[Congressional Record Volume 142, Number 100 (Tuesday, July 9, 1996)]
[Senate]
[Pages S7461-S7466]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SMALL BUSINESS JOB PROTECTION ACT OF 1996

  The Senate continued with the consideration of the bill.
  Mr. MOYNIHAN. Mr. President, I am happy to yield 8 minutes to my 
distinguished friend and fellow member of the Finance Committee, 
Senator Graham of Florida.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, I wish to speak briefly on a provision 
which I hope will be included in this bill at the time we take our 
final vote. It is a provision which is of great importance to working 
parents and their children across America.
  For years, one of the major challenges to American families has been 
how to plan for their children's educational future. This challenge has 
been exacerbated in recent years due to the continued rising costs of 
college education.
  In response to this challenge, over the past 10 years States have 
formed innovative partnerships with families. These are typically known 
as prepaid college tuition plans. These plans, although not 
structurally identical, share a common purpose. These plans allow 
parents to pay in advance for a child's tuition at a participating 
college or university, thereby locking in today's tuition prices, 
guaranteeing the child's access to a future college education. The 
State then takes the funds which have been paid by the participant, 
typically the parent, and invests them in a way that keeps pace with 
the cost of college education. These programs are designed so that 
people of moderate means can help their children realize the dream of a 
college education. For instance, the typical Florida family 
participating in this program earns approximately $50,000 a year.
  These programs are also tailored to maximize flexibility. Families 
can either purchase a prepaid tuition contract with a lump sum or, if 
they choose, they can pay the child's education in monthly 
installments. These plans, therefore, are affordable. For instance, 
those families who opt to invest on a monthly basis in my State of 
Florida put aside an average of about $53 a month, roughly the price of 
cable television service.

  This affordability has made prepayment programs enormously successful 
in Florida and across the Nation. Most importantly, at a time when the 
next generation will struggle to provide for the financial security of 
its children, prepaid college programs provide a powerful incentive for 
families to save, to invest in their futures, to provide for some 
security when an unexpected tragedy occurs.
  Let me share with you an example of such an unexpected tragedy. Mr. 
and Mrs. Daniel Gilliland enrolled their sons, Sean and Patrick, in the 
Florida program in 1988, the first year of its existence. Four years 
later, Sean entered the University of Florida as a freshman in the fall 
of 1992. In 1994, the father, Daniel Gilliland, died unexpectedly, just 
as the younger son Patrick was about to go to the University of Florida 
for his freshman year. The death of Daniel Gilliland was devastating to 
the family, but because the Gillilands were able to participate in the 
Florida prepaid college program both children were able to go on with 
their lives and continue their education. I will quote from a letter 
from Mrs. Gilliland, which I ask unanimous consent be printed in the 
Record immediately after my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. GRAHAM. She states, ``By expecting the unexpected, we were able 
to give both sons an education at a fine university that would 
certainly otherwise have been difficult for me as a single parent.''
  When Daniel died, I silently offered ``thanks that we had the 
foresight and chance to participate in this program.''
  Today, Sean is a senior at the University of Florida, ready to 
graduate with a degree in business. Patrick maintains a 3.6 average, 
while working toward a degree in athletic training.
  Mr. President, it is because of success stories like the Gilliland's 
that the prepaid college programs are flourishing. Twelve States 
already have operating programs. Those States are those depicted in 
green on this map. Four States depicted in yellow will begin tuition 
programs this year, and a dozen more are moving towards enacting 
prepaid tuition legislation, those depicted in red.
  As an example, the Texas prepaid tuition program, which was set up 
this year, receives 4,000 inquiries a day and enrolled 40,000 
participants within the first few weeks of implementing the program.
  In Florida, 376,000 families are currently participating in the 
program; 40,000 participants join each year.
  Why, in the face of this great success, are we considering Federal 
legislation to affect State prepaid tuition plans? The reason is 
because early this year the taxation of these plans was called into 
question by the Internal Revenue Service. The IRS contacted six States 
with operating programs and informed them that the IRS intended to do 
two things: First, the IRS stated that it would treat the State fund as 
a taxable corporation rather than a tax-exempt government entity. 
Obviously, this action would make it difficult for States to meet their 
obligation to families under the plan. Second, the IRS stated that 
families should have to pay tax annually on the interest income earned 
on amounts transferred to the fund.
  Mr. President, it just does not make sense to me that an individual 
who purchases a tuition contract should have to pay tax every year on 
the earnings on the funds. First, the contributor has surrendered 
control of his funds. He or she can only get money back if a student 
dies or should not qualify for college. And then, under most plans, the 
State refunds only the principal. Second, the contributor does not have 
access to the funds to pay the tax, since the money contributed to the 
tuition contract now belongs to the fund itself.
  Given the fact that most who contribute to the fund are of modest 
means, it is a tremendous disincentive to investing in education to 
make contributors pay tax on interest income for up to 18 years before 
the child goes to college.
  Because we felt so strongly about this issue, a bipartisan group of 
Senators, including Senators McConnell, Breaux, and Shelby, decided to 
do something about it. In discussions with the administration and the 
Department of Treasury we were able to get the IRS to revisit this 
issue. I am pleased to report that on June 11 of this year, the IRS 
issued new rules that will temporarily exempt State tuition plans from 
interest income taxation. This matter has not been settled. The 
Department of Treasury has asked for help from Congress, asking us to 
clarify the tax treatment of these plans. Until we act, the financial 
future of these plans, along with the education of over a half-million 
participants nationwide, remains in limbo. This bill will clarify that 
these State programs are not taxable and that the earnings on the fund 
will not be taxed until the child goes to college.
  Removing the specter of Federal taxation from these plans is 
particularly appropriate at this time, a time when Congress should be 
trying to foster innovative programs among the States and encouraging 
families' efforts to save and invest for their children's future.
  I would like to particularly thank Senator Roth and Senator Moynihan 
for their support and assistance in including this important provision 
in the legislation. With enactment of this legislation, parents and 
children will be able to rest easier, knowing that Congress has done 
the right thing in protecting their investment and protecting their--
and our--Nation's future.

