “a women’s issue” and “a family value issue” and “a civil
rights issue because so many of the workers are men and women of color.”50
At that juncture, the Frist amendment remained to be dealt with — i.e., interstate
transportation for purposes of abortion. At last, Senator John Warner addressed his
colleagues. He asked (a) that the Frist second-degree amendment be withdrawn, (b)
that Senator Enzi be recognized in order to offer a first-degree amendment relating
to the minimum wage, (c) that the Senate resume debate at 9:30 a.m. the following
morning with time equally divided between the chairman and ranking member of the
HELP Committee (respectively, Senators Enzi and Kennedy), (d) that no
amendments be permitted to either proposal, and (e) that “if either amendment does
not get 60 votes in the affirmative, then that amendment would be automatically51
withdrawn.” After some discussion, Senator Warner’s motion was agreed to.
47 Congressional Record, June 20, 2006, p. S6124.
48 Congressional Record, June 20, 2006, pp. S6126-S6128.
49 Congressional Record, June 20, 2006, p. S6128.
50 Congressional Record, June 20, 2006, pp. S6129-S6130.
51 Congressional Record, June 20, 2006, pp. S6137 and S6139. Senator Enzi’s amendment
Debate, a ‘Qualified’ Victory, and Procedural Withdrawal. Debate
opened on June 21, 2006, with a generalized introduction by Senator Kennedy.
Senator Jeff Sessions pointed to certain of the broader implications of the
minimum wage: that is, to suggest the impact of excessive and illegal immigration
upon the incomes of American workers. “We are being told by the business
community that there is this incredible shortage out there — they can’t find workers
so they have to have foreign workers....” Senator Sessions then observed: “If a
business wants to find more workers, they will usually increase wages, not decrease
them.” Again, Senator Sessions stated: “I would say that the current rate of
immigration, legal and illegal ... has depressed the wages of low-skilled American
workers.” Senator Kennedy disagreed with these observations. We are talking about
jobs “an American does not take” and “that an American worker has not been52
interested in and refused to accept,” Senator Kennedy said.
Senator Judd Gregg stressed that the Enzi proposal was a “thoughtful and
effective” way to meet the needs of working people — “especially single women in
the workplace, especially single moms....” Senator Gregg suggested that the
Kennedy proposal would “raise the minimum wage too quickly” and to a level that
“small employers can’t afford.” But the thrust of the Senator’s comments focused
upon “family time.” Though impassioned about the wage rate, proponents of an
increase in the minimum wage “... stiff-arm the working mother in this country,” the
Senator said. Senator Gregg then proceeded to a discussion of compensatory time
(comp time) as a replacement for overtime rates — an Enzi proposal. “Sure, the
minimum wage is important. But there are a lot more people who are going to be
affected by the family time language in this bill....” Then Senator Gregg suggested:
“Why don’t we include this [comp time] on the other side? We know why they
don’t: Because labor unions are against it.” And he added: “ It is a knee-jerk
reaction on the part of organized big labor to this language.”53
Senator Kennedy responded that the comp time proposal, suggested by Senator
Enzi (and endorsed by Senator Gregg) would provide flexible scheduling for the
employer — but not for the worker. The employer, he stated, “makes the sole54
judgment and decision.”
Other arguments, pro and con, were quickly rebutted.55 Economic studies have
found that “increases such as the proposed minimum wage hike would not reduce
employment,” Senator Paul Sarbanes affirmed, and would have certain other
advantages: notably, a reduced turnover rate. “You get a more experienced and
was S.Amdt. 4376. See Congressional Record, June 20, 2006, pp. S6178-S6185.
52 Congressional Record, June 21, 2006, pp. S6194-S6195.
53 Congressional Record, June 21, 2006, pp. S6195-S6196.
54 Congressional Record, June 21, 2006, p. S6196.
55 See CRS Report RL31875, Compensatory Time vs. Cash Wages: Amending the Fair
Labor Standards Act? by William G. Whittaker.
productive workforce, lower costs for recruiting new workers, and lower costs for
training new workers.”56 Senator Johnny Isakson argued for “the marketplace” —
as would Senator Enzi.57 Senators Patty Murray and Russell Feingold argued that the
minimum wage was simply not enough to permit a family to live decently.58 Finally,
Senators Kennedy and Enzi closed out the debate. There had been effectively no
discussion of the actual non-wage substance of the Enzi amendment. And only at the
last minute was a very general letter concerning conditions in the CNMI inserted into
With all time having expired, the voting began. On the Kennedy amendment,
the vote was 52 yeas to 46 nays — sufficient under normal circumstances to have
passed the amendment. But since an agreement had been worked out with the
Republican leadership that a 60-vote margin would be needed, the vote was
insufficient. The amendment was “automatically withdrawn.” On the Enzi
amendment, the vote was 45 yeas to 53 nays; but since a 60-vote margin was also
needed in this case, the amendment was “automatically withdrawn.”59
House Proposals to Raise
the Federal Minimum Wage
In the House of Representatives, action on the minimum wage (and on related
matters) was often the concern of committees, being debated extensively prior to
being brought to the floor — if that course were chosen.
The Labor, Health and Human Services,
and Education Appropriations Bill (for 2007)
During consideration of the Departments of Labor, Health and Human Services, and
Education (for 2007), on June 13, 2006, by the House Appropriations Committee,
an amendment was offered by Representative Steny Hoyer that would increase the
federal minimum wage to “not less than $5.85 an hour beginning on January 1, 2007,
not less than $6.55 an hour beginning on January 1, 2008, and not less than $7.25 an
hour beginning on January 1, 2009.” The Hoyer amendment was approved in
committee by a vote of 32 yeas to 27 nays, with seven Republicans having joined
with Democrats in support of the proposal. Thereafter, the measure was approved60
by a voice vote.
Hoyer announced that he was “very pleased” that his amendment had been
adopted by the House Appropriations Committee. “Republicans talk about creating
56 Congressional Record, June 21, 2006, p. S6197.
57 Congressional Record, June 21, 2006, p. S6197-S6198.
58 Congressional Record, June 21, 2006, pp. S6199-S6201.
59 Congressional Record, June 21, 2006, pp. S6203-S6204. See also Bureau of National
Affairs, Daily Labor Report, June 22, 2006, p. AA1.
60 Bureau of National Affairs, Daily Labor Report, June 14, 2006, p. AA1,
an ‘ownership society,’ yet the fact,” he stated, “remains that their policies have left
millions of families earning the minimum wage struggling to afford the basic
necessities.” He further stated that unless the leadership interferes, “the amendment’s
passage means the House will vote on the minimum wage for the first time in a
The measure (with the Hoyer amendment) will still require floor consideration.
Representative Howard P. “Buck” McKeon, Chairman of the House Education and
Labor Committee, was quoted as suggesting that he would like to see a point of order
raised against the amendment if it comes to the floor.62 The minimum wage
amendment, the Bureau of National Affairs’ Daily Labor Report notes, “is outside
the jurisdiction of the Appropriations Committee,” which could make it “subject to
a point of order under House rules.”63
Appropriations for the Departments
of Commerce, Justice, and State
On June 20, 2006, during consideration of the appropriations for the
Departments of Commerce, Justice, and State, Representative David Obey introduced
an amendment to raise the minimum wage, in steps, to $7.25 per hour by January
The Republicans, with a majority on the committee, either were not present or
declined to vote with the Democrats in support of a minimum wage increase. Thus,
the Obey amendment failed (28 yeas to 34 nays) — in part because the
recent/pending amendment to the Labor, Health and Human Services, and Education
bill was viewed as having dealt with the issue.64
When on June 28, 2006, while the House had under consideration H.R. 5672
(the Commerce, Justice, and State appropriations bill), Representative Obey once
more offered an amendment: to raise the federal minimum wage to $7.25, in steps,
by January 1, 2009, and to extend the minimum wage to the Commonwealth of the
Northern Mariana Islands, in steps, until it reaches the otherwise applicable federal
minimum wage. Representative Frank Wolf (R-VA) reserved a point of order and
Representative Obey recalled the prior experience with the Departments of
Labor, Health and Human Services, and Education. “Every Democrat voted for that
amendment, and so did seven Republicans. But,” he continued, “after that happened
and the amendment had passed ... the bill was blocked from consideration by the
leadership of this House and by the Rules Committee.” Mr. Obey then explained the
61 Comments by Steny Hoyer, dated June 13, 2006, appeared on his website. See
62 Bureau of National Affairs, Daily Labor Report, June 14, 2006, p. AA1.
63 Bureau of National Affairs, Daily Labor Report, June 16, 2006, p. A11.
64 Bureau of National Affairs, Daily Labor Report, June 21, 2006, p. A9; and CG Today,
Midday Update, June 20, 2006.
attempt to amend the Departments of Commerce, Justice, and State appropriations
in committee (noted above) and how that effort has failed. “We, therefore, asked the
Rules Committee to make in order an amendment on this bill which would adjust that
minimum wage, and that is what I am trying to do today.” Mr. Obey observed that
“... if the point of order is lodged against this amendment, that we will once again be
blocked from our effort to provide an increase in the minimum wage....” He further
“... I just want to say to those who say this is not the proper vehicle and we
should try to do it on some other bill, that for 9 years we have been waiting for
the majority party to find the right vehicle to accomplish this. And for 9 years,
nothing has happened.”
