Minimum Wage in the 110th Congress

Minimum Wage in the 110 Congress
Updated April 14, 2008
William G. Whittaker
Specialist in Labor Economics
Domestic Social Policy Division

Minimum Wage in the 110 Congress
On May 25, 2007, the President signed into law a supplemental appropriations
bill (H.R. 2206, P.L. 110-28) which included an increase in the federal minimum
wage with special provisions for American Samoa and for the Commonwealth of the
Northern Mariana Islands (CNMI). Under the act, the federal minimum wage will
increase to $5.85 an hour on the 60th day after enactment and, in steps, to $7.25 per
hour by the summer of 2009. Smaller increases will apply to the CNMI and to
American Samoa until $7.25 is reached.
In 1938, following decades of discussion and research in academic and policy
circles, Congress adopted the Fair Labor Standards Act (FLSA). It quickly became
the primary federal statute in the fields of minimum wage, overtime pay, child labor,
industrial work at home, sweatshop control, and related areas.
Although the FLSA mandates that not less than the minimum wage be paid to
most workers, there are exceptions. For example, under the tip credit provisions of
the act, the employer is required to pay $2.13 per hour — so long as the remaining
portion of the minimum wage is accounted for in tips regularly received. Similarly,
a youth (under 20 years of age) can be paid $4.25 per hour through the first ninety
consecutive days of employment with an employer. Persons with disabilities can be
paid a wage commensurate with their productivity — but with no minimum standard.
And, some employees of small businesses may be entirely exempt from the federal
minimum wage. Conversely, some states have minimum wage laws that are in
excess of the federal minimum wage — some, significantly so. Where there is
overlapping jurisdiction, the wage more nearly in the workers’ interests prevails.
Early in the first session of the 110th Congress, the House of Representatives
adopted a bill (H.R. 2) to increase the federal minimum wage in steps to $7.25 per
hour and, incrementally, to extend its coverage to the Commonwealth of the Northern
Mariana Islands. The Senate Finance Committee began hearings on a series of tax
and related incentives to add to the House-passed bill (and that was done), but that
initiative raised complications. Traditionally, revenue bills are first taken up by the
House and, therefore, H.R. 2 remained in limbo.
Subsequently, three other bills with implications for the minimum wage were
taken up by the House. The House first passed H.R. 976, which provided a vehicle
of revenue options (possibly to be joined to H.R. 2), but it was not acted upon in the
Senate. This was followed by H.R. 1591, an emergency supplemental appropriations
bill dealing largely with funding for the conflict in the Middle East, but which also
contained minimum wage and tax provisions. H.R. 1591 was adopted but was
vetoed by the President. A new supplemental appropriations bill (H.R. 2206) —
which included minimum wage and tax provisions — was adopted and signed into
law (May 25, 2007, as P.L. 110-28).
This report will be updated as developments warrant.

In troduction ......................................................2
Logistics of Application and Targeting ................................5
Adequacy of the Minimum Wage.................................5
To Whom Should Not Less Than the Minimum Wage Be Paid?..........6
Who Should Pay the Minimum Wage?.............................7
The Minimum Wage vs. the EITC.............................7
Small Businesses..........................................8
General Demographics of the Minimum Wage Workforce..................8
Who Are the Minimum Wage Workers?............................9
The Size of the Minimum Wage Workforce........................10
Some Collateral Issues.............................................13
Minimum Wage: The Issue of Indexing...........................13
The Youth Sub-Minimum Wage ................................13
The “Tip Credit” Provision.....................................14
Legislative Linkage: Moving a “Clean Bill”............................15
Activity in the 110th Congress.......................................17
H.R. 2: The Fair Minimum Wage Bill of 2007......................17
Coverage for the Northern Mariana Islands?....................17
A Clean Bill -v- Industry Incentives..........................18
H.R. 976: The Small Business Tax Relief Act of 2007...............19
H.R. 1591: Emergency Supplemental Appropriations (2007)..........19
Action in the House.......................................19
Coverage for American Samoa?.............................20
Action in the Senate.......................................20
Final Congressional Action and Presidential Veto...............21
H.R. 2206: The Second Supplemental (2007).......................22
Parliamentary Maneuvers..................................22
Changes in the Wage Rates: 2007............................23
The Voting Pattern on Minimum Wage........................24
Comment and Summary............................................24
List of Tables
Table 1. Federal Minimum Wage Rates, 1938-2009......................3
Table 2: Status of State Minimum Wage Rates (as of January 2008).........4
Table 3. Poverty Guidelines, All States and the District of Columbia (2008)...7
Table 4. Number and Percent of Workers Paid Hourly at the
Minimum Wage or Less........................................12
Table 5: The Tip Credit Under the 2007 Amendments to the
Fair Labor Standards Act: Dollars per Hour and Percentages ..........15

Minimum Wage in the 110 Congress
On May 25, 2007, the President signed into law a supplemental appropriations
bill (H.R. 2206, P.L. 110-28) which included an increase in the federal minimum
wage with special provisions for American Samoa and the Commonwealth of the
Northern Mariana Islands (CNMI). Under the act, the federal minimum wage willth
increase to $5.85 an hour on the 60 day after enactment. Thereafter, in steps, it will
rise to $7.25 per hour by the summer of 2009. The minimum wage for Samoa and
the CNMI will increase in smaller amounts until the $7.25 rate has been reached.
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, child labor, industrial homework, and sweatshop
regulation). It is supplemented by state standards in most of the states: some of
which with minima significantly in excess of the federal minimum wage.
Minimum wage legislation in the 110th Congress has undergone a series of
more-or-less complicated steps. Phase one began on January 10, 2007, when the
House of Representatives adopted a single purpose (or stand alone) bill (H.R. 2) to
increase the federal minimum wage, in steps, to $7.25 per hour — and,
incrementally, to extend its coverage to the Commonwealth of the Northern Mariana
Islands. The vote was 315 ayes to 116 nays. On February 1, the Senate adopted a
substitute minimum wage bill (H.R. 2) with extensive tax and related incentives for
business included (94 yeas, 3 nays). Here, however, a non-substantive complication
arose. Traditionally, revenue bills have been initiated by the House and, then, have
moved to the Senate. H.R. 2, as passed by the House of Representatives, was not a
revenue measure (dealing solely with the minimum wage), though revenue provisions
were attached in the Senate.
The House Committee on Ways and Means, in phase two, quickly produced a
new bill (H.R. 976) — not a minimum wage bill, per se, but containing revenue
provisions that could be added to H.R. 2 were that option adopted. The House
approved H.R. 976 on February 16 (360 ayes to 45 nays) and sent it to the Senate
where it was read and placed on the Senate Legislative Calendar.
On March 20, in phase three, a supplemental appropriations bill, providing
funding for the conflict in the Middle East (with other matters), was introduced in the
House (H.R. 1591). It was considered and, on March 23, was approved (218 yeas to

212 nays), and subsequently passed by the Senate on March 29 (51 yeas to 47 nays).

