Wednesday, June 21, 2006

Opinion: Should competition in the marketplace determine wages, or should the current minimum wage be increased through legislation?

Senate nixes bid to raise minimum wage

WASHINGTON (AP) -- The Republican-controlled Senate smothered a proposed election-year increase in the minimum wage Wednesday, rejecting Democratic claims that it was past time to boost the $5.15 hourly pay floor that has been in effect for nearly a decade.

Wednesday, June 21, 2006; Posted: 6:15 p.m. EDT (22:15 GMT) WASHINGTON (AP) -- The Republican-controlled Senate smothered a proposed election-year increase in the minimum wage Wednesday, rejecting Democratic claims that it was past time to boost the $5.15 hourly pay floor that has been in effect for nearly a decade.

The 52-46 vote was eight short of the 60 needed for approval and came one day after House Republican leaders made clear they do not intend to allow a vote on the issue, fearing it might pass.

Sixty votes were required because the plan was proposed as an amendment to an unrelated defense bill.

The Senate vote marked the ninth time since 1997 that Democrats there have proposed -- and Republicans have blocked -- a stand-alone increase in the minimum wage. The debate fell along predictable lines.

"Americans believe that no one who works hard for a living should have to live in poverty. A job should lift you out of poverty, not keep you in it," said Sen. Edward M. Kennedy, D-Massachusetts (pictured at right). He said a worker paid $5.15 an hour would earn $10,700 a year, "almost $6,000 below the poverty line for a family of three."

Republicans said a minimum wage increase would wind up hurting the low-wage workers that Democrats said they want to help.

"For every increase you make in the minimum wage, you will cost some of them their jobs," said Sen. Johnny Isakson, R-Georgia.

He described the clash as a "classic debate between two very different philosophies. One philosophy that believes in the marketplace, the competitive system ... and entrepreneurship. And secondly is the argument that says the government knows better and that topdown mandates work."

The measure drew the support of 43 Democrats, eight Republicans and one independent. Four of those eight Republicans are seeking re-election in the fall.
Democrats had conceded in advance that this attempt to raise the minimum wage would fare no better than their previous attempts. At the same time, they have made clear in recent days they hope to gain support in the coming midterm elections by stressing the issue. Organized labor supports the legislation, and Sen. Chris Dodd, D-Connecticut, said that contrary to some impressions, most minimum wage workers are adults, not teenagers, and many of them are women.

"When the Democrats control the Senate, one of the first pieces of legislation we'll see is an increase in the minimum wage," said Kennedy.

His proposal would have increased the minimum wage to $5.85 beginning 60 days after the legislation was enacted; to $6.55 one year later; and to $7.25 a year after that. He said inflation has eroded the value of the current $5.15 minimum wage by 20 percent.

With the help of a few rebellious Republicans, House Democrats on the House Appropriations Committee succeeded in attaching a minimum wage increase last week to legislation providing funding for federal social programs. Fearing that the House would pass the measure with the increase intact, the GOP leadership swiftly decided to sidetrack the entire bill.
"I am opposed to it, and I think a vast majority of our (rank and file) is opposed to it," House Majority Leader John Boehner, R-Ohio, said Tuesday. Pressed by reporters, he said, "There are limits to my willingness to just throw anything out on the floor."

While Democrats depend on organized labor to win elections, Republicans are closely aligned with business interests that oppose any increase in the federal wage floor or would like changes in the current system.

Sen. Mike Enzi, R-Wyoming, chairman of the Senate Health, Education, Labor and Pensions Committee, offered an alternative that proposed a minimum wage increase of $1.10 over 18 months, in two steps. The increase was coupled with a variety of provisions offering regulatory or tax relief to small businesses, including one to exempt enterprises with less than $1 million in annual receipts from the federal wage and hour law entirely. The current exemption level is $500,000, and a Republican document noted the amount had "lagged behind inflation."

Additionally, Republicans proposed a system of optional "flextime" for workers, a step that Enzi said would allow employees, at their discretion, to work more than 40 hours one week in exchange for more time off the next. Unions generally oppose such initiatives, and the Republican plan drew 45 votes, with 53 in opposition.