                               Exhibit 1


                                     Mrs. Daniel D. Gilliland,

                                                    Bradenton, FL.
     Karen S. Fenton,
     Editor, College Bound, Florida Prepaid College Program, 
         Tallahassee, FL.
       Dear Ms. Fenton: I am writing to acknowledge your 
     invitation to share ``success stories''.
       My husband Daniel and I enrolled our two sons Sean and 
     Patrick in the College Program in 1988, I believe the first 
     year this was offered.

[[Page S7462]]

       Sean entered the University of Florida (Honors Program) in 
     the fall of 1992 a graduate of Manatee High School, 
     Bradenton, Florida.
       Daniel died suddenly two years later at age 52, so with 
     Sean then a sophomore, and Patrick about to enter his 
     freshman year also at the University of Florida, I did 
     silently offer thanks that we had the foresight and chance to 
     participate in this program.
       By expecting the unexpected, we were able to give both 
     son's an education at a fine university that would certainly 
     otherwise have been difficult for me as a single parent.
       Today, Sean has reached his senior year pursuing a degree 
     in business, with an area of specialization in Japanese 
     studies.
       Patrick presently in his sophomore year maintains a 3.6 
     average while working towards a degree in Athletic Training.
       Thank you for allowing me to share this brief page from our 
     lives with you and other participants of this college 
     program.
           Sincerely,
                                               Sally A. Gilliland.

