[Congressional Record Volume 142, Number 76 (Wednesday, May 29, 1996)]
[Extensions of Remarks]
[Page E938]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               EMPLOYEE COMMUTING FLEXIBILITY ACT OF 1996

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                               speech of

                            HON. ENID GREENE

                                of utah

                    in the house of representatives

                         Thursday, May 23, 1996

  Ms. GREENE of Utah. Mr. Chairman, I share in the desire of many of my 
colleagues to help the working poor. However, I voted against the Riggs 
amendment to increase the minimum wage because I believe it will have 
negative consequences--particularly for those it portends to help.
  First, I believe that increasing the minimum wage will result in the 
loss of hundreds of thousands of entry-level and low-wage jobs, which 
are needed not only by young people but also by those who are seeking 
to reenter the workforce.
  Raising the minimum wage is a tax on an employer who is offering 
someone a job. It is not paid by all Americans, but only by those who 
seek to employ others. The natural result is that there will be fewer 
jobs available. Any freshman economics student knows that if you raise 
the price of something, in this case labor, then demand for it, in this 
case by employers, will fall.
  History indisputably shows that raising the minimum wage costs jobs. 
In fact, since 1973, Congress has increased the minimum wage 9 times, 
over 2-year periods. In each case, except one, unemployment increased. 
The one exception was during the period 1977-79, when the economy was 
growing robustly at over 5 percent annually. We are not now enjoying 
such growth.
  Second, I believe that increasing the minimum wage will have an 
inflationary effect, as widespread increases in wage costs necessitate 
higher prices for goods and services. According to the Progressive 
Policy Institute, 80 percent of the cost of an increased minimum wage 
are passed through to consumers in the form of higher prices.
  This means that all workers who do not gain from an increase in the 
minimum wage will lose some of their buying power. This includes the 
very poorest of Americans, those without jobs on fixed incomes, who 
will see the value of their benefits diminish. Thus, the poorest of 
Americans, the unemployed, are in effect taxed to pay higher wages for 
union workers and those minimum wage workers who are able to keep their 
jobs.
  Third, I believe that a higher minimum wage will be a barrier for 
individuals trying to move from welfare to work, because employers will 
refuse to hire inexperienced and/or low-skilled workers at even higher 
wages. Further, if the intent of those who would increase the minimum 
wage is to make working more attractive than welfare, their strategy is 
doomed to failure. The majority of welfare recipients receive a package 
of benefits that far exceeds the value of even a $5.15 an hour job. In 
my own State of Utah, the pretax wage equivalent of welfare is $9.42 an 
hour, or $19,600 a year. Moreover, a recent University of Wisconsin 
study found that the average time on welfare among States that raised 
the minimum wage was 44 percent higher than in States that did not.
  Instead of a minimum wage hike which carries such a negative 
consequences, I believe that the needs of the working poor would be 
better served by a more focused effort aimed at creating jobs and 
increasing take-home pay. Such a program would be consistent with my 
belief that reducing the tax burden on working Americans and expanding 
economic opportunity is the best way to win the war on poverty. It was 
for this reason that I supported the Tax Fairness and Deficit Reduction 
Act--first passed by the House in April 1995 and then again in November 
as part of the Balanced Budget Act that was subsequently vetoed by 
President Clinton. The Tax Fairness and Deficit Reduction Act 
provisions offered tax relief to senior citizens, families, small 
business owners, and many others. It would have promoted savings and 
investment in business, and resulted in the creation of more than 1.5 
million new jobs by the year 2000.
  A number of plans have emerged that would assist the working poor 
without costing jobs, including our fiscal year 1997 budget resolution 
that would provide $121 billion in net tax relief, fully funding a 
permanent $500 per child tax credit, permanent capital gains tax 
relief, and other pro-job tax incentives.
  Representatives Tim Hutchinson [R-AR] and Cass Ballenger [R-NC] have 
introduced The Minimum Wage for Families Act which would change the 
earned income tax credit program from a yearly lump sum into monthly 
payments so it could serve as a supplement to a low wage salary. And 
Representative David McIntosh [R-IN] has proposed that individuals 
making between $4.25 and $5.15 an hour be relieved from having any 
Social Security or Federal income taxes withheld from their paychecks, 
while still protecting the Social Security system and the retirement 
benefits of those workers.
  These proposals, while imperfect, at least focus on the right goal: 
Increasing the take-home pay of working Americans while, promoting, not 
restricting, new job creation. We should build on these proposals to 
find a new approach to helping the working poor instead of fueling 
inflation and costing jobs.
  The starting wage is the best paying on-the-job education and 
training program America has ever seen. Changing it doesn't make sense, 
particularly where there is overwhelming evidence that the effect of 
such a change would be to victimize the lowest-skilled workers in our 
society.

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