Minimum wage debate: House and Senate battle over business tax breaks

Published 12:00 am Wednesday, February 7, 2007

The Selma Times-Journal

After no increase for 10 years, Alabama’s minimum wage workers’ pay hike lies in the midst of a big Congressional debate.

On Thursday, Feb. 1, the U.S. Senate voted to increase the minimum wage from $5.15 an hour to $7.25 an hour over two and a half years. The House of Representatives voted in favor of the increase on Jan. 10. The debate over the increase is whether or not to package the increase with small business tax cuts and limits on corporate pay.

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The Senate is stressing business tax breaks and does not want to pass the House’s version of the bill, which offers no tax breaks.

House Speaker Nancy Pelosi, D-Calif., does not oppose including some tax provisions in the House’s bill, but says she prefers they be in a separate House-initiated bill.

In a statement, President George W. Bush encouraged the House, which has a Democratic majority, to accept the Senate’s version of the bill.

“The Senate has taken a step toward helping maintain a strong and dynamic labor market and promoting continued economic growth,” Bush said.

Local Economic Development Authority (EDA) Director Wayne Vardaman doesn’t think the wage hike will have a negative impact on our local industries.

“Most of our industries pay more than minimum wage,” Vardaman said.

It is speculated that small businesses will be impacted far more than industries or large businesses.

“We may have to cut back on hours or go up on product,” David Oliver, owner of Pickering’s Superette in Plantersville, said.

Oliver said he employs four full-time and five part-time workers.

To keep from “eliminating help,” Oliver said his first option would be to cut back on hours.

Oliver said that he would be able to absorb the wage increase better if it is done in small increments.

The legislation is planning to raise the minimum wage in three stages.

Thirty days after the bill is signed into law, the wage would go up to $5.85 an hour, then up to $6.55 a year later and the up to $7.25 the following year.

Jim Creech, one of three owners of Pilcher McBryde Drug Company, located at 101 Broad St., expressed the same concerns as Oliver.

Creech said in order for the store – in business for 120 years – to absorb the wage increase, they would have to have “less people working.”

According to Creech, there are about six part-time workers at the store and they would be the ones most affected by cutbacks. Holiday and summer hires would also be affected.

Pilcher’s has 12 full-time employees, none of which are paid minimum wage.

“We try to be competitive in our pay,” Creech said.

According to an article published by the Alabama Press Association, the tax breaks have won the support of small businesses, retailers and restaurant owners.

“The Senate’s reasonable approach recognizes that small businesses have been the steady engine of our growing economy and that they have been a source of new job creation, a source of job training,” said Sen. Michael Enzi, R-Wyo., who helped manage the debate for the GOP.

Both parties have come to the consensus that the minimum wage should increase, but until the debate over business tax breaks is resolved by the House and Senate, the bill will not become law.

“Minimum wage workers in this country have waited far too long for a raise,” AFL-CIO President John Sweeny said in a statement. “It’s shameful that they must now wait even longer because of the Senate’s insistence on business tax giveaways.”

The Associated Press contributed to this report.