H.R. 1591 contained, among other things, minimum wage and tax components with
a new provision altering the manner in which the wage should be applied to
American Samoa (in addition to the CNMI proposal).

The President had early indicated that he would veto any measure that required
a time table for withdrawal of U.S. troops from Iraq. H.R. 1591 did have such time
tables and the President vetoed the measure on May 1. When, on May 2, the bill was
presented to the House in an effort to override the President’s veto, the vote was 222
yeas to 203 nays, lacking the two-thirds necessary for an override.
Shortly thereafter, on May 8, in phase four, a modified version of H.R. 1591
was introduced as H.R. 2206. The new bill, like that which had been vetoed,
contained minimum wage and tax language and altered the wage rate for American
Samoa and for the CNMI. H.R. 2206 was passed by the House (221 yeas to 205
nays) on May 10 and dispatched to the Senate. In the Senate, there were now a series
of disagreements with respect to the measure and, as a result, a much reduced bill
was sent back to the House (on a voice vote) where it encountered new House
amendments. Ultimately, a conference report produced yet another draft and, on May

24, the bill was agreed to by both houses and was dispatched to the White House.

On May 25, 2007, the new bill (H.R. 2206) was signed by the President,
becoming P.L. 110-28. In its final form, it included amendments to the FLSA and
altered the minimum wage treatment of workers in American Samoa and the CNMI.
The FLSA is an umbrella statute that deals with a series of labor standards.
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, limits or1
qualifies its wage/hour and child labor provisions.
Traditionally, Congress has mandated broad general minimum wage coverage,
and then has specified select 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 these areas, the Secretary of Labor has been
granted wide interpretive powers — though these have not been without limit.
The minimum wage aspects of the FLSA have undergone changes on numerous
occasions: in 1949, 1955, 1961, 1966, 1974, 1977, 1989, 1996 and, now, 2007. (See
Table 1.) The act began in a limited way, encompassing labor standards essentially
for industrial workers. In 1938, the minimum wage was 25 cents an hour; the work
week was 44 hours. With amendment, coverage provisions of the act were expanded
while, over the years, the rate has been raised to $5.15 per hour (going up to $7.25
per hour by late summer 2009), with a 40-hour week. For more than 40 hours
worked in a week, overtime pay (time-and-a-half) would need to be paid.
Since the late 1970s, coverage patterns seem to have leveled off with few new
workers, by classification, having been brought under the act. Moreover, in real

1 This report focuses narrowly upon the federal minimum wage. Other related issues are
considered separately in other CRS products.

terms, the value of the minimum wage rate has been on a downward slope. The
minimum wage reached its peak value in 1968 at $l.60 an hour and, since then,
generally, has declined in terms of constant dollars. To equal its 1968 peak in
purchasing power, it would currently need to be in excess of $9.50 an hour. When
fully implemented in the summer of 2009, the minimum wage will still be only $7.25
an hour — without taking into account intervening economic change.2
Table 1. Federal Minimum Wage Rates, 1938-2009
Public LawEffective DateRate
P.L. 75-718 (Enacted June 25, 1938)October 1938$0.25
October 19390.30
October 19450.40
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
September 19631.25
P.L. 89-601 (Enacted September 23, 1966)February 19671.40
February 19681.60
P.L. 93-259 (Enacted April 8, 1974)May 19742.00
January 19752.10
January 19762.30
P.L. 95-151 (Enacted November 1, 1977)January 19782.65
January 19792.90
January 19803.10
January 19813.35
P.L. 101-157 (Enacted November 17, 1989)April 19903.80
April 19914.25
P.L. 104-188 (Enacted August 20, 1996)October 19964.75
September 19975.15
P.L. 110-28 (Enacted on May 25, 2007)July 20075.85
July 20086.55
July 20097.25
Fair labor standards issues are handled jointly by the states and the federal
government. The states took up the question early in the 20th century, enacting a
variety of measures dealing with minimum wages and related subjects, and they have
continued to do so. Various states currently have minimum wage rates (and other
standards) that are higher than those established by the federal FLSA, with
Washington state at the top with a state minimum wage standard of $8.07. (See
Table 2.) Speaking generally, where there is overlapping jurisdiction, the higher
standard (the one most favorable to workers) takes precedent — and where

2 See CRS Report RS20040, Inflation and the Real Minimum Wage: Fact Sheet, by Brian
W. Cashell.

applicable, the federal statute supercedes lower standards of the states. Some aspects
of fair labor standards (notably, vacations, rest breaks and lunch breaks) have
traditionally been treated as state matters.
Table 2: Status of State Minimum Wage Rates
(as of January 2008)
Jurisdictions with Minimum Wage Rates Higher than the Federal FLSA
Alaska ($7.15)Maine ($7.00)North Carolina ($6.15)
Arizona ($6.90)Maryland ($6.15)Ohio ($7.00)
Arkansas ($6.25)Massachusetts ($8.00)Oregon ($7.95)
California ($8.00)Michigan ($7.15)Pennsylvania ($7.15)
Colorado ($7.02)Minnesota ($6.15)Rhode Island ($7.40)
Connecticut ($7.65)Missouri ($6.65)Vermont ($7.68)
Delaware ($7.15)Montana ($6.25)Virgin Islands ($6.15)
District of Columbia ($7.00)Nevada ($6.33)Washington ($8.07)
Florida ($6.79)New Hampshire $6.50)West Virginia ($6.55)
Hawaii ($7.25)New Jersey ($7.15)Wisconsin ($6.50)
Illinois ($7.50)New Mexico ($6.50)
Iowa ($7.25)New York ($7.15)
Jurisdictions with Minimum Wage Rates at the Same Level as the Federal FLSA ($5.85)
Guam Neb r aska T e xa s
IdahoNorth DakotaUtah
I nd i a na O kl a ho ma V i r gi ni a
KentuckySouth DakotaWyoming
Jurisdictions with Minimum Wage Rates less than the Federal FLSA
American Samoa a Commonwealth of theaPuerto Ricoa
Northern Mariana Islands
Kansas ($2.65)Georgia ($5.15)
Jurisdictions with No State Minimum Wage Requirement
Alabama MississippiTennessee
LouisianaSouth Carolina
Source: U.S. Department of Labor, Wage and Hour Division, Employment Standards Administration,
[], visited March 2008.
Note: Coverage patterns vary from one jurisdiction to another: some new changes are already
scheduled. 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
current state law. In some jurisdictions, the rate is linked to the federal FLSA.
a. For American Samoa, the CNMI and certain industries in Puerto Rico, the minimum wage rate is
lower than the general federal minimum wage but, under P.L. 110-28, will rise, in steps, to meet
standards set by federal legislation.