Representative Obey explained, from his own experience, some of the complications
of having to deal with a very low minimum wage. He suggested that he was not
interested in the “niceties about which committee is supposed to handle this bill.65
This bill,” he stated, “ought to be out on the floor. This amendment ought to pass.”
The rules of the House, however, took precedence. “I believe it is an
appropriate issue to debate,” Representative Wolf replied, “but the appropriate forum
for debate is with the authorizing committees and with an opportunity for both sides
on the issue to present their cases.” Traditionally (except with the 1996
amendments), minimum wage had come to the floor as a freestanding bill, reported
from the committee of jurisdiction. “Today’s pending legislation,” Mr. Wolf stated,
“is not a place for the debate, and I would hope that the authorizing committee would
schedule hearings and bring forward a bill and let the House work its will.” The
point of order was “conceded and sustained.” The Obey amendment was, thus,
The Permanent Estate Tax Relief Act of 2006
On June 22, 2006, during floor consideration of the Permanent Estate Tax Relief
Act of 2006 (H.R. 5638), proponents of an increase in the federal minimum wage
again took to the floor.
During debate on Resolution 885, Representative James McGovern argued that
although the Majority regards tax relief “for the wealthiest people in the United
States” to be an “emergency,” it has declined to consider an increase in the minimum
wage. McGovern recalled that the Appropriations Committee, a week earlier, had
approved an increase in the minimum wage and had included it within the Labor-
HHS-Education appropriations bill. But he also stated that the Majority Leader will
not allow the House to “consider that provision.” McGovern continued:
“We should be debating today an increase in the minimum wage for
workers in this country. We should be doing something that will make a
difference in the lives of people who are struggling.... And, instead, here we go
65 Congressional Record, June 28, 2006, pp. H4712-H4713.
66 Congressional Record, June 28, 2006, p. H4713.
again bringing the estate tax bill up ..., a bill that benefits mostly people who are67
very well off.”
Sharpening the contrast, Representative Louise Slaughter pointed out that the current
value of the minimum wage “... is at its lowest level since 1955.”68 The Congress has
“time to deal with estate taxes that will benefit basically people who have wealth in
excess of millions of dollars,” stated Representative Benjamin Cardin, but it does not
have “enough time to deal with increasing the minimum wage that has been stagnant
now for the last 10 years, people making $5.15 an hour.” And he asked: “Where is
the priority of this Congress?”69 This is “the ultimate values debate,” added
Representative Nancy Pelosi.70 Representative Jim McDermott termed the entire
debate “the theater of the absurd.”71
As the vote neared, Representative Charles Rangel moved to recommit the bill
with a series of instructions that closed with the admonition: “... based on the above
the Committee shall report the same back to the House only after the House has acted
on an increase in the minimum wage.”72 The motion to recommit failed.73 The estate
tax package was adopted (269 yeas to l56 nays).74
Internet Gambling Prohibition
On July 11, 2006, the House called up House Resolution 907, providing for the
consideration of the Unlawful Internet Gambling Prohibition and Enforcement Act
of 2006 (H.R. 4411). The question arose: Should Members vote no on the resolution
so that a minimum wage amendment could be added?
The resolution was introduced by Representative Phil Gingrey (R-GA), who
directed his remarks to the gaming aspects of the measure. When James McGovern
(D-MA) spoke, he, too, endorsed the rule — but then went on to discuss the
minimum wage. “The minimum wage is not keeping pace with the cost of living in
America today,” he argued. “Poverty is getting worse in our country today.... And
it is frustrating that the leadership on the other side of the aisle seems indifferent to
that sad reality.”75 “What we are asking for is the opportunity to be able to debate the
67 Congressional Record, June 22, 2006, p. H4429.
68 Congressional Record, June 22, 2006, p. H4432. Ms. Slaughter proposed a rejection of
the resolution, allowing her to bring H.R. 2429 (the Miller minimum wage bill) to the floor
for an up-or-down vote
69 Congressional Record, June 22, 2006, p. H4450.
70 Congressional Record, June 22, 2006, p. H4456.
71 Congressional Record, June 22, 2006, p. H4451.
72 Congressional Record, June 22, 2006, p. H4461.
73 Congressional Record, June22, 2006, pp. H4462-H4463.
74 Congressional Record, June 22, 2006, pp. H4466-H4467.
75 Congressional Record, July 11, 2006, p. H4970.
issue of increasing the Federal minimum wage and letting people in this Chamber,
both Republicans and Democrats, have an opportunity to vote up or down.”76
While Republicans remained silent on the minimum wage issue, Representative
George Miller stated that a rule on gaming practices was “the only place where we
can protest the priorities of this Congress.” Miller, Ranking Minority Member of the
Committee on Education and the Workforce, added that there are “... huge gaps of
time where it would be available to debate the minimum wage, hold hearings on the
minimum wage, and report out a bill for consideration by the Members of Congress.
And yet,” he said, “that is not being done.”77 McGovern seemed to agree. “... those
of us on this side believe that increasing the minimum wage for working families in
this country needs to be a priority, and we would prefer to have this discussion during
a debate on the minimum wage. Unfortunately,” McGovern stated, “the leadership
on the other side continues to deny us that opportunity.”78
As debate drew to an end, Representative McGovern urged “... all Members of
this House to vote ‘no’ on the previous question so that I can amend the rule and
allow the House to vote on H.R. 2429, the Miller-Owens bill to increase the Federal
minimum wage....”79 However, Members voted to approve the rule: 214 yeas to 189
Credit Agency Duopoly Relief Act
On July 12, 2006, the House called up the Credit Agency Duopoly Relief Act of
906, setting forth the terms under which the bill would be debated. In responding for
the Democrats, Representative Doris O. Matsui explained the likely amendments and
stated that Members “... will have an opportunity to support today ... an increase in
the minimum wage. Just as the credit rating bill seeks to safeguard average
Americans in the long term, so should Congress protect their immediate financial
needs by increasing the minimum wage.”80
Representative James McGovern was one of the early speakers on the proposal.
He stated that he had “no problem with the rule before us,” but then added: “... I rise
because I do have a serious problem with the way this House is being run.”
“There is something very, very wrong with this Congress when the
Republican leadership refuses to recognize and appreciate the important
76 Congressional Record, July 11, 2006, p. H4971-H4972.
77 Congressional Record, July 11, 2006, p. H4972. Representative James Leach (R-IA), did
state: “I would comment to begin with on Mr. McGovern’s point. I think he has a really
quite excellent one on the minimum wage.” He then moved on to discuss the gambling
implications of H.R. 4411. Congressional Record, July 11, 2006, pp. H4974-H4975.
78 Congressional Record, July 11, 2006, p. H4973.
79 Congressional Record, July 11, 2006, p. H4976.
80 Congressional Record, July 12, 2006, p. H5058.
contributions of workers in this country, and consistently, and I would add
callously, refuses to raise the Federal minimum wage.”
McGovern suggested that, in his opinion, Republican priorities “are messed up.” He
added: “Is corporate greed part of your Family Values Agenda?” Then he explained
his purpose. “You [Members of Congress] will have an opportunity today to make
a difference by voting against the previous question so that we can bring an increase
in the minimum wage up for a vote.”81
Representative Barney Frank (D-MA) reiterated the same thought. “We are not
trying to displace the underlying bill [H.R. 2990]. We are seeking to defeat the
previous question so we can also have a vote on the minium wage.” Mr. Frank
“We have this extraordinary disparity in this country between hardworking jobs,
and then we have CEOs getting tens and hundreds of millions of dollars when
there is no connection between their work and the success of their companies that
anybody has been able to measure.”
He continued at some length to discuss the rationale for not bringing up the minimum
wage for a vote, concluding, “We are really here talking about not just economic
fairness, but democracy.”82 Representative Rush Holt (D-NJ) then added to the
debate. “We will have a recorded vote in a few minutes on the previous question.
This is not an arcane parliamentary procedure. Every editorial board, every citizen
group, every voter,” he suggested, “ought to understand what this vote means. It
means, will we have a vote on the floor about raising the minimum wage to
something that is tolerably humane?”83 With McGovern, Representative Hoyer
called on the Members to “defeat the previous question” so that a minimum wage
proposal can be brought to the floor.84
Representative Matsui, closing the debate on the rule, affirmed that she would
“be asking Members to vote ‘no’ on the previous question so I can amend the rule
and provide this House with an opportunity to vote on legislation to increase the
Federal minimum wage....”85
81 Congressional Record, July 12, 2006, p. H5058.
82 Congressional Record, July 12, 2006, p. H5059.
83 Congressional Record, July 12, 2006, p. H5060. Representative Obey explained, from his
perspective, the rationale for bringing up the minimum wage on a credit industry bill. “The
way this House works, absolutely nothing can be brought to the floor for a House vote
unless we have the permission of the majority party leadership to do so. And the fact is that
for the last month they have been absolutely stonewalling every single effort to bring an
increase in the minimum wage to this floor.” Mr. Obey concluded: “That is not right, it is
not fair, and it is not moral.” See ibid., pp. H5060-H5061.
