Minimum wage bill tips scales against fairness

The U.S. House of Representatives Saturday passed the Minimum Wage Held Hostage Act of 2006.

That may not be the bill’s real title, but that’s the clear intent of Republican congressional leadership. By welding a long-overdue increase in the federal minimum wage to cherished estate tax relief, the GOP hopes it can finally deliver an estimated $1 million in tax relief to each of America’s 8,200 wealthiest families. Democrats have frustrated every previous scheme to accomplish that end, including a pathetic bid by Sen. Majority Leader Bill Frist, R-Tenn., to marry it with the still-pending pension reform bill.

Putting together estate tax bill and minimum wage increases was strictly a marriage of convenience, with the shotgun pointed at the heads of Democrats who have consistently sought higher pay for millions of low-income households. The last hike, to $5.15 an hour, took effect in 1997. The bill would increase the federal minimum to $7.25 by 2009.

But wait: The hastily arranged marriage was not desperate or despicable enough. At the behest of the National Restaurant Association, Republicans also included a “Tipped Wage Fairness” provision that may cut the wages of as many as 120,000 Washington workers. How? By overriding state law that requires employers to pay Washington’s $7.63 an hour minimum wage, which is adjusted each year for inflation.

The House bill would force Washington and six other states to credit tips against wages. Now, tips are income on top of wages. The House bill would credit tips against wages so, according to some Democrats and labor officials, a waitress who collects $2 an hour in tips could expect just $5.63 an hour from her employer.

But bill opponents say the ramifications are far worse because federal law allows restaurants to pay just $2.13 an hour, unless tips do not lift wages up to the minimum, in which case employers must make up the difference.

The language seems to assure tipped workers will suffer no reduction in the cash wages they receive today. Anthony Anton, president of the Washington Restaurant Association, says his group will fight any move to roll back wages.

However, the association has long supported measures that would compromise the protections hospitality workers enjoy under the state minimum wage law. Lawmakers in Olympia have refused to budge. Obviously, congressional Republicans are more pliable.

If nothing else, fire from bill opponents has Republicans seeking cover. Wednesday, Rep. Cathy McMorris, R-Wash., drafted a letter to the chairman of the House Committee on Education and the Workforce saying she does not believe the bill language should “allow employers to reduce employees’ base pay.”

A letter to Frist from the U.S. Department of Labor likewise tries to deflect claims tipped workers are headed for a pay cut, but adds that it would be willing to work with Congress on clarification.

All this may be political theater intended to bring more attention to the fundamental problem with marrying estate tax relief with a minimum wage increase. Clearly, the bill is just another intrusion on state prerogatives by an allegedly conservative Republican Party that was once fiercely federalist. This Congress and this president have repeatedly usurped state authority.

Washington Democrats are in a particularly tough position because the bill also extends the deductibility of state and local sales tax payments in calculating federal income tax obligations. The average deduction for Washington residents is more than $500. But unless it is renewed, the deduction will expire at the end of the year.

Deductions for business expenditures on research and development are also extended and, in a blatant bid to get senators Patty Murray and Maria Cantwell, both D-Wash., on board, there is also significant tax relief for the state’s timber industry.

Meanwhile, here’s a tip for Republicans: Stop jerking around American workers whose incomes are not keeping up with the rising cost of just about everything they buy. Tipped Wage Fairness? Baloney any way you slice it.