Under federal law, special treatment may be afforded to certain youth workers,
to tipped employees, and to persons with a disability. The federal FLSA provides a
wage floor, as some perceive it, for fairness in the workplace. Where state statutes
also deal with these matters (and deal with them in a manner more favorable to
workers), the state standard would normally prevail, going beyond the federal statute
and enacting higher standards. Individuals, however, are not allowed to bargain
away provisions of the federal law.
Of the state standards, many run roughly parallel to the FLSA, but they need not
do so — and often do not. Even with this more or less dual coverage, not all workers
are covered by wage/hour standards, though most are. Coverage patterns (including
patterns of exemption) need to be taken into account when considering the potential
impact of changes in federal wage/hour law. 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 without careful assessment.
Logistics of Application and Targeting
Adequacy of the Minimum Wage
In the academic literature and political debate, people often tend to speak of the
minimum wage as a livable wage or a decent wage. But, it is not clear that such
concepts are always interpreted in a consistent manner.
In statute, the minimum wage is reasonably clearly defined: $5.85 per hour (and,
subsequently, increasing to $6.55 and to $7.25) for most (but not all) covered
workers.3 However, the FLSA does not translate that dollar amount into social or
human terms. For example, some have questioned whether $5.85 an hour is actually
a “living wage.” The livability of the minimum wage, in some measure, depends
upon the context in which it is earned: for example, whether one resides in an urban
or a rural area. It may also be dependent upon the earner’s role within the family (a
breadwinner or a youth contributing to a combined family income) and the number
of persons in a family unit.
Under current law, a minimum wage worker employed full-time and full-year
(40 hours per week for 52 weeks at $5.85) would earn $12,168.4 A full-time worker,
under age 20 and paid at the statutorily permissible sub-minimum rate ($4.25 per

3 The minimum wage will go up to $5.85 an hour in July 2007. However, for purposes of
this report, we will assume that the wage remains at its current $5.15 per hour.
4 Following the same pattern, a worker may be earning, in two years and sixty days after
enactment of H.R. 2206, a total of $15,080 for 40 hours a week at $7.25 per hour through

52 weeks a year.

hour), could earn $8,840 — for the same hours of work even when performing the
same duties as a straight minimum wage worker.5
Since much minimum wage work is also part-time and/or part-year, estimating
actual annual income for minimum wage workers can be problematic. Some
workers, earning the minimum wage, find, either through their own designs (school,
sports, family responsibilities) or through the absence of alternative work, that their
year-long income may fall substantially below an annualized figure. While some
minimum wage work may provide a fringe benefit component, such fringes are often
not available until a worker has been employed for a specific period of time: a period
that many minimum wage workers may not reach. Under present law, the concept
of a minimum wage is limited to a cash wage.
As set forth in Table 3, one sees 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 have
been, debated. The guidelines have no direct connection with the federal minimum
wage, but they are frequently cited in discussions of minimum wage and are used by6
some analysts as a measure of the adequacy of the wage floor. If the estimated
annual income ($12,168) for a minimum wage worker is compared to the poverty
guidelines in Table 3, the income is just above the poverty line for a family of one
in the 48 contiguous states, the District of Columbia, and Hawaii — and below the
poverty line for families of any other size.
To Whom Should Not Less Than the Minimum Wage Be Paid?
FLSA minimum wage requirements have always been subject to exceptions:
examples include the tipped worker, the youth worker, the person with disabilities.
In some cases, an exception has been made on the basis of the type of work
performed: for example, in the early days of the act, agricultural labor — and, even
now, certain small business establishments. (See discussion below.)
A collateral question involves the issue of need — which, it would seem, also
involves a variety of socio-economic questions. If the worker is engaged primarily
for “pin money,” then his or her need may be less extreme than a fellow worker who
supports a parent or is saving for tuition at the local university. Here, one may want
to ask: Should compensation be based upon the needs of the worker, his
productivity, or simply based upon the demand for services.

5 After 90 consecutive days with an individual employer, a qualifying youth employee would
ordinarily see his or her wage increased to $5.15 an hour — unless he or she breaks the
consecutive days rule and moves on to another employer or simply drops out of work. The
youth sub-minimum wage was not altered under H.R. 2206.
6 The table is provided as a reference. Minimum wages are not a federal assistance program
but, rather, are payment for performance that comes directly from the employer.

Table 3. Poverty Guidelines,
All States and the District of Columbia (2008)
Poverty Guideline
Size of Family UnitStates and District of ColumbiaAlaskaHawaii
1$10,400 $13,000 $11,960
214,000 17,50016,100
317,600 22,00020,240
421,200 26,50024,380
524,800 31,00028,520
628,400 35,50032,660
732,000 40,00036,800
835,600 44,50040,940
Source: U.S. Department of Health and Human Services, “Annual Update of the HHS Poverty
Guidelines,” 73 Federal Register, January 23, 2008, pp. 3971-3972.
Note: For family units with more than eight members in the 48 states and the District of Columbia,
add $3,600 for each additional member. For Alaska, add $4,500, and for Hawaii, add $4,140. 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.
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 the
concept: Who should pay the minimum wage?
If one thinks of the minimum wage as an anti-poverty measure, then it is more
likely to be considered as needs-based and focused on moving the worker out of
poverty. Conversely, if the minimum wage is productivity based, but fails to provide
income sufficient to maintain an individual (or his dependents), then some
supplemental means may be necessary through which to increase the worker’s
The Minimum Wage vs. the EITC. In 1975, Congress established the
Earned Income Tax Credit (EITC). As amended, it provides a tax credit to certain
low-wage workers. 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. It is not
simply a matter of taking a job and collecting one’s pay — as would be true even
with a minimum wage job. Historically, it has been subject to over-claims of
benefits — and, on occasion, to under-claims as well.7

7 See CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview, and CRS
Report RS21477, The Earned Income Tax Credit (EITC): Legislative Issues, both by

Proponents of the EITC argue that it 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. 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.
Over time, there has been pressure from the small business community to
expand this 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, since there is no test of profitability, the exemption is
enjoyed by prosperous and struggling businesses alike.
General Demographics
of the Minimum Wage Workforce
Precise data on the minimum wage workforce are difficult to develop. 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 changes Congress may make: for example, the
youth sub-minimum wage workers or persons subject to the tip credit provisions of
the act. Their pay may continue at whatever rate may seem justified to management
and acceptable to the worker. Conversely, some employers may choose to pay the
statutory minimum because it is a convenient and generally recognized basic rate —
even where workers are not subject to the act.
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 the search of higher incomes or in response to non-work-related factors:

7 (...continued)
Christine Scott.

school, pregnancy or, perhaps, a change in marital status. Some workers may be
multiple jobholders and, as a result, may be tabulated in a different manner.8
Not all workers covered under the FLSA are covered in precisely the same way.
Thus, where statistics are available, we may be speaking of the low-wage worker
rather than the minimum wage worker covered under the FLSA.
Who Are the Minimum Wage Workers?
In 2007, about 1.729 million workers, 16 years of age and up, who were paid
hourly rates, earned at or below the federal minimum wage of $5.85 per hour. About
267,000 were paid at the minimum rate; about 1.462 million were paid below the
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 depending upon one’s calculation (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. Part-time workers are considerably more likely to
be women than men.
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 the head of a household) and, thus,
suggestive of more serious needs.
Statistics can be used to support either interpretation. If, for example, using
2007 data, one defines a youth as someone between 16 and 19 years of age, then
about 21.6% of workers, paid hourly at or below the minimum wage, are youths and
about 78.4% are adults. If one’s definition is more expansive, defining youth as
between 16 and 24 years of age, then about 47.1% of persons earning at or below the
minimum wage are youths and 52.9% are adults. Thus, even with an expansive

8 Surveys of income may collect information only with respect to a worker’s main job.
9 About 76.5 million workers, 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 has stated: “It is not possible to clearly determine whether
workers surveyed in the CPS [Current Population Survey] are actually covered by the Fair
Labor Standards Act ... or by individual State minimum wage laws. Thus some workers
reported as earning an hourly wage of $5.15 may not in fact be covered by Federal or State
minimum wage laws. Also, there are a number of States that have minimum wages that
exceed the Federal minimum wage. 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 FLSA or applicable State laws, because there are numerous
exclusions and exemptions to these minimum wage statutes.” (Emphasis added.) See
“Characteristics of Minimum Wage Workers: 2006,” Bureau of Labor Statistics, U.S.
Department of Labor, February 27, 2007, footnote to Table 3.

definition of youth (16 to 24 years of age), over half of the minimum wage workforce
is 25 years of age or over.
Among hourly workers, paid at or below the general minimum rate, about
68.4% are women and about 31.6% are 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.10
In 2007, about 56.2% of workers at and below the minimum wage were
employed on a part-time basis; about 43.5% were full-time. Some 73.2% of part-
time workers were female and 26.8% were males. (Some statistical variation may
result from a small number of multiple jobholders.)
Low-wage workers may differ from better paid workers in other ways. For
!Low-wage employment may tend to be less stable than more highly
compensated employment, with workers experiencing involuntary
joblessness or moving in and out of the labor force because of
discouragement, quitting to seek better wages and working
conditions, or for personal reasons.11
!Full-time low-wage 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
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.
The Size of the Minimum Wage Workforce
In 2007, as noted above, there were roughly 1.729 million workers, paid at
hourly rates, who earned at or below the federal minimum wage of $5.85 per hour
beginning in July 2007. They constitute about 2.3% of hourly paid workers from an
aggregate of about 75.9 million hourly paid workers. This figure indicates an upward
movement of one-tenth of a percentage point from 2.2% in 2006 and, collectively,

10 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.” Concerning
this classification, see Mary Bowler, et al., “Revisions to the Current Population Survey
Effective January 2003,” Employment and Earnings, February 2003, pp. 4-7, and 14.
11 See “Characteristics of Minimum Wage Workers, 2006,” Bureau of Labor Statistics, U.S.
Department of Labor, March 24, 2008.

represents the smallest percentage of hourly workers earning at or below the
minimum wage in the United States in recent times.12 (See Table 4.)
The numerical decline does not necessarily indicate improved economic status
for the workers. It may, rather, suggest a progressive movement up from the
statutory (fixed) minimum wage — in response to inflationary pressures — but
without improving one’s general economic status. Had the minimum wage been
indexed for inflation to provide a sustained purchasing power (its highest rate was
in February 1968), its current level would now be in excess of $9.50 per hour.
The decline in the real value of the minimum wage (in policy terms) would
appear to have several implications. If the statutory minimum wage remains at a
fixed rate 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 standard minimum wage — even though their general economic
condition may not have improved. This would not mean that the low-wage
workforce has shrunk. Rather, some may suspect, an increasingly large number of
persons would be employed at wages slightly above the declining real value of the
statutorily defined minimum.13
Under this scenario, the federal minimum wage could be effectively repealed by
attrition and, in that context, an argument might be made that since so few would
actually be employed at rates at or below the statutory federal minimum, 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 may run counter to public policy that income from work is generally
preferable to entitlements financed through taxation.
With the increase in the wage rate under H.R. 2206, there ought to be some
change in the structure of wage rates; though, with increases spread over two plus
years, it may be difficult to assess. As noted in Table 2, some state minimum wage
rates have moved in to fill the gap of a declining federal minimum wage. However,
such considerations have been uneven. What impact these state regulations could
have is yet to be assessed.

12 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.
13 As the rate proceeds upward, it may be difficult to be sure whether an increase results
from the federal minimum wage or from a higher state standards — without doing
considerable research.

Table 4. Number and Percent of Workers
Paid Hourly at the Minimum Wage or Less
YearNumber in ThousandsAs a Percentage of Hourly Paid Workers
1979 a 6,913 13.4
1980 a 7,773 15.1
1981 a 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 a 3,228 5.1
1991 a 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 a 3,724 5.4
1997 a 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
2006 1,692 2.2
2007 1,729 2.3
Source: United States Bureau of Labor Statistics.
a. Years in which a legislated change in the federal minimum wage took effect.