84 Congressional Record, July 12, 2006, p. H5061.
85 Congressional Record, July 12, 2006, p. H5061.
For her part, Representative Capito suggested that the vote on the previous
question was “procedural” and is “without substance.”86 No other comments from
the Majority had been made on the minimum wage implications of the bill. On the
previous question, the vote was 308 yeas to 113 nays.87
Vocational and Technical Education Act:
Miller Motion to Instruct
On July 12, 2006, the House called up the Senate-passed bill, S. 250 (the
Vocational and Technical Education for the Future Act), and without objection it
was determined that conferees be appointed. At that point, Representative George
Miller proposed a motion to instruct the conferees to include within the conference
substitute the following language: “In section3(2) of the bill, after the phrase ‘high88
wage’ insert ‘(in no case less than $7.25 an hour).’”
Miller reminded the House that the federal minimum wage “is just $5.15 an
hour,” stating that such a figure “is a shame, it is an insult, and it is a moral outrage.”
He reviewed the purposes of the original enactment and walked his colleagues
through the realities of the current consumer market. “... [T]he fact of the matter is
that these people who have made a conscious decision to go to work every day are
so badly disadvantaged that they cannot raise themselves above the poverty line.”
Mr. Miller continued: “... you cannot build a strong and rich country on the backs of
poor people. It simply will not work.”89
Representative Howard P. “Buck” McKeon (R-CA) then rose to explain what
the bill in question would do. “Nothing in the Vocational Education bill before us
has anything to do with the minimum wage,” he stated, “nor had there been any
discussion of the minimum wage among the conferees, because this is neither the
time nor the place to consider an increase.” Mr. McKeon further stated that the
proposal is for a reauthorization of the vocational education bill. “We have been
meeting with the Senate for almost a year trying to work out, resolve the differences90
between the bills so we can get a bill finally passed and to the President’s desk.”
About 15 minutes ago, McKeon stated, “... the Democrats gave us this motion
to instruct conferees that says: ‘In section 3(2) of the bill, after the phrase ‘high
wage’ insert ‘(in no case less than $7.25 an hour).’” Now, McKeon suggested, “...
it sounds like they are talking about minimum wage, but what they are doing is
defining a high wage as $7.25 an hour.” As Representative McKeon explained, the
proposal would not amend the FLSA to create a new minimum wage level, but rather
would apply only to those students engaged in “academic and technical and equip
them with the knowledge to proceed with postsecondary education.” In the process,
86 Congressional Record, July 12, 2006, p. H5061.
87 Congressional Record, July 12, 2006, pp. H5079-H5080.
88 Congressional Record, July 12, 2006, p. H5073.
89 Congressional Record, July 12, 2006, pp. H5073-H5074.
90 Congressional Record, July 12, 2006, p. H5074.
he suggested, the proposal would “give us something that changes the definition of
high wage to $7.25 an hour and ends up tainting good work with bad politics.”91
Without rebutting McKeon’s contention, Miller objected: “Our committee
[Education and the Workforce] has had no hearings and they are not reporting the
bill. Where is the time and where is the place?” Referring to those who work at or
below the minimum wage, Miller stated: “... where do they go to make their case to
this Republican Congress? Where is that time and where is that place?”92
On the Miller motion to instruct the conferees on S. 250, the vote was 260 yeas
to 159 nays. The motion was agreed to.93
Pledge [of Allegiance] Protection Act of 2005
On July 19, 2006, the House called up for debate the Pledge Protection Act of
Representative Obey was recognized. He observed that “for 9 years there has been
no increase in the minimum wage.” Obey reviewed the recent congressional record
on minimum wage votes and pointed to an article from Congressional Quarterly
(CQ). “‘It is unlikely that GOP leaders would allow an up-or-down vote on a wage
increase. Rather,” Obey stated, still quoting the CQ article, “‘... aides say that if they
craft a bill, it would likely include so-called sweeteners.’” Obey continued:
“... I am proud of the fact that on this side of the aisle, our Members do not have
to be maneuvered and cajoled and enticed into voting for a minimum wage
increase. I am pleased by the fact that on this side of the aisle, Members do not94
need sweeteners in order to do what is right on this issue.”
W. Todd Akin (R-MO), sponsor of the Pledge Protection Act, stated that he had
come “to discuss” the rule; but, “... most of the discussion that seems to come from
the other side is complaining about priorities.” Representative Akin went on to
discuss the philosophy behind the Pledge Protection Act and affirmed that the “bill
is important and not irrelevant or trivial.”95
As debate on the rule (H.Res. 920) drew to a close, Representative Alcee L.
Hastings (D-FL), speaking for the Democratic minority on the rule, interjected: “I
urge all Members to vote ‘no’ on the previous question so I can amend the rule and
91 Congressional Record, July 12, 2006, p. H5074. Later, p. H5075, Mr. McKeon reiterated:
“As I said earlier, what it does is change high-skill, high-wage to $7.25 an hour. That is
what I read from their motion to instruct.” Again, McKeon noted: “... aside from all of the
rhetoric about the minimum wage, this is not a vote on the minimum wage bill, it is a vote
on reauthorizing the Vocational Education Act.”
92 Congressional Record, July, 12, 2006, p. H5075.
93 Congressional Record, July 12, 2006, p. H5080.
94 Congressional Record, July 19, 2006, p. H5390.
95 Congressional Record, July 19, 2006, pp. H5390-H5391.
provide this House with yet another chance to vote on legislation to increase the
Federal minimum wage.” He continued:
“My amendment provides that immediately after the House adopts this rule
it will bring H.R. 2429, the Miller-Owens minimum wage bill, to the House floor
for an up-or-down vote. This bill will gradually increase the minimum wage
from the current level of $5.15 an hour to $7.25 an hour after about 2 years.”
Representative Hastings noted that “... [it] is identical to language that was included
in the Labor-HHS appropriations bill that was blocked by the majority leadership last
month.” Further, he stated: “It is also identical to the language that we on the
Democratic side have tried to bring to this floor in recent weeks.” He added: “...
every day that we fail to bring legislation to the floor to increase the minimum wage
is another day we turn our backs on America’s low-income and middle-class families96
who desperately need our help.”
There was no substantive rebuttal to the Hastings proposal. When the rule was
called up, the vote was 257 yeas to 168 nays. The Hastings proposal fell.97
Action Urged by 28 Republican House Members
On July 12, 2006, 28 Republican Members of the House joined together to urge
that action be taken on minimum wage legislation prior to the August recess.
Spearheaded by Representatives Frank LoBiondo (R-NY) and Steven
LaTourette (R-OH), co-chairs of the House Republican Working Group on Labor,
the 28 House Republicans signed an appeal to Majority Leader Boehner requesting
that minimum wage legislation be brought up for a vote. The signers suggested that
“it has been nearly ten years since the last increase in the minimum wage” was signed
into law. They stated that a person who regularly works a 40-hour workweek “earns
$10,700 per year. Nobody working full time,” the Members observed, “should have
to live in poverty. We believe it is time for Congress to take responsible action to
raise the minimum wage and ensure our hard working constituents can provide for98
Several of the signatories stated that their respective states had raised state
minimum wage laws, thereby creating an economic imbalance. “We must level the
playing field,” stated Representative Phil English (R-PA), “and provide a fair wage
for all American workers while ensuring that local businesses are not encouraged to99
move to a neighboring state with a lower minimum wage.” Similarly,
96 Congressional Record, July 19, 2006, p. H5395.
97 Congressional Record, July 19, 2006, p. H5397.
98 The letter, addressed to Representative John Boehner, Majority Leader, appears on the
website of Representative LoBiondo, visited on July 20, 2006:
www.house.gov/ apps/list/press/nj 02_lobiondo/071306.html .
99 See press release, website of Representative English, visited July 20, 2006,
Representative John Sweeney (R-NY) remarked that “New York State has already
seen fit to provide a better living wage for employees,” and expressed concern that
“businesses in New York do not leave to go to states with a lower minimum wage,
taking needed jobs with them.”100
Proponents of a minimum wage increase had pressed for an up-or-down vote —
presumably only dealing with the minimum wage per se — or with very closely
related issues. Representative LoBiondo, in a followup press release, stated that he
had met with Majority Leader Boehner “on developing a comprehensive legislative
package that could also provide benefits to the small business community.”101
However, a more comprehensive package (with sweeteners) may pose new problems.
On July 18, 2006, Representative George Miller wrote to Boehner, stating that “... a
legitimate vote on the minimum wage must not be saddled with poison pills, such as
labor law rollbacks.”102 Representative Obey took basically the same approach,
noting “Republican leaders must not attempt to defeat this proposal by attaching
‘poison pill’ provisions.”103
House Acts on Estate Tax,
Incentives for Business, and the Minimum Wage
During the early evening of July 28, 2006, following a day during which the
House was in recess (subject to the call of the Chair), that body was called to order.