Nine Senate Republicans voted against both proposals.
Copyright 2006 The Associated Press. All rights reserved.


brandong said...

I think that competition should determine wages. If you work in a field with high competition, you're always on the move , and always kept busy your wages should reflect that. If your job is not that comeptitive and doesn't require you to do or know a lot the minimum wage for that job should be lower.

Dain said...

I agree with the idea of competition helping wages, but only to a cirtain point. Remember we used to follow Lazzie Fair economics and market competition eventually created monopolies. Those monopolies then slashed workers wages and were then able to lower the cost of their product, which cemented them in as a monopoly since no other startup could hope to compete with them. My point is that the market needs some oversight.

Ok, back to topic. Highly competitive feilds already pay more than minimum wage and may not be heavily affected by the minimum wage increase. The increase would have a greater effect on the Niche markets and Service feilds. Service jobs, for the most part, require little training and workers are easily replaceable. Companies don't need to raise wages to attact workers in these feilds because there is a huge number of people who can perform the job. If person A won't work for wage X, then move on to person B. Companies will not raise the wages of their service workers because they do not have to. It would take legislation to make that increase. Wether or not that increase will help them in the end is another question.

TeresaH said...

I believe that the wage for a particular job should reflect the requirements of that job.
Entry-level positions for skilled workers who need to have certain skills upon hiring deserve a higher wage as compensation for their existings skills. Jobs that hire based upon proof of citizenship and a clean criminal record should have a mandated minimum wage, because workers need no compensation for their skills. Legislators are more in touch with the effects of inflation and the necessary income than individual employers.

KimK said...

I believe that competition in the marketplace should determine minimum wage but only to an extent. I think that while a minimum wage is necessary to regulate working conditions, a small increase in the minimum wage is not going to change the poverty conditions of the people effected. Even if the minimum wage were increased by a dollar, the people effected would be getting about $2000 more per year. This would do little if anything to change their living conditions. Additionally, many of those effected by a higher minimum wage will be teenagers who do not necessarily need the money to live. Therefore, I think the minimum wage should remain as is.

Megan B said...

I think that competition in the marketplace should determine wages and not legislation on the minimum wage. People should take responsibility for themselves and not rely on the government to bail them out of bad job decisions that they made. If people want higher paying jobs, they should find jobs that are in demand and that others may not want to do. A person's ambition to get a head in their job also should be reflected in their pay, when it is compared to their peers who just do enough to get by and collect a pay check. Education plays another key role in getting a high paying job. For those who may not have a lot of financial help from their home there are enough social programs that every one can get a decent education, but again people have to be responsible for themselves and use the chances and opportunities that they are given. The basis of our economy is free market, which has worked best with little outside influence for close to 200 years. I believe we should keep outside influences at a minimum.

tonileep said...

I believe that competition in the marketplace should determine wages. Competition is what essentially determines the appropriate wages. People who work in a more competitive field can command a higher wage than people who work in a lesser field. Having a minimum wage isn’t a bad idea. The minimum wage protects people who have lesser skills from being taken advantage of by businesses.

BrandonK said...

I believe that the current minimum wage should be increased through legislation. Most people think that wages should be determined by demand, when in reality, you need to look at every point of view. In our country, there are a great number of families who cannot afford to live the luxurious lives we live. These people may not have graduated from school or could not afford college, and all of a sudden they're stuck in an unfair world, struggling with two minimum wage jobs and cannot spend any time with thier family. A family of three or four cannot survive in this world making $5.15 an hour. If the legislature were to raise the minimum wage a set number over the next few years, families such as this one would be able to afford a descent living. It is unfair that a person can get an amazing job and make great money right out of school, when there are people out there on the brink of poverty.

MKlinka said...

I'll have to disagree with you, Koster, because it simply is not fair to the business owners and the market to raise the wage.

If minimum wage is raised, then companies will have to pay employees more. This can either bankrupt small businesses, or increase outsourcing of American jobs. There's no reason to pay someone a higher minimum wage when the work can be done in india for a fraction of the cost.

No, competition must dictate. High paying jobs are high paying because they are in demand. They are in demand because they require dedication. It may seem impossible to pull out of the mire of poverty, but it can and will be done. Such is the American entrepreneurial spirit.