Some Collateral Issues
Minimum Wage: The Issue of Indexing
Varying through the years, the minimum wage reached its inflation-adjusted
peak in 1968 — and has since generally declined in real value. A recent CRS
analysis suggests that the minimum would need to be raised to slightly in excess of
$9.50 per hour to reach its 1968 level.14
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.
Under prolonged objections from southern industrialists, the figure was dropped to
25 cents per hour. Thus, Congress avoided a regional option and southern
industrialists avoided stricter standards.
The minimum wage, set in statute, remains at a fixed level until the Congress
alters it through legislation. Failure of the minimum wage to maintain parity with the
cost of living has been a continuing concern and some have suggested that it might
usefully be indexed to reflect changes in the cost of living or shifts in other economic
variables. This would provide a more regular pattern of increase. On the other hand,
some contend that there really isn’t a need for a federal minimum wage at all.
Indexation was discussed during the early 20th century as an approach to wage
stability. It was last a subject of extensive congressional debate during the 1970s
and in the context of the 1988-89 FLSA amendments. In each case, it was rejected
with Congress seeming to prefer direct control of legislative action. Several states
have experimented with indexation and, thus far, none has as yet reversed the
process. No federal action has yet been taken and the issue was not part of the debate
over H.R. 2206 and the several related bills. Still, the issue remains alive and seems
to have attracted attention at the state level.15
The Youth Sub-Minimum Wage
During the 1960s and 1970s (as retail and service industries, major employers
of youth workers, came under the FLSA), the issue of a youth sub-minimum wage
became active. Proponents of the concept 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, the issue was defeated.
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 who were beginning new employment. A first bill was vetoed; but,

14 CRS Report RS20040, Inflation and the Real Minimum Wage: Fact Sheet, by Brian W.
15 See CRS Report RL30927, The Federal Minimum Wage: The Issue of Indexation, by
Gerald Mayer; and CRS Report RL33791, Possible Indexation of the Minimum Wage:
Evolution of Legislative Activity, by William G. Whittaker.

following extended discussions, Congress adopted a new bill with a sub-minimum
wage for youth.16
The youth program, affecting persons under 20 years of age, was divided into
two parts. The first part covered a 90-day period with no conditions beyond a
willingness of the worker to accept the work. The second part was more complex,
mandating training through a second 90-day period. After 180 days, the regular
minimum would be required. The program was experimental: from April 1990 to
April 1993. As it turned out, almost no one used the program and it was not
ex tended. 17
During the Clinton Administration, the minimum wage came up as a floor
amendment to the “Small Business Job Protection Act of 1996,” essentially a tax bill
but with the sub-minimum wage as one of its provisions. The measure was passed
with the sub-minimum wage in place (P.L. 104-188).18 As enacted, the bill allows
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 (and
it did not do so in the 2007 legislation), it will remain at $4.25 per hour — even as
the general minimum wage is raised. Legislatively, the youth rate is a separate issue
from the general wage floor.19
The “Tip Credit” Provision
Minimum wage coverage was expanded, during the 1960s and 1970s, to provide
protection for retail and service workers. Some of these workers were “tipped” and
their employers argued, successfully, that 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 has varied.

16 See “Minimum-Wage Impasse Finally Ended,” Congressional Quarterly: Almanac, 101st
Congress, 1st Session, 1989, Congressional Quarterly Inc., 1990, pp. 333-340.
17 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, April 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,
March 12, 1993, p. A4.
18 On President Clinton’s views, 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. In some states, this arrangement (still on the books) may not be permissible.

19 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.

Under the 1996 FLSA amendments, Congress provided a tip credit of 50% of
the then standard minimum wage $4.25 (or $2.12 an hour). 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 not
to be paid by the employer of a tipped employee.) The tipped employee would
receive a full minimum wage: either through tips or, where tips were insufficient, in
combined tips and cash. Then, Congress increased the federal minimum wage, in
steps, from $4.25 to $5.15 per hour. The tip credit increased to $3.02 per hour: that
is, the amount the employer does not need to pay to his or her regularly tipped
employees. (See Table 5.)
Table 5: The Tip Credit Under the 2007 Amendments to the Fair
Labor Standards Act: Dollars per Hour and Percentages
StatutoryCash WageTip CreditTip CreditMandatory
Federalfrom(Between $2.13as a % ofEmployer Cash
MinimumEmployer,and the StatutorytheContributions
WageMandatoryMinimum Wage) Minimumas a % of
under StatuteWageMinimum
$5.15 $2.13 $3.02 58.6% 41.4%
(to July 24,
$5.85 $2.13 $3.72 63.6% 36.4%
(July 24, 2007)
$6.55 $2.13 $4.42 67.5% 32.5%
(July 24, 2008)
$7.25 $2.13 $5.12 70.6% 29.4%
(July 24, 2009)
When Congress increased the federal minimum to $5.15 per hour (and, now, in
steps, to $7.25), the threshold income for tipped employees remained at $2.13 per
hour. As the minimum wage increases to $7.25 an hour, the tip credit will rise to
$5.12. Tipped employees do receive the minimum wage — albeit in a combination
of tips and cash wages.
Legislative Linkage: Moving a “Clean Bill”
The original FLSA proposals (1937-1938) were in the form of freestanding
legislation: focusing narrowly upon 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 various changes in the
FLSA itself, took the form of freestanding legislation. Non-FLSA or non-wage/hour

issues were not addressed as part of the package with minimum wage and related
In 1996, minimum wage and related FLSA amendments were brought to the
House floor as an amendment to a broad package of industry-related proposals: the
“Small Business Job Protection Act of 1996.” 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).20

When minimum wage legislation came up during the 106th Congress in 1999-
2000, it largely followed the 1996 pattern. It combined tax revisions that were
beneficial to the business community with changes in the FLSA — including an
increase in the minimum wage.21 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:
that is, that the former could not go forward, it seemed, without the latter.
Linkage, although a tradition only since the 104th Congress (1996) and used only
during that one occasion, has appeared to become a frequent 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.”22 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.”23
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 concur. Amy Borrus, writing in Business Week, termed the
tax/minimum wage bill “a monument to legislative logrolling,” stating that “its

20 See CRS Issue Brief IB95091, The Minimum Wage: An Overview of Issues Before the
104th Congress, by William G. Whittaker (out of print, but available from the author). See
also Alissa J. Rubin, “Congress Clears Wage Increase with Tax Breaks for Business,”
Congressional Quarterly, August 3, 1996, pp. 2175-2177; and Julie Kosterlitz, “A Bounty
For Business,” National Journal, October 26, 1996, pp. 2289-2292.
21 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 (out of print, but available from the author).
22 Congressional Record, March 9, 2000, p. H860.
23 Bureau of National Affairs, Daily Labor Report, December 6, 2000, p. A12.

veneer of virtue made it the perfect vehicle for a tax-break extravaganza.”24
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.”25
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.26
Activity in the 110th Congress
The concept of linkage, though utilized only once (in 1996), continues to be an
active theme in public policy discourse. As a result, the bills that have been
considered by the House and Senate can, for the most part, be characterized as being
either a clean bill or one that contains a variety of non-wage issues.
H.R. 2: The Fair Minimum Wage Bill of 2007
Over a number of years, since the 1990s, an increase in the minimum wage was
viewed by some as involving simultaneously an increase in the rate for the
Commonwealth of the Northern Mariana Islands. Those issues arose once more
during consideration of legislation of the 110th Congress.
Coverage for the Northern Mariana Islands? In 1947, following World
War II, the CNMI was placed under U.S. control as part of the Trust Territory of the
Pacific Islands. During the 1970s, it entered into a Covenant of Association with the
United States and established its current Commonwealth status.
Western-style jobs for specific wages and trade union development were slow
to emerge in the Northern Marianas. Under the Commonwealth, responsibility for
labor standards was divided: the U.S. Department of Labor governing overtime pay
while the insular authorities were charged with creation of a minimum wage. In
addition, the Commonwealth retained control over immigration and exercised the
right to market goods made in the islands under a Made in America label.