Representative Doc Hastings (R-WA), speaking for the Committee on Rules,
presented H.Res. 958, a “same day rule.”
Debating the Preliminaries
As structured, there would be a series of sequential debates. First, the House
would be asked to approve a martial law rule (H.Res. 958): a term sometimes
applied to consideration of certain bills that, in its absence, would require a lay-over
provision, or certain similar requirements. Second, the House would debate the rule
[http://www.house.gov/ apps/list/press/pa03_english/MW0706.html ].
100 See press release, website of Representative Sweeney, visited on July 20, 2006,
101 See press release, website of Representative LoBiondo, visited on July 20, 2006:
www.house.gov/ apps/list/press/nj 02_lobiondo/071306.html .
102 See Representative George Miller to Majority Leader Boehner, July 18, 2006, Miller
website, [http://www.house.gov/apps/list/press/ed31_democrats/rel71806c.html], visited
July 20, 2006.
103 See press release, website of Representative Dave Obey, July 18, 2006,
[http://obey.house.gov/ HoR/ WI07/Newsroom/Press+Releas es/Obey+ Continues+Fight+
For+A+Fair+Minimum+Wage.htm], visited on July 20, 2006. See, also, Ben Pershing and
Erin P. Billings, “Wage Hike Vote Likely in House,” Roll Call, pp. 1 and 24.
on the particular bill (H.Res. 966). Third, there would be a debate on the bill itself:
in this case, H.R. 5970.
Debate on the Martial Law Rule: H.Res. 958. Under H.Res. 958, a
variety of issues (several bills) were to be in contention, one of which dealt with
“economic security for all Americans.” Representative Hastings assured the104
membership that the bills were of “vital importance to the American people.”
James McGovern, speaking for the minority of the House Rules Committee,
rose “in strong opposition to this martial law rule.” Representative McGovern
“Apparently, the Republican leadership will be presenting a minimum wage
bill that will be loaded down with sweetheart tax deals for the wealthy and the
corporate special interests, the same special interests that call the shots in the
McGovern objected to the timing of the bill (that the bills “appeared literally just an105
hour ago which no one has read...”). Others continued in largely the same manner.
Representative Gene Green (D-TX) affirmed: “We should have an up-and-down vote
on a minimum wage increase, not a vote on [a] minimum wage increase and the
estate tax at the same time or pension reform or whatever else the leadership feels106
convenient to add to this bill.”
Hastings responded that “... we have the minimum wage in the same bill as the
sales tax [deduction],” and added: “it seems to me to be a pretty attractive107
package.” Hastings stated that he was “not in favor of raising the minimum wage”
and that he had “never voted for that.” He would vote for this bill, he stated, “...not
because I embrace the minimum wage” but “...because it has the sales tax deduction
for Washington State and other States that don’t have sales tax deductibility.”
Hastings concluded: “It seems to me it is the best of all worlds in the give and take
of the legislative process....”108
On H.Res. 958, the vote was 217 yeas to 192 nays. The resolution was adopted109
and the martial law rule was passed.
Debate on the Rule for Floor Consideration: H.Res. 966. As reported
from the Committee on Rules, H.R. 5970 came to 183 pages. Mr. Hastings recited
its contents: some elements of pension legislation, state and local sales tax
104 Congressional Record, July 28, 2006, pp. H6023-H6024. The bill on the minimum wage
was part of a composite bill that deals with the estate tax, with other provisions. Of 183
pages, the minimum wage and related issues occupy three pages.
105 Congressional Record, July 28, 2006, p. H6024.
106 Congressional Record, July 28, 2008, p. H6025.
107 Congressional Record, July 28, 2006, p. H6025.
108 Congressional Record, July 28, 2006, p. H6026.
109 Congressional Record, July 28, 2006, pp. H6028-H6029.
deductions, special tax treatment of privately owned forest lands, extension of a
research and experimentation tax credit, proposals dealing with education — and,
finally, issues related to the minimum wage.
The structure of the bill raised questions with minimum wage advocates. The
American people, Mr. McGovern began, “want and deserve a clean up-or-down vote
on raising the minimum wage, and this rule does not provide for such a vote.” He
characterized the bill as cluttering “up the minimum-wage vote with ... tax cuts for
the wealthy.”110 Representative Charles Rangel (D-NY) stated that the primary focus
of the bill was “the estate tax” with the minimum wage added.111 “It links action to
help struggling families, working families,” stated Representative Sander Levin (D-
MI), “with tax breaks for the very wealthy. And why the linkage? It is clear.
Because the estate tax provisions can’t pass on their own.”112
Conversely, Representative Deborah Pryce (R-OH) affirmed: “Our friends on
the other side of the aisle are already calling this political, but they are wrong. It is,”
she said, “another example of House Republicans getting things done for the
On H.Res. 966, there was a recorded vote with 217 yeas and 194 nays. The
House then proceeded, following a break for other business, to take up H.R. 5970.114
The Bill (H.R. 5970) as Reported
As presented (and as approved by the House), the minimum wage portion of the
bill was divided into four parts.
First: The minimum wage would be increased by the following amounts: $5.85
per hour, beginning on January 1, 2007; $6.55 an hour, beginning June 1, 2008;
and $7.25 an hour, beginning June 1, 2009.
Second: Tips “shall not be included as part of the wage paid to an employee to
the extent that they are excluded therefrom under the terms of a bona fide
collective bargaining agreement applicable to the particular employee....”
Parts one and two may not have been especially controversial. However, the
remainder of the bill’s minimum wage provisions — dealing with the tip credit —
it seems could be contentious. There follows:
Third: “Notwithstanding any other provision of this Act, any State or political
subdivision of a State which on or after the date of enactment of the Estate Tax
and Extension of Tax Relief Act of 2006 excludes all of a tipped employee’s tips
110 Congressional Record, July 28, 2006, p. H6032.
111 Congressional Record, July 28, 2006, p. H6034.
112 Congressional Record, July 28, 2006, p. H6035.
113 Congressional Record, July 28, 2006, p. H6032.
114 Congressional Record, July 29, 2006, pp. H6038-H6039.
from being considered as wages in determining if such tipped employee has been
paid the applicable minimum wage rate, may not establish or enforce the
minimum wage rate provisions of such law, ordinance, regulation, or order in
such State or political subdivision thereof with respect to tipped employees
unless such law, ordinance, regulation, or order is revised or amended to permit
such employee to be paid a wage by the employee’s employer in an amount not
Fourth: (continuing) “... an amount equal to —
“(A) the cash wage paid such employee which is required under such law,
ordinance, regulation, or order on the date of enactment of the Estate Tax and
Extension of Tax Relief Act of 2006; and
“(B) an additional amount on account of tips received by such employee
which amount is equal to the difference between the cash wage described in
subparagraph (A) and the minimum wage rate in effect under such law,
ordinance, regulation, or order, or the minimum wage rate in effect under section
Unlike changes in the minimum wage prior to the 1996 round, there have been no
hearings on the specific proposals of H.R. 5970 — and, thus, there is no testimony
to serve as a guide to its interpretation.
The House Considers the Bill: H.R. 5970
Debate on H.R. 5970 was divided between Representatives William Thomas (R-
CA) and Rangel of New York. Much of the testimony was generic — perhaps
because the bill had just been introduced prior to actual debate.115
Debate on the minimum wage aspects of the bill tended to emphasize what
opponents considered to be the short-comings of the legislation. Representative
Robert Andrews (D-NJ) stated: “No bill more clearly captures the distorted values
of the majority of the House than the bill before us right now.” Of the estate tax
provisions of the bill, Andrews affirmed, “This shows us who comes first.” Again,
speaking generally, “This is a shameful distortion of the country’s values.”116
Others, however, were positive. Representative Frank LoBiondo (R-NJ) rose
“in support of this minimum-wage package which I think is long overdue.” He
thanked “the 48 or 50 other Republicans that stood along together with me in
presenting our case....” He continued:
“Some Republicans are not happy about this. If I had my choice, this
package would have looked a lot different. But we don’t live in the world of the
perfect, and we should not sacrifice the good for the perfect.”
115 See Congressional Record, July 28, 2006, p. H6028.
116 Congressional Record, July 28, 2006, p. H6190.
He suggested that the “reality is that probably a straight minimum-wage vote, that I
would have preferred,” probably couldn’t have been passed.117
A somewhat different perspective arose from the Far West. “The only people
in the State of Washington whose wages will be affected by this bill, should it pass,”
stated Jay Inslee (D-WA), “will have their minimum wage decreased.” Inslee
pointed to the impact of the tip credit.
