Minimum wage rise is voted by Senate 90-cent raise passes key hurdle, may affect nearly 12 million

WASHINGTON — WASHINGTON -- The Republican-led Senate voted overwhelmingly yesterday to raise the minimum hourly wage by 90 cents over two years, handing an election-year victory to President Clinton and the minority-party Democrats.

Twenty-seven Republicans joined the unanimous Democrats to approve the bill by a 74-24 vote.


Earlier, five Republicans broke ranks to help Democrats defeat a GOP amendment that would have allowed small businesses to avoid paying the higher wage and would have delayed the wage increase by six months.

"What an outstanding moment on the floor of the U.S. Senate, with a resounding victory for the minimum wage and a convincing repudiation of a cynical attempt to kill it," declared Sen. Edward M. Kennedy, the Massachusetts Democrat who has been the driving force behind the wage increase.


Kennedy and other Democrats note that the minimum wage -- now $4.25 an hour, or about $8,800 a year -- was last raised in 1991 and that its purchasing power has nearly dropped to a 40-year low.

The wage increase is needed, Democrats argue, to ensure that entry-level jobs for welfare recipients pay more than welfare.

But Republicans assert that a higher minimum wage would hurt workers because employers would be less likely to fill job openings if they had to pay more, and might even lay off current employees.

Partisan bickering, which has made the minimum wage increase a contentious issue in the 1996 election campaign, threatens to delay final passage until the end of summer or longer. But the bill is expected to pass Congress and be signed into law by Clinton.

Under the measure, which has already been passed by the House in a similar form, the 90-cent increase would be phased in over two years, bringing the wage to $5.15 an hour by next July 1.

The first phase, raising the wage to $4.75, would take effect retroactively to July 1, although Republican leaders say they will try to delay the effective date to minimize the consequences.

"It may not seem like a lot of money, but it's a lot of paperwork," complained Sen. Don Nickles of Oklahoma, the Senate majority whip, who said businesses would now face salary increases of 20 percent that they haven't budgeted or planned for.

But Clinton called on Congress to send him the bill quickly. "This is not a time to nickel and dime our working families," he said after the Senate vote. "We have to make sure that all Americans benefit from the economy."


Leaders of the small-business community, who backed an unsuccessful Republican attempt to exempt companies that gross less than $500,000 a year from paying the higher wage, vowed to keep fighting against what they see as Clinton's payback to his union supporters.

"It's July and now it's Christmas -- the labor union bosses have been given a gift," said Jack Faris, president of the National Federation of Independent Businesses. "It does not make sense. It will not be sitting well in America's Main Streets."

But the Senate votes made clear the overall popularity of the minimum wage increase.

"If you're looking for a straw in the wind to determine which way the winds are blowing in the United States of America in 1996, look no further than this vote," said Vice President Al Gore, who was standing by in case his vote was needed to break a Senate tie.

Bob Dole, Clinton's Republican challenger, took pains not to be seen as an opponent of the first minimum wage raise in seven years.

Responding to a taunt from the Clinton campaign that the former Senate majority leader had been silent on the issue, Dole's spokesman, Nelson Warfield, said in a statement: "Bill Clinton is playing maximum politics with minimum wage. Bill Clinton should know full well that Bob Dole is on record in favor of an increase in the minimum wage.


In the May 24 Senate floor statement cited by the his campaign, Dole said he favored a minimum wage increase coupled with a "training wage" for teen-agers and the small business exemption that the Senate rejected.

Nearly 12 million workers now making less than $5.15 an hour stand to benefit from the wage increase; about 60 percent are women, many single heads of households, according to Sen. Paul S. Sarbanes, who has been active in the effort to raise the wage.

At a rally of several hundred red T-shirted union workers on the Capitol steps, the Maryland Democrat said the minimum wage has fallen so far behind the rest of the economy that it would have to be raised to $6.25 an hour to match its buying power in the 1960s.

To soften the blow on small businesses, the bill includes $14 billion in tax breaks and incentives.

They include an increase, to $25,000, in expenses that can be written off each year, and an extension of expired tax credits for research and education assistance that employers provide workers.

The bill allows tax breaks for nonworking spouses to invest up to $2,000 a year in Individual Retirement Accounts.


Legislation proposing such "homemaker IRAs" was first offered three years ago by Sens. Barbara A. Mikulski, the Maryland Democrat, and Kay Bailey Hutchison, the Texas Republican.

"It's a matter of simple fairness," Hutchison told her colleagues. "If you work outside the home, you can set aside $2,000 a year, but if you are a homemaker raising your children, contributing to this country and its stability, you can't. This will allow the homemakers of this country to be equal in their ability to contribute to their retirement security."

Pub Date: 7/10/96