24 Amy Borrus, “Why Business Isn’t Bucking This Minimum-Wage Hike,” Business Week,
November 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.”
25 Bureau of National Affairs, Daily Labor Report, March 9, 2000, p. A8.
26 In general, see Bureau of National Affairs, Daily Labor Report, April 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, April 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 minimum wage.”

Through the next 10 years, there was very little presence of American officials
in the islands. In that interim, the Commonwealth (Saipan) developed a thriving
garment and tourism industry. In the context of the former, various American
distributors arranged to have garments made in the islands where wages were lower
than the federal minimum. By the late 1980s, several Members of Congress
expressed concern about what was perceived to have been sweatshop conditions as
workers from China, the Philippines, and other low-wage states were recruited to
augment the native labor force. Several committees of the Congress conducted
hearings on conditions in the CNMI and legislation was introduced that would have
imposed, over time, regular U.S.-style minimum wage standards. None of these
labor standards measures was enacted.27
A Clean Bill -v- Industry Incentives. In the House, a new minimum wage
bill (H.R. 2) was introduced during the first days of the 110th Congress.
Representative George Miller (D-CA), a primary sponsor of the bill, observed: “For

10 years, we have struggled to have this vote, and now we are finally going to have28

it.” The bill moved through the legislative process without collateral amendment.
As adopted on January 10, 2007, it would have raised the minimum wage, in steps,
to $7.25 an hour and would have extended the act’s requirements, incrementally, to
the Commonwealth of the Northern Mariana Islands. The vote was 315 yeas to 11629
In the Senate, there had been speculation of some willingness to add tax
sweeteners to a minimum wage bill in order to secure the requisite number of votes
for passage — or simply because tax cuts for business were regarded in a positive
light.30 Senator Max Baucus (D-MT), chair of the Committee on Finance, in hearings
held January 10, 2007, explored the impact of the minimum wage upon small
businesses. “This Committee,” he stated, “has the opportunity to help small
businesses through tax incentives that stimulate their rates of formation and growth.”
The Senator affirmed: “Let us raise the minimum wage. Let us help small
businesses to cope. And let us do so as much as possible through the Committee
process.”31 However, Senator Edward Kennedy (D-MA) generally supported a clean
bill — dealing only with the minimum wage. Senator Kennedy reportedly affirmed:
“It is going to be clean.”32
On January 10, 2007, H.R. 2 was called up on the Senate floor, touching off
sporadic discussion of the relative merits of a wage increase. On February 1, the

27 See CRS Report RL30235, Minimum Wage in the Territories and Possessions of the
United States: Application of the Fair Labor Standards Act, pp. 10-13, by William G.
28 Congressional Record, January 10, 2007, p. H307.
29 Congressional Record, January 10, 2007, p. H308. See also Bureau of National Affairs,
Daily Labor Report, December 13, 2006, p. A1.
30 Bureau of National Affairs, Daily Labor Report, November 15, 2006, p. A12.
31 Press release from Senator Max Baucus, Committee on Finance, January 10, 2007.
32 Bureau of National Affairs, Daily Labor Report, November 17, 2006, p. A6.

wage bill came up for a vote and was approved by 94 ayes to 3 nays. In the process,
the measure had been expanded to include a series of tax and related benefits
reportedly of interest to employers — especially small business, but of more general
interest as well. The two bills — the clean bill from the House and the composite bill
from the Senate — would, it seems, need to be reconciled.33 However, since the
Senate-passed version of H.R. 2 now contained tax measures (in excess of $8
billion), it was initially held at the desk awaiting some initiative from the House.
H.R. 976: The Small Business Tax Relief Act of 2007
Traditionally, as Congress has operated, matters dealing with finance must
originate in the House, and thus there was some concern about the action taken by
the Senate with respect to H.R. 2 (discussed above). Representatives Rangel,
Chairman of the Ways and Means Committee, with Representative Jim McCrery (R-
LA), developed a “package of small-business tax breaks” that “could clear the way
for final action on stalled legislation to raise the minimum wage.”34 Rangel
reportedly observed: “This is a bipartisan bill providing critical momentum for the
bipartisan effort to raise the minimum wage.” McCrery added, according to The
Daily Labor Report: “I believe it is important to couple a minimum wage increase
with tax cuts to help businesses that will be hurt by higher costs.”35 The
Rangel/McCrery bill was brought to the House floor and, on February 16, passed by
360 yeas to 45 nays.36 On February 17, the bill was read for the first time in the
Senate and placed on the Senate Legislative Calendar. On February 26, it was read
a second time and given Calendar No. 58.
Thus, two bills with implications for the minimum wage had come from the
House to the Senate: one, a direct increase in the minimum wage and the other a
package of small business offsets. There were substantial differences between the
two bills (H.R. 2 and H.R. 976), not the least of which had been the cost: roughly
$1.3 billion for the House bill and in excess of $8 billion for the Senate bill. In
addition, there was concern that some modification of the bills (minimum wage and
other non-wage provisions) might be necessary.
H.R. 1591: Emergency Supplemental Appropriations (2007)
In late March, Congress took up the emergency supplemental appropriations
bill for conflicts in Iraq and Afghanistan, and other purposes.
Action in the House. On March 20, 2007, Representative David Obey (D-
WI) introduced a new bill that would have funded a portion of the conflicts in Iraq
and Afghanistan but that also included a series of other related and unrelated

33 Congressional Record, February 1, 2007, pp. S1499-S1500. The Senate version of H.R.

2 can be found in the Congressional Record, February 1, 2007, pp. S1500-S1511.