“Seven states are in the same position: Alaska, California, Minnesota, Montana,
Nevada, Oregon and Washington. In seven States in this country, the only
people who will be affected by this bill are those who will get their minimum
wage slashed.... That is what you have written into this bill. ...I want to make sure
people understand in the States of Washington, Montana, Nevada, California,
those States, that if it [H.R. 5970] did pass, they would be cutting restaurant118
Representative Miller concurred in the Inslee comments. “They would lose their119
wages under this bill,” Miller said.
Representative J. D. Hayworth (R-AZ) pointed to a “level of Orwellian
‘newspeak’ emanating from our friends on the left. We are now told that a
reasonable, rational compromise that includes many commonsense ideas is somehow
legislative extortion.” He continued: “Isn’t it interesting the lexicon offered by the
left? If it is a compromise forged by conservatives that somehow actually, ironically
delivers on an issue for which my friends on the left believe they have ownership,120
why, that is a poison pill.”
Representative David Scott (D-GA), recalling a line from Julius Caesar,
remarked on “the meanest cut of all in this bill.” The bill “excludes all of the tipped
employees’ tips from being considered as wages in determining if such tipped
employees have been paid the applicable minimum wage rate.”121 Representative
Jim McCrery (R-LA) joined the dialogue.
“Mr. McCRERY. ... I just want to say to the point that some are making
about States that have no tip credit law and have a higher minimum wage..., all
they have to do in response to passage of this bill is to pass any kind of tip credit.
It can be a minimal tip credit, and then they can fully restore the minimum wage
117 Congressional Record, July 28, 2006, p. H6192.
118 Congressional Record, July 28, 2006, p. H6192.
119 Congressional Record, July 28, 2006, p. H6193. In the several states, minimum wage
rates are higher than the wages under the FLSA or there is a provision of state law that
precludes tips from being included in calculating the overall minimum wage. Thus, were
the proposed legislation to be enacted and unless a state amends its law, the state law
governing the minimum wage for the tipped worker in those states would be overturned by
the language of H.R. 5970.
120 Congressional Record, July 28, 2006, p. H6194-H6195.
121 Congressional Record, July 28, 2006, p. H6195.
that that State wishes its employees to have. So it is not that complicated. It is
not that difficult as some Members have suggested.
“Mr. INSLEE. ... what we want to point out and we want to make sure,
because I think I have confirmed this ... the way this works, if this bill passes, in
the State of Washington the minimum wage goes down the next day $1.78 an
“The gentleman is correct. If the State legislature got together and
essentially overrode the Republicans in Congress, they might be able to get it
back up where it was. But you know what? ... it is not going to happen. That is
why we object to cutting the minimum wage in any State by any Congress of any
Representative McCrery suggested that “it is a legitimate issue the gentleman brought
up” but it could “easily be taken care of, the same way his State originally enhanced
the minimum wage in Washington.”122
Inslee was not alone in his protest. “After months of stalling, the Republican
leadership was finally forced to allow a vote. Unfortunately it was not a simple vote
on minimum wage...,” stated Earl Blumenauer (D-OR). “In Oregon restaurant
workers are paid $7.50 per hour and yet this legislation would reduce their wage to
only $5.15 per hour.” Representative Blumenauer commented that the bill was
“poorly drafted” and argued: “The minimum wage needs to be increased by crafting
a simple and clear solution that protects states with existing legislation. Under no
circumstance,” he stated, “should the Federal government undercut what Oregon
voters have already established.”123
George Miller proposed to recommit the bill with instructions; the motion was124
defeated: 190 ayes to 220 nays. On a final vote, the bill was adopted with 230 ayes
to 180 nays.125
122 Congressional Record, July 28, 2006, p. H6195. Traditionally, the federal government
has established a general standard of wages and hours and has allowed the states to build
upon that standard. H.R. 5970's impact on that policy may raise questions relating to federal
and state relations.
123 Congressional Record, July 28, 2006, p. H6199.
124 Congressional Record, July 28, 2006, pp. H6219-H6220.
125 Congressional Record, July 28, 2006, pp. H6220-H6221.
The Senate Takes Up the House-Passed Bill
On August 3, 2006, the Senate took up the so-called “trifecta” legislation.126 As
considered by the Senate, the bill (H.R. 5970) was composed of three units. Part one
dealt with tax measures: i.e., the estate tax or “death tax.” Part two concerned the
extenders: tax law that deals with the treatment of state sales tax for internal revenue
purposes, a research and development tax oriented toward industry, etc. Part three
provided for an increase in the federal minimum wage. The three components were
taken up more-or-less sequentially — through, here, emphasis will be placed on the127
minimum wage provisions of the act.
Initial Concern: The “Tip Credit”
Debate on the issue was interspersed throughout the day of August 3, 2006.
Senator Norm Coleman (R-MN), early in the day, suggested that he found it
“regrettable that some of my Democratic colleagues are now arguing that the tip
credit provision would actually lead to a reduction in the minimum wage for those
workers in non-tip credit states.” Further: “The charge that the tip credit provision
would result in the minimum wage for tipped workers going down is absolutely
false.” Senator Coleman sought permission to have printed into the Record a
statement by Victoria A. Lipnic, Assistant Secretary of Labor for Employment
Standards (August 2, 2006), addressed to Senator Frist. The letter reads, in pertinent
“If Section 402 of the Act (“Tipped Wage Fairness”) were passed into law, WHD
[the Wage and Hour Division] would read Section 402 as protecting the current
minimum wages of the tipped employees in the seven states that now exclude a
tipped employee’s tips from being considered as wages because to do otherwise
would be inconsistent with what we understand to be the intent of Congress and
the Fair Labor Standards Act, which WHD enforces.
“Nevertheless, we are aware that some have argued that Section 402 is
ambiguous.” (Emphasis added.)
Senator Coleman said that Lipnic letter “... says that absolutely the Fair Labor
Standards Act prohibits employers from paying less than the current minimum
wage.” He emphasized that “The letter from the Department of Labor is very
For others, however, the clarity of the proposed amendment was more
problematic. They questioned how protecting the current minimum wages for a
tipped employee who (a), under state law may not have his/her wages reduced by tips
received but who (b), under the proposed amendment, would have that restraint
removed. The issue was how the intent of Congress, which had traditionally allowed
126 In the Senate, the bill was termed by Senator Frist as the “Family Prosperity Act” and,
informally, as the “trifecta.”
127 Congressional Record, Aug. 3, 2006, pp. S8725-S8726. On Aug. 2, 2006, Congressional
Record, p. S8668, Senator Frist filed a cloture motion on H.R. 5970.
128 Congressional Record, Aug. 3, 2006, pp. S8677-S8678.
for elimination of the tip credit under state law, would be interpreted given the
proposed legislation.129 “The waiters and waitresses who depend on tips in seven
States” affirmed Senator Durbin, “will get a pay cut with this so-called minimum
wage increase.”130 The tip credit “should be called a tip penalty,” suggested Senator
Carl Levin (D-MI), since it allows employers of tipped employers to pay as their
share of the minimum wage “as little as $2.13" per hour — assuming that the
remainder of the minimum wage is made up through tips. According to Senator
“Although this tip penalty has been Federal law for years, States have been
free to guarantee higher wages to workers in these industries. This bill would
supersede those state laws to permit the lower wages. This will decrease wages
in at least seven States, and it will set a dangerous precedent by allowing the
Federal Government to interfere with the States to cut the wages of the lowest-131
Senator Patty Murray (D-WN) placed in the Record a letter from Gary K.
Weeks, director, Washington State Department of Labor and Industries, which
seemed to support the comments of critics. “Under our preliminary analysis,”
Weeks’s letter stated,
“this proposal, in effect, appears to nullify an employer’s obligation to pay the
minimum wage rate ... with regard to tipped employees. This means that
Washington workers who receive tips — typically service industry workers —
would see a decrease in income.”
He further said that the proposal would allow the several states to revisit the issue
and, if they chose to do so, “... to amend their laws to specifically reinstate their
current minimum wage rate laws.” But, until such action were to occur, the House-
passed bill (then before the Senate) “would diminish workers’ rights in Washington
S t at e.”132
General Issues in the Debate
With Senators Frist and Reid in charge, debate on the general issue of H.R. 5970
commenced when the Senate convened on August 3, 2006. Senator Grassley looked
to the non-wage aspects of the bill, noting that he would continue to support
129 See discussion of the tip credit provisions in this report, above, pages 37-40.
130 Congressional Record, Aug. 3, 2006, p. S8729. The seven states are Alaska, California,
Minnesota, Montana, Nevada, Oregon, and Washington — along with Guam.
131 Congressional Record, Aug. 3, 2006, p. S8741.
132 Congressional Record, Aug. 3, 2006, p. S8731. The letter from Weeks , dated Aug. 3,
2006, was addressed, jointly, to Senators Murray and Maria Cantwell D-WA). See also
memorandum by Jon O. Shimabukuro, Legislative Attorney, Congressional Research
Service, to Honorable Barbara Boxer, Aug. 2, 2006, Congressional Record, pp. S8732-
minimum wage increases “as long as the increase doesn’t raise teen unemployment
and doesn’t hurt small business.”133
Rising in Opposition. Critics of H.R. 5970 seem to have been grouped
together — speaking first. Senator Kennedy stated: “The Republican bill would
boost the bottom line for America’s restaurants, while taking money away from
hardworking Americans who depend on tips to support themselves and their
families.” Kennedy discussed the problem of tipped employees in a range of crafts,
referring to the seven states that currently do not allow a tip credit to employers. “In
fact, the Fair Labor Standards Act encourages States to enact laws that are more
protective for workers than the Federal law.” Then, he moved on to an analysis of
the current proposal.
“... the Republican bill would take power away from the States by nullifying
these state laws providing stronger wage protections for tipped employees than
[would] the Federal standard....
“Under this bill, tipped workers would see drastic reductions in their take-
home pay. A waitress at a family restaurant in Washington State, for example,
will see her hourly wages drop by $5.50 an hour. That’s almost $11,500 per
year. A hotel maid in Oregon will see her hourly wages drop by $5.37 an hour.134
That’s almost $11,200 a year.”
Senator Frank Lautenberg (D-NJ) termed the bill “a cynical ruse.” The measure,
he said, “marries the minimum wage increase with this huge cut in the inheritance
tax.” He continued “... the Republican position is: we will only help everyday135
working people in America if you give multi-millionaires and billionaires a bribe.”
Senator Jack Reed (D-RI) focused upon procedural matters. “The economic
disparities between minimum wage workers and wealthy people whose large estates
are subject to the estate tax are so vast that pairing these two measures together defies
logic. I am hard pressed,” Reed stated, “to find a link between either of these issues
and the extension of several expiring tax provisions that have been tacked on as136
well.” Senator Daniel Akaka (D-HI) was “disheartened that the majority in
Congress uses the plight of our low-income and disadvantaged to better the cause for
the wealthiest among us,” and suggested that it was “truly an outrage that the
majority has stooped so low to do this....”137
Senators Tim Johnson (D-SD) and Christopher Dodd (D-CT) generally
concurred, while Senator John Kerry (D-MA) suggested of the tax-minimum wage
linkage: “This is nothing more than political blackmail.”138 Meanwhile, Senator
Barack Obama (D-IL) observed: “This is simply an attempt to dare members of my
party to vote against an increase in the minimum wage which has been one of our
133 Congressional Record, Aug. 3, 2006, p. S8726.
134 Congressional Record, Aug. 3, 2006, p. S8732.
135 Congressional Record, Aug. 3, 2006, pp. S8734-S8735.
136 Congressional Record, Aug. 3, 2006, p. S8735.
137 Congressional Record, Aug. 3, 2006, pp. S8736-S8737.
138 Congressional Record, Aug. 3, 2006, pp. S8737-S8739.
long-time priorities.” Again, Senator Obama stated: “They have decided to hold an
increase in the minimum wage hostage to a fiscally destructive cut in the estate
Rising in Support. As the period for debate drew to a close, several
Republicans rose to challenge the Democratic position, but, although some were as
vigorous in style as were the critics, they tended to focus on non-minimum wage
issues, for the most part.
Senator Santorum stated: “We have voted on minimum wage more in this
Chamber than probably any other issue.” Then, the Senator moved on to other
matters. “This is a compromise. This is giving things that I can tell you many on this140
side of the aisle don’t want to give....” Senator Kay Bailey Hutchison (R-TX) had
“heard the Democratic leader call this a ‘do-nothing Congress.’ He said that several
times. I have heard it before. Yet here we have a bill that will go directly to the
President.” She explained that the bill “gives a minimum wage increase of over $2
that we have been trying to do, along with tax cuts for small businesses so that it is
a balance for years in this Congress. We have,” Mrs. Hutchison affirmed, “been
trying to permanently ease the burden of the death tax ever since I got to this Senate.”
She indicated that the tax negatively affects “the small businesses” and “the farmer
who is going to have to sell his farm when he dies.... It is the small business that has
been built by a family.” She stated: “This is a bill that would take away the ability
to call this a ‘do-nothing Congress.’” Mrs. Hutchison concluded that following the
Democratic line would be “... turning our back on the middle class and the poor141
people of this country who depend on the minimum wage and death tax relief.”
And Senator Jon Kyl (R-AZ) affirmed: “The bottom line of this legislation ... is it142
will increase the standards of living and decrease the cost of dying.”
Senator Pete Domenici (R-NM) rose “in support of the Estate Tax and
Extension of Tax Relief Act of 2006 ... more commonly known as the Family
Prosperity Act.” He would support the legislation “because it represents a fair and
reasonable compromise on all three of these important issues.” Later, Senator
Domenici explained: “I have said many times before that I would support an increase
in the minimum wage if it was crafted properly. I believe that this bill is crafted
properly because it raises the minimum wage while extending some personal and
business tax cuts and reduces the overreaching death tax.”143
Senator Enzi, chair of the Committee on Health, Education, Labor, and
Pensions, similarly rose “in strong support of ... the Estate Tax and Extension of Tax
Relief Act.” But, here, his focus was upon the Abandoned Mine Land Trust Fund
(AML) and related issues. Though he mentioned that the legislation would provide
“a minimum wage increase,” he did not discuss that issue here. “I also take this
139 Congressional Record, Aug. 3, 2006, p. S8739.
140 Congressional Record, Aug. 3, 2006, p. S8742.
141 Congressional Record, Aug. 3, 2006, pp. S8742-S8743.
142 Congressional Record, Aug. 3, 2006, p. S8743.
143 Congressional Record, Aug. 3, 2006, p. S8743.
opportunity to voice my support for the estate tax relief contained in this legislation”
— a tax which he regarded as”burdensome and unfair.” In closing, Senator Enzi
noted his intention “to vote in favor of the overall package.” He explained: “I
strongly support the inclusion of the AML legislation. I am also strongly supportive
of the tax extenders and the death tax relief. I hope that my colleagues will see the
importance of this legislation and will join me in supporting its passage.”144
The Issue Brought to a Vote
In the Senate, the issue was a cloture motion. On that motion, the vote was 56
yeas to 42 nays. “Three-fifths of the Senators duly chosen and sworn not having
noted in the affirmative,” the Record read, “the motion is rejected.” The qualifying
vote would have been 60 votes.
Anticipating that the vote would go against the position taken by the majority,
Senator Frist changed his vote from yea to nay in order “to preserve all of my
procedural options.” The Senator explained: “I initially voted ‘yes’ on cloture, but
by switching to a ‘no’ vote, I preserve my right, as leader, to revisit this issue in the
future as a package.” He went on to discuss the concept of a “do nothing” Congress
and, in closing, stated:
“... as I have said before, these issues must be addressed as a package:
permanent death tax relief, tax policy extensions, and a 40-percent increase in the
“All three together. All or nothing.
“Not bringing this package — the Family Prosperity Act — to the floor is145
tantamount to saying, “‘We don’t care about America’s economic security.’”
Other Minimum Wage Proposals
of the 109th Congress
Additional minimum wage legislation in the 109th Congress has emerged in a
variety of forms: sometimes, as an independent free-standing bill; on other occasions,
as part of more general legislation.
The Stabenow Proposal
Senator Debbie Stabenow, on January 24, 2005, introduced S. 14, a composite
infrastructure and jobs bill, part of which would increase the minimum wage to
$7.25. The minimum wage component would begin to take effect 60 days after
144 Congressional Record, Aug. 3, 2006, pp. S8744-S8745. Speaking generally, some
Democratic Members — perhaps most who spoke — focused upon the minimum wage and
spoke at length about it. Similarly, some Republican Members seemed to emphasize tax
questions and, for the most part, did not focus on the minimum wage.
145 Congressional Record, Aug. 3, 2006, p. S8746-S8747.
enactment and be phased in over two years. The bill would also reverse actions taken
(2003-2004) on overtime payment for certain workers categorized as executive,
administrative, or professional.146 The bill was referred to the Committee on
The English Proposal
Representative Phil English, on March 3, 2005, introduced H.R. 1091, a bill (a)
to increase the minimum wage, in steps, to $6.50 beginning October 1, 2008, and to
expand the pattern of exemption to eliminate employers with nine or fewer
employees; (b) to allow for an altered small business exemption under the act; and
(c) to provide assorted incentives intended to stimulate the growth of business. The
bill was referred to the Committee on Ways and Means and to the Committee on
Education and the Workforce.
See, also, H.R. 5368, a composite bill that provides for small business tax
incentives and would raise the federal minimum wage, in steps, to not less than $7.50
an hour beginning October 1, 2009. At the same time, H.R. 5368 would increase the
small business exemption from $500,000 (its current rate) to $1 million by
September 30, 2008. The bill would also exempt employers with fewer than 10
employees from minimum wage protection. The bill was introduced by
Representative English (with Representatives Simmons and Weldon of
Pennsylvania), and was referred to the Committees on Ways and Means and
Education and the Workforce.147
The Durbin Proposal
Under the date of April 19, 2005, Senator Durbin introduced S. 846, a bill to
increase the federal minimum wage, in steps, to $7.25 per hour beginning 24 months
and 60 days after enactment. The bill also deals with overtime pay under Section
13(a)(1) of the act, and expresses the sense of the Senate, among other things, for
“strong support for multiemployer defined benefit pension plans.” The bill was
placed on the Senate Legislative Calendar under General Orders (Calendar No. 80).