34 Alan Ota, “Rangel’s Move to Add Tax Breaks to Minimum Wage Hike Could Break
Logjam,” CQ Today, February 8, 2007, p. 5. See also Rebecca Kimitch, “Rules Allow Tax
Package to Come to Floor Under Suspension of the Rules,”, February 14, 2007.
35 Bureau of National Affairs, Daily Labor Report, February 12, 2007, p. A14.
36 Congressional Record, February 16, 2007, p. H1860.

concerns: among them, a provision for an increase in the federal minimum wage, its
extension to the Commonwealth of the Northern Mariana Islands, long an issue in
contention, and a renewed application of the minimum wage to American Samoa (see
comment below). In general, the Obey bill dealt with the minimum wage (except
with the addition of American Samoa) in the same manner as H.R. 2 and, by
inference, H.R. 976.37
Coverage for American Samoa? Since 1938, American Samoa had been
under the minimum wage rates of the FLSA; but, given the distance from the
mainland and the attributes of the insular economy, it was not enforced.38 In 1956,
Congress placed American Samoa under a special industry committee (the SIC — in
the same manner as Puerto Rico and the Virgin Islands). Under the SIC, minimum
rates are designated by a committee dispatched by the Secretary of Labor. After
exploring economic conditions in the islands, the determinations of the SIC become
law — unless Congress were to override them as it did in 1986. During the 1980’s
and 1990’s, Puerto Rico and the Virgin Islands were removed from the SIC
jurisdiction and placed fully under the FLSA. But, economic conditions in Samoa
were such that Congress decided it should continue under SIC jurisdiction.
In terms of private sector employment, American Samoa has only one major
industry: the canning and processing of tuna fish. Other concerns operating in
American Samoa, for the most part, have supportive connections with the tuna
canneries. Were the minimum wage to be raised (and were the tuna canneries to
leave the island in search of even lower-paid workers, as has been intimated), the
economy of Samoa could face hardships.
Under H.R. 1591, the current insular minimum wage ($3.26 per hour) would be
raised, over time, to $7.25 per hour. No hearings were held on the issue. On March
22, the emergency supplemental appropriation (the Obey bill) was called up for floor
debate. The measure attracted considerable attention, but mainly (for all practical
purposes) as it related to military operations. Application of the full minimum wage
to American Samoa, basically, was not discussed. On March 23, the composite
measure was adopted by the House (218 yeas to 212 nays) and was dispatched to the
Senate. There, it was read twice and placed on the Legislative Calendar under39
General Orders, Calendar No. 84.
Action in the Senate. On March 26, 2007, the Senate took up H.R. 1591.
Senator Robert Byrd (D-WV) opened the discussion, which would take place over
several days, with an amendment to strike “all after the enacting clause” and then to
insert a new text.40 Thus, debate on the supplemental proceeded.
On March 27, 2007, Senator Kennedy proposed a new minimum wage
amendment to be added to H.R. 1591. The Kennedy amendment, in substance, was

37 Congressional Record, March 22, 2007, pp. H2892-2893.
38 Concerning American Samoa, see CRS Report RL34013, The Federal Minimum Wage
and American Samoa, by William G. Whittaker.
39 Congressional Record, March 23, 2007, p. H2999.
40 Congressional Record, March 26, 2007, pp. S3760-S3777.

the same as that already included in H.R. 2 and approved by the Senate on February
1st — namely, to raise the minimum wage, in steps, to $7.25 per hour and to extend
it to the CNMI. Reference to American Samoa had been dropped.
Senator Kennedy explained: “The House of Representatives has passed its own
minimum wage. Because of the parliamentary complexities,” however, “we were
unable to get this issue resolved.” And again, Kennedy suggested: “I am delighted
to debate the minimum wage, but I think we had a good debate ... so I do not think
that is necessary.”41 Ultimately, the Kennedy amendment was added to H.R. 1591.42
On March 29, 2007, the bill was adopted by a vote of 51 yeas to 47 nays.43
Final Congressional Action and Presidential Veto. With the Senate and
House versions of H.R. 1591 in disagreement, Representative Obey called for a
conference. Representative Jerry Lewis (R-CA) then moved to instruct the
conferences to support the House’s position “with respect to a timetable for the
withdrawal of troops from Iraq. This motion,” he stated, “which I will oppose, puts
Members on record as either fully supporting our troops or agreeing to a surrender
date in Iraq.”44 (Italics added.) The Lewis motion was approved (with Mr. Lewis45
voting in opposition) and conferees were appointed. No reference was made to
minimum wage issues though they were included.
On April 25, 2007, the conference report (H.Rept. 100-107) was called up for
debate. In speech after speech, Members responded to the essential thrust of the
measure: support for or opposition to the conflict in Iraq. Almost the only Member
to mention the FLSA was Representative Rangel. “I am glad that both chambers of
congress, in passing this Conference Report, have spoken to the fact that an increase
in the Federal minimum wage enjoys broad bipartisan, bicameral support,” he stated,
“as does the approximately $5 billion in small business tax relief also included in the
agreement.” Rangel continued: “I hope that combining the tax provisions of this bill
with a Federal minimum wage increase will encourage the President’s quick action46
on signing these provisions into law without further delay.” Included in the
Conference Report, which was adopted in the House by 218 yeas to 208 nays, were
provisions for an increase in the minimum wage for American Samoa and for the
In the Senate, a similar pattern was followed. The conflict in the Middle East
dominated the discussion. Only marginally was the minimum wage considered.
Senator Christopher Dodd (D-CY) lionized the “hard-working men and women” who

41 Congressional Record, March 27, 2007, p. S3793.
42 Congressional Record, March 27, 2007, pp. S3817-S3818.
43 Congressional Record, March 29, 2007, p. S4093.
44 Congressional Record, April 19, 2007, p. H3665.
45 Congressional Record, April 19, 2007, pp. H3671-H3672.
46 Congressional Record, April 25, 2007, p. H4156.
47 Congressional Record, April 25, 2007, pp. H4157-H4158. The Senate had receded.

had waited for “nearly 10 years” for an increase in the minimum wage.48 Senator
Kennedy termed the minimum wage increase in the bill “appropriate” and noted,
“many of our fighting forces have husbands or wives back at home who are
struggling to make ends meet.” Kennedy added: “Ten percent of military spouses
earn between $5.15 and $7.25 per hour.”49 The vote on the Conference Report was

51 yeas to 46 nays.50

On May 1, 2007, the President vetoed H.R. 1591 and returned it to the
Congress. In his message, he stated that the measure sets “an arbitrary date for
beginning the withdrawal of American troops” from Iraq, provides”billions of dollars
in spending and other provisions that are unrelated to the war,” and “is
unconstitutional because it purports to direct the conduct of the operations of the war
in a way that infringes upon the powers vested in the Presidency” as Commander in
Chief of the Armed Forces. “For these reasons, I must veto this bill.”51
On May 2, 2007, immediately following receipt of the veto message, the House
took up the override. The vote was 222 yeas to 203 nays. With two-thirds not
having voted to override, the veto was sustained.52
H.R. 2206: The Second Supplemental (2007)
A week later, on May 8, 2007, Representative Obey introduced a new
supplemental: the “U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and
Iraq Accountability Appropriations Act” (H.R. 2206). The bill contained language
dealing with the minimum wage, modifying coverage with respect to American
Samoa, and extending coverage to the CNMI.
Parliamentary Maneuvers. H.R. 2206 was reported to the House on May