The Kennedy/Miller Proposals
On May 18, 2005, Senator Kennedy and Representative George Miller
introduced bills that would raise the federal minimum wage to $7.25 per hour (over
a period of years) and would amend treatment of the minimum wage in the
Commonwealth of the Northern Mariana Islands (S. 1062 and H.R. 2429,
respectively). The Miller bill was referred to the House committee on Education and
the Workforce and, on June 22, 2005, was referred to the Subcommittee on
146 See CRS Report RL32088, The Fair Labor Standards Act: A Historical Sketch of the
Overtime Pay Requirements of Section 13(a)(1), by William G. Whittaker.
147 H.R. 5368 was introduced on May 11, 2006. The summary, above, is drawn from a “pre-
publication” edition of the bill, on line as of May 15, 2006.
Workforce Protections. The Kennedy proposal was placed on the Senate Legislative
Calendar under General Orders (Calendar No. 109).
The Andrews Proposal
Representative Robert Andrews, on June 7, 2005, proposed the “Camp Safety
Act of 2005.” The bill (H.R. 2748) would “condition the minimum-wage-exempt
status of organized camps under the Fair Labor Standards Act of 1938 on compliance
with certain safety standards....” The bill was referred to the House Committee on
Education and the Workforce and, on June 11, to the Subcommittee on Workforce
The Boehlert Proposal
Representative Sherwood Boehlert, on July 25, 2005, introduced the “Minimum
Wage Competitiveness Act of 2005.” The Boehlert bill (H.R. 3413) would increase
the federal minimum wage, in steps, to $7.15 an hour beginning on January 1, 2007.
The bill also includes a provision raising the minimum wage of the CNMI in steps
until it reaches the federal minimum wage. Referred to the House Committee on
Education and the Workforce, the bill was referred to the Subcommittee on
The Clinton Proposal
On May 4, 2006, Senator Clinton introduced S. 2725, titled the “Standing with
Minimum Wage Earners Act of 2006.” The bill would increase the federal minimum
wage to $7.25 per hour, in steps, beginning 24 months and 60 days after enactment.
In addition, the bill provides that subsequent changes in the minimum wage “shall
be automatically increased for the year involved by a percentage equal to the
percentage by which the annual rate of pay for Members of Congress” is increased
under “the Legislative Reorganization Act of 1946 (2 U.S.C. 31).” The bill was
referred to the Committee on Health, Education, Labor, and Pensions.
The Miller CNMI Proposals
On June 7, 2006, Representative George Miller, with others, introduced a new
proposal, the “United States-Commonwealth of the Northern Marianas Human
Dignity Act” (H.R. 5550).
When, during the mid-1970s, the CNMI entered into a quasi-autonomous
relationship with the United States, the islanders retained certain rights or
responsibilities. For example, goods produced in the islands were allowed to be
shipped under the designation of “Made in America.” Since the islanders also
controlled immigration policy and the minimum wage (overtime was the
responsibility of the DOL in Washington), their industries enjoyed a major advantage
of foreign labor employed at low costs.
It has been suggested, by some, that the islands have gradually become
sweatshops, making use of labor from China and the south Pacific states but with
little concern for labor standards or labor laws. Others have viewed the islands as an
indicator of how a free enterprise system could and should work — being free from
artificial constraints. Through a number of years, insular affairs have been the
subject of hearings before committees of the Congress — with an ample record
established, though with some disagreement as to its implications.
With H.R. 5550, there would be a restructuring of the U.S.-insular relationship.
At the end of the Covenant between the Marianas and the United States, certain
additional items would be added. Inter alia:
(a) The bill would restrict the use of the term, “Made in America,” unless
certain conditions had been met. Each individual “providing direct labor in
production of such product,” must have been paid a wage “equal to or greater
than” the minimum wage under the FLSA. The product was “produced or
manufactured in compliance with all Federal laws relating to labor rights and
working conditions....” None of the workers would be employed “under148
conditions of indentured servitude.”
(b) The minimum wage provisions of the FLSA shall apply to the
Commonwealth. However, there would be a series of step increases to bring the
insular minimum up to the otherwise applicable federal rate — which rate shall
be reached about the end of the first decade of the twenty-first century.
Thereafter, the insular rate shall be equal to the federal rate.
(c) Duty-free and quota-free status will not apply unless (1) federal labor
standards are met, (2) indentured workers are not employed in the manufacture
of the product, and (3) the Commissioner of Customs has certified that the
islands are not being used as an illegal trans-shipment point.
(d) The Immigration and Nationality Act shall apply to the Northern
Mariana Islands as though it were a state of the union. The Secretary of
Homeland Security shall, under specified constraints, be permitted to adjust the
immigration status of certain insular workers.
(e) Special protections are afforded to persons engaged in contracts for the
construction of “public buildings and public works” — setting wage and related
(f) A program of technical assistance would be included.
(g) Various reports are mandated.
The Miller bill (H.R. 5550) was referred to the Committee on Resources and, in
addition, to the Committee on Ways and Means.
148 Indentured servitude is defined as including “all labor for which an alien worker is in the
Commonwealth ... solely by virtue of an employment contract with a specific and sole
employer or ‘master’ who is in control of the duration of the stay of the indentured alien
worker in the Commonwealth.... If the worker displeases the employer/master, the contract
is terminated and the employee must leave the Commonwealth....”
Some Collateral Issues
Although not always thought of as part of the minimum wage debate, there are
other issues that do play an intricate role in consideration of minimum wage-related
issues. Certain of these are discussed below.
The Youth Sub-Minimum Wage
During the 1960s and 1970s (as retail and service industries — major employers
of youth workers — were brought under the FLSA), the issue of a youth sub-
minimum wage became extremely active. Proponents of the concept (most notably
from the hotel and restaurant industries — but from other segments of the economy
as well) urged that youth workers be paid at a rate lower than the standard minimum
wage, regardless of experience or the quality of work they performed. In each case
and after heated debate (this came up through several years), the issue was defeated.
Through a number of years after adoption of the 1977 FLSA amendments, no
further adjustments were made in the federal minimum wage. When George H. W.
Bush became President in 1989, he agreed to sign a new minimum wage increase if,
among other things, it included a general sub-minimum wage for workers beginning
new employment. However, in the form adopted by the Congress, the President
vetoed the measure. Following an extended period of reconsideration, Congress
presented the President with a new bill, which he did sign — and which contained
a sub-minimum wage for youth.149
The new program, as it related to youth employment, was divided into two parts,
and focused upon youth not having “attained the age of 20 years.” The first part
covered a 90-day period at the sub-minimum wage with no conditions beyond those
imposed by the employer and the willingness of the worker to accept the work. The
second part was more complex. It involved an additional 90-day period, but included
a training wage component. At the close of the 180-day period, a regular minimum
wage or more would be required for the employee. The program was experimental,
to begin on April 1, 1990, and to end on April 1, 1993. At the end of the trial period,
the Secretary of Labor was to provide Congress with an assessment. As it turned out,
almost no one used the program and it was not extended.150
Three years passed. In 1996, minimum wage legislation came up as a floor
amendment to an industry-oriented bill — with a sub-minimum wage for youth as
one of its provisions. Following floor debate and approval in the House, the measure
was forwarded to the Senate. Negotiations continued in the Senate and, ultimately,
149 See “Minimum-Wage Impasse Finally Ended,” Congressional Quarterly: Almanac, 101st
Congress, 1st Session, 1989. Congressional Quarterly Inc., 1990, pp. 333-340.
150 P.L. 101-157, Section 6: training wage. See U.S. Department of Labor, Employment
Standards Administration, Wage and Hour Division, Report to the Congress on the Training
Wage Provisions of the Fair Labor Standard Act Amendments of 1989 from the Secretary
of Labor, Robert B. Reich, Apr. 21, 1993, 24 pp.; and Kevin G. Salwen, “Subminimum
Wage of $3.62 an Hour Is on Deathbed but Draws Few Mourners,” The Wall Street Journal,
Mar. 12, 1993, p. A4.
the measure was passed with the sub-minimum wage in place — the bill
subsequently being signed into law by President William Clinton (P.L. 104-188).151
As enacted, the bill would allow an employer to pay a youth (under 20 years of age)
a sub-minimum wage of $4.25 per hour through the first 90 consecutive days of
employment with an employer.
Having set forth a youth sub-minimum rate, Congress then raised the general
minimum rate to $5.15 an hour — but without linking the youth worker option to the
new standard. Unless Congress takes specific action to increase the youth rate, it will
remain at $4.25 per hour even if the general minimum wage is raised. Legislatively,
the youth rate is a separate issue from the general wage floor.152
The ‘Tip Credit’ Provision
During the 1960s and 1970s, the FLSA was progressively expanded to provide
protection for retail and service employees. Some of these workers were “tipped
employees” and their employers argued, successfully, that since they were given tips
by the public, they (the employers) ought not to be responsible for paying such tipped
employees a full minimum wage. Through the years, the level of the so-called tip
credit (the value of tip income received by tipped employees that an employer could
count toward his or her minimum wage obligation) has varied.