9, debate on the resolution commencing on May 10. On a vote of 221 ayes to 20553

nays, the House approved the bill. A second proposal, H.R. 2207 (“Agricultural
Disaster Assistance and Western States Emergency Unfinished Business54
Appropriations Act, 2007”) was subsequently adopted and added to H.R. 2206.
The Senate, however, disagreed with the House on the military aspects of the
collective measure. On May 15, the Senate began consideration of H.R. 2206 — a
process that continued through several days and eventually came to involve

48 Congressional Record, April 26, 2007, p. S5137.
49 Congressional Record, April 26, 2007, p. S5141.
50 Congressional Record, April 26, 2007, p. S5153.
51 Congressional Record, May 2, 2007, p. H4315.
52 Congressional Record, May 2, 2007, pp. H4325-H4326. Chairman Obey affirmed: “...
this bill is first, last and foremost about the war. It is about how we get our troops out of the
war.” See Congressional Record, May 2, 2007, p. H4316. Discussion of the minimum wage
did not come up during debate on the override.
53 Congressional Record, May 10, 2007, pp. H4866-H4867.
54 Congressional Record, May 10, 2007, pp. H4879-H4880. The vote on H.R. 2207 was 302
ayes to 120 nays.

representatives of the House.55 The Senate had proposed a very general bill, a
placeholder, and had sent it to conference with the House. Just hours before the new
House vote, a proposal was refined and presented in two parts. Part one represented
the non-military expenditures (yeas, 348; nays, 73); part two, the issues dealing with
funding for the conflict in the Middle East (yeas, 280; nays, 142).56 The Senate
promptly concurred (yeas, 80; nays, 14).57 On May 25, 2007, the measure was signed
by the President (P.L. 110-28).
Changes in the Wage Rates: 2007. The final bill contained a wide variety
of supplemental measures. With respect to the minimum wage, the bill contained the
following provisions.
The General Minimum Wage:
An increase to $5.85 per hour beginning on the 60th day following enactment:
roughly, July 25, 2007.
An increase to $6.55 an hour, beginning 12 months after the 60th day following
enactment: roughly, July 25, 2008.
An increase to $7.25 an hour (and to remain at that level until changed by
Congress), beginning 24 months after the 60th day following enactment: roughly, July

25, 2009.

The Minimum Wage and the CNMI:
The minimum wage shall be $3.55 an hour, beginning on the 60th day following
The minimum wage shall be raised by 50 cents an hour beginning each year
after the date of enactment and continuing until the rate in the CNMI is equal to
$7.25 (or the amount specified in Section 6(a)(1) of the act).
The Minimum Wage and American Samoa:
The minimum wage in “each industry and classification” in American Samoath
will be increased by 50 cents an hour, beginning on the 60 day after the date of
enactment of this act, and by 50 cents per hour beginning each year thereafter on the
date of enactment until the rate in American Samoa reaches $7.25 per hour (or the
amount specified in Section 6(a)(1) of the act).

55 Congressional Record, May 15, 2007, pp. S6115-S6118; and May 17, 2007, pp. S6215-
S6219, S6254.
56 Congressional Record, May 24, 2007, pp. H5730-H5738 and H5776-H5911.
57 Congressional Record, May 24, 2007, p. S6823.

A Study Commissioned:
Beginning on a date “that is 60 days after the date of enactment of this Act,” the
Secretary of Labor (through the Bureau of Labor Statistics) will conduct a study to
(1) assess the impact of the wage increases required by this Act ... and
(2) project the impact of any further wage increase, on living standards and rates
of employment in American Samoa and the Commonwealth of the Northern
Mariana Islands.
Not later than eight months after the date of enactment of this act, “the Secretary of
Labor shall transmit to Congress a report on the findings of the study....”
The Voting Pattern on Minimum Wage. Other aspects of the FLSA (e.g.,
the youth sub-minimum wage, the tip credit provisions, treatment of the handicapped,
the small business exemption) were not dealt with in the minimum wage adjustments
of 2007. The minimum wage aspects of H.R. 2206 merely (1) raised the general
minimum wage and (2) altered the application of the wage as it applies to American
Samoa and to the CNMI.
H.R. 2, the initial proposal on the minimum wage in the House, was a clean bill,
solely relating to changes in the level of the minimum wage. But, once in the Senate,
various additions were added to the bill (in excess of $8 billion dollars) before it was
adopted, and for a series of reasons internal to Congress, the measure died. Thus,
only H.R. 2 (and only in the House) was there a vote that could be discerned as a vote
on the minimum wage. The remaining bills (H.R. 976, H.R. 1591 and, finally, H.R.
2206) were all composite measures with no identifiable vote solely on minimum
wage issues.
Comment and Summary
In the 110th Congress, the minimum wage seemed to occupy a larger role in the
House than in the Senate. Four bills with implications for the minimum wage were
sent from the House to the Senate.
The first was H.R. 2. It had passed as a clean bill in the House early in the
session; but, once in the Senate, the bill was enhanced with a series of tax and related
proposals of interest to industry. The added revenue measures in particular rendered
compromise with the House difficult.
H.R. 976, a package of small business offsets, had been arranged in the House
Committee on Ways and Means that might have been used to augment H.R. 2, still
in the Senate. Before the House and Senate could reach a compromise on the
minimum wage and tax issues, a new bill, H.R. 1591, was passed by the House and
sent to the Senate. Although intended to fund American troops in the Middle East,
H.R. 1591 contained a series of unrelated funding proposals — including an increase
in the minimum wage, its adjustment for the CNMI and American Samoa, and a
series of tax and related issues of interest to the business community. The bill also
included specific timetables to be met in Iraq, which rendered the bill anathema to

the White House. Ultimately, it was vetoed and the House sustained the President’s
A final bill (the fourth) was a restructuring of H.R. 1591. The new bill (H.R.
2206) was contentious in the House (which passed the measure) but was rejected, in
its House-passed form, by the Senate. Like H.R. 1591, H.R. 2206 contained
language dealing with the minimum wage. The Senate removed all after the enacting
clause, inserted a placeholder, and passed H.R. 2206, sending the bill to conference.
In conference, accommodation was reached. The House (and then the Senate) agreed
to the restructured H.R. 2206, sending it to the President who, on May 25, 2007,
signed the bill — which still included minimum wage language.