Under the 1996 FLSA amendments, Congress provided a tip credit at 50% of
the regular minimum wage (i.e., $2.13 an hour) — based upon the $4.25 per hour
general minimum wage as it was then in effect. So long as an employee received tip
income on a regular basis sufficient to reach the statutory minimum wage, when
combined with an employer contribution of $2.13 per hour, the employer had no
further minimum wage obligation. (The credit deals only with the amount to be paid
by the employer of a tipped employee.) Thereafter, the tipped employee would
receive — either in a combination of tips and cash wages or cash wages alone where
there were insufficient tips — an amount sufficient to reach the full minimum wage.
Then, Congress increased the federal minimum wage, in steps, to $5.15 per hour.153
In the 1996 FLSA amendments, Congress was working from a minimum wage
floor of $4.25 per hour. Thus, $2.13 per hour (one half of the minimum wage) was
151 When signing the new minimum wage bill, President Clinton observed, “I should note
that I disagree with certain provisions added to the minimum wage title of the Act, such as
the provision creating a new sub-minimum wage for young people and the one denying
increased cash wages to most employees who rely on tips for part of their income. Still,
those defects do not obscure the central accomplishment of this Act — securing the first
minimum wage increase since 1991.” See Public Papers of the Presidents of the United
States: William J. Clinton, Book II, 1996. Washington: United States Government Printing
Office, 1998, p. 1317.
152 See “Congress Clears Wage Increase With Tax Break for Business,” Congressional
Quarterly: Almanac, 104thCongress, 2nd Session, 1996. Congressional Quarterly Inc., 1997,
pp. 7-3 to 7-9.
153 For a discussion of the tip credit, see CRS Report RL33348, The Tip Credit Provisions
of the Fair Labor Standards Act, by William G. Whittaker.
set as the new base rate for employers. When Congress increased the federal
minimum, in steps, to $5.15 per hour, the threshold income for tipped employees
remained at $2.13 per hour. The minimum cash wage ($5.15 per hour) and the tip
credit provision ($2.13 per hour) are not linked. They do not increase in tandem.154
The Computer Services Professional Rate
Beginning in the 1960s, pressure increased to have certain computer services
workers defined administratively by the Department of Labor as “professional” and,
therefore, exempt under Section 13(a)(1) of the FLSA from the standard minimum
wage and overtime pay protection. When the Department seemed to demur,
Congress (in 1990) enacted legislation directing the Secretary to develop regulations
that would permit such an exemption if, among other criteria, “such employees are
paid on an hourly basis” at a rate that is “at least 6½ times greater than the applicable
minimum wage” (P.L. 101-583). The Department proceeded as directed, developing
a regulation under Section 13(a)(1) and justifying the exemption on the professional
character of the targeted personnel.
Under the 1996 FLSA amendments, Congress directly amended the act with
Section 13(a)(17) to exempt the targeted computer services workers where, among
other qualifying criteria, they are paid “on an hourly basis ... at a rate of not less than
$27.63 an hour” (P.L. 104-188). While $27.63 was 6½ times the then applicable
minimum wage of $4.25 per hour prior to the 1996 FLSA amendments, the wage
requirement for exemption was set at a specific dollar amount. Then, Congress
raised the minimum wage. The computer services threshold wage and the general
minimum wage were no longer linked. Specific action by Congress is required to
alter the threshold.155
The ‘Small Business’ Exemption
Since enactment of the FLSA in 1938, Congress has attempted, variously, to
exempt certain small businesses from coverage under the act. Ultimately, Congress
instituted a dollar volume test for exemption, though the level of that test has been
changed through the years.
In 1989, the threshold for the small business exemption was $362,500 in terms
of annual sales. Congress, as part of the 1989 FLSA amendments (P.L. 101-157),
increased the threshold to $500,000 — and made certain other adjustments in the
154 See also H.R. 3732, introduced on Sept. 13, 2005, and referred to the Committee on
Education and the Workforce, Subcommittee on Workforce Protections: the “Minimum
Wage Fairness Act of 2005.” The bill calls for a restructuring of the current tip credit
155 See CRS Report RL30537, Computer Services Personnel: Overtime Pay under the Fair
Labor Standards Act, by William G. Whittaker. Regulatory changes, proposed (and now
implemented) by the Department of Labor with respect to Section 13(a)(1) could affect
workers in the computer services industry. See CRS Report RL32088, The Fair Labor
Standards Act: A Historical Sketch of the Overtime Pay Requirements of Section 13(a)(1),
by William G. Whittaker.
statute. With enactment, the amendments were turned over to the Department of
Labor for implementation. At that juncture, the Department ruled that there were, in
effect, two standards. On the one hand, a person — employed by a firm with
proceeds of less than $500,000 — could be exempt unless he were personally
engaged in interstate commerce. If he were involved in interstate commerce, then he
would be covered by minimum wages and overtime pay as an individual under the
FLSA. Some argued that the department’s ruling did not adhere to the intent of
Congress. Others held that the ruling was, indeed, the correct interpretation of
congressional intent. In any case, an employer, henceforth, would need to be
absolutely certain that the work engaged in by his or her employee could not be
classified as interstate commerce — thus, rendering the worker FLSA-covered.
The small business threshold, however interpreted, is set at a specific dollar
amount, requiring direct action by Congress to alter it. The provision is not directly
affected by any change in the general minimum wage.156
The Case of American Samoa
American Samoa was acquired by the United States as a result of the Spanish-
American War (1898), supplemented by a series of treaties.
When enacted in 1938, the FLSA applied (or seemed to apply) to Samoa as it
did to the states of the Union. However, the wage/hour statute does not appear to
have been immediately enforced. During the early 1950s, the tuna canning industry
became Samoa’s major private sector employer. When it appeared that the industry
would be required to pay its workers the national minimum wage (though its
economy was somewhat different from that of the mainland), the industry appealed
to Congress to write an exception into the act. Following hearings, the FLSA was
amended. An industry committee structure was created under which an appropriate
minimum wage for the island group would be developed administratively.157
The industry committee structure was intended, it appears, to have been an
interim measure while the insular economy progressed toward mainland standards.
Half a century later, the system remains in place. The minimum wage for American
Samoa continues to be set administratively. It is independent from any change in the
general minimum wage rate under the FLSA.158
156 See CRS Issue Brief IB90082, The Federal Minimum Wage: Changes Made by the 101st
Congress and Their Implications, by William G. Whittaker (archived, but available from the
157 P.L. 84-1023. See also U.S. Congress, Senate Committee on Labor and Public Welfare,
Amending the Fair Labor Standards Act of 1938, hearings, 84th Cong., 2nd sess., May 8, 1956
(Washington: GPO, 1956).
158 See CRS Report RL30235, Minimum Wages in the Territories and Possessions of the
United States: Application of the Fair Labor Standards Act, by William G. Whittaker. The
Samoan minimum wage is calculated on an industry-by-industry basis, but is generally lower
than that which applies on Guam or in the States.
Health Care Concerns and the Issa Bill
On December 13, 2005, Representative Issa proposed linking the minimum
wage, both federal and state, with certain aspects of health care legislation. The bill,
H.R. 4505 (the “Health Care Incentive Act”), was referred to the Committee on
Education and the Workforce, and to the Subcommittee on Workforce Protections.
Under the Issa bill, the Secretary of Labor would be directed to promulgate a
rule “requiring” that any employer engaged in interstate commerce where “Federal
or State law” establishes a minimum wage “at a rate that is higher than the minimum
wage required by section 6(a) of the Fair Labor Standards Act of 1938 ... as in effect
on September 1, 1997" (i.e., $5.15 per hour) would “... be permitted, in accordance
with regulations promulgated by the Secretary, to count the value of creditable health
care benefits provided by such employer to an employee in determining the wage
such employer is required to pay an employee.” The Secretary “shall include a
contribution to a health saving account or similar account” in determining creditable
benefits, and shall determine a formula for “a minimum value of such benefits.”
Finally, the bill provides the following: “In no case shall the credit permitted by the
rule promulgated under this section exceed the difference between the minimum
wage under section 6(a) [in effect on September 1, 1997] ... and the wage rate
Under the Issa proposal, the wage floor would be $5.15 per hour (the rate
payable under section 6(a) of the FLSA on September 1, 1997). Any amount above
that level, whether under state or federal law, could be payable in the form of
creditable benefits — to be defined by the Secretary of Labor but to include “a
contribution to a health savings account or similar account.” The credit for health
care benefits could be substituted for any future increase in the cash minimum wage.
Thus, in effect, the minimum wage could be capped at $5.15 per hour — depending
upon how the benefit package is assessed by the Secretary, the value that is assigned
to it, and whether it is fully utilized.