  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York is recognized.
  Mr. MOYNIHAN. Mr. President, I am sure I can speak for the chairman, 
Senator Roth, when I say to Senator Graham of Florida that it is we who 
are indebted to him for having brought this matter to the committee, 
set forth the issues with clarity and succinctness, and won unanimous 
support for obviously an important subject--important not just to 
Florida but, as the map shows, to States across the Nation.
  I see Senator Conrad has risen. I am happy to yield 8 minutes to him.
  The PRESIDING OFFICER. The Senator from New York has 5 minutes 
remaining at this time.
  Mr. MOYNIHAN. I ask unanimous consent if I might use 3 minutes of the 
leader's time for Senator Conrad.
  The PRESIDING OFFICER. The Senator may do that.
  The Senator from North Dakota is recognized.
  Mr. CONRAD. Mr. President, I support the Small Business Job 
Protection Act of 1996 and urge my colleagues to join me in supporting 
this legislation. The Senate Finance Committee made a series of 
bipartisan changes in the bill as it came from the House, led by our 
chairman and ranking member, the Senator from New York. I want to 
publicly commend them for the outstanding job they did in improving 
this legislation. I especially want to single out the ranking member 
who has, as always, made enormous contributions to this finished 
product. I think this is a significant improvement over what was sent 
to the committee.
  The bill raises the minimum wage by 90 cents over the next 2 years. I 
think everybody who has been following this debate understands that. 
The current minimum wage is at a 40-year low in purchasing power. Maybe 
I need to repeat that, because I think it is a stunning fact. We are 
not talking about a 4-year low, we are talking about a 40-year low in 
terms of its purchasing power.
  I brought this chart that shows what the minimum wage has been from 
1960 to the end of 1995 in purchasing power. As we can see, the minimum 
wage has been all over the map over this period of time. Without 
exception, it has been higher than it is today. It is time to act. It 
is the right thing to do. It is the fair thing to do.
  Over the past 2 years, I and many others have supported welfare 
reform that encourages adult, able-bodied welfare recipients to work. 
However, any welfare to workfare reform, to be effective, must be 
accompanied by a living wage for those who do work. I do not know how 
anybody can seriously advocate welfare reform as it has been talked 
about in this Chamber and fail to support a living wage for those who 
do work. That is fair. That is what we ought to do.
  The legislation before us also contains numerous provisions to help 
small businesses. I come from a State of shopkeepers, farmers, and 
small manufacturers. My State has many very small businesses. I was 
just telling a colleague that a cousin of mine ran a small gift shop in 
my hometown of Bismarck, ND. I know something about that business. I 
know that it provided a modest income. I am not going to use those 
figures here because back home people would know exactly who I am 
talking about and I would be breaking faith with a treasured relative. 
But I can tell you, I know what happens to small businesses. I used to 
be the tax commissioner of my State.
  I have looked at the books and records of literally hundreds of 
businesses in my State, and I think I understand very, very clearly the 
pressure that an increase in the minimum wage puts on small business 
owners. I have evaluated it very carefully, and think I fully 
appreciate its effects.
  Mr. President, I say to those small business owners in my State who 
have been strong supporters of mine, it is time now to increase this 
minimum wage. It is the right thing to do. It is the fair thing to do. 
I know it is going to mean difficulty for some. I regret that. But I 
also know there are literally thousands of people in my State who are 
dependent on this minimum wage to provide for their families' incomes.
  Today, that family income, for those who are on the minimum wage, is 
$8,800 a year. I defy anyone to explain to me how you live on $8,800 a 
year, even with a very small family, even if it is a single person--
$8,800 a year.
  To offset the effect on small businesses, we have included many 
provisions to help small businesses. I am strongly supportive of those 
provisions. The key provision increases the amount of investment small 
businesses can expense from the current $17,500 per year to $25,000 per 
year. That is a tax savings of up to $2,900 a year when it is fully 
phased in.
  Mr. President, these sound like modest amounts. They are modest 
amounts, but when you talk about the very small businesses in my State, 
they make a difference. It will be a tremendous help to thousands of 
small businesses and farmers in North Dakota.
  In addition, the legislation contains a series of provisions 
reforming subchapter S corporations. Again, my State has hundreds and 
hundreds of subchapter S corporations. My wife, when she was in the 
private sector, had a subchapter S corporation. I am very familiar with 
the operations of those businesses. These changes are long overdue.
  I think the business community is going to welcome a key provision 
that increases the number of allowable stockholders from 35 to 75 and 
allows S corporations to have subsidiaries.
  These and other changes will allow S corporations to grow and invest, 
creating jobs and a better future for literally millions of Americans.
  For working families, the most important changes in the bill provide 
for simplified pension plans for small businesses. Again, not only will 
the employees be the beneficiaries, the owners of these businesses will 
be the beneficiaries. Anybody who has gone through the paperwork 
required of pension plans for small businesses knows what I am talking 
about. The rules as currently constituted are a nightmare for small 
business owners. These provisions are going to improve that 
circumstance dramatically.
  Mr. President, I again salute the ranking member of the Finance 
Committee, the senior Senator from New York, for the outstanding effort 
that was made in the Finance Committee to improve these provisions.
  The savings incentive match plan for employees [SIMPLE] reduces 
compliance and reporting requirements for small businesses with 100 or 
fewer employees. Businesses will be able to offer either IRA's or 
401(k) plans.
  Mr. President, for families in which one spouse decides to stay at 
home to care for children, this bill allows for a full IRA contribution 
of up to $2,000. This will remove the penalty that is in the current 
code with respect to spouses who are at home.
  In this legislation, the Congress recognizes the work of raising 
children to be productive members of society is just as important--many 
of us believe more important--than paid work. In fact, it is the most 
important job of any in our society.
  These are dramatic improvements to current law that will allow 
millions of Americans to provide for their retirement. In doing so, the 
savings generated will help provide for the investment needed for 
economic growth and prosperity.
  The Senate Finance Committee also provided for the extension of a 
number of important tax incentives. Specifically, the targeted jobs tax 
credit is extended and renamed the ``work opportunity tax credit.'' 
This tax credit provides incentives for businesses to hire difficult-
to-place workers.

[[Page S7463]]

  Second, the research and experimentation tax credit and the orphan 
drug tax credit are extended. These assure that the private sector is 
encouraged to develop new technologies and new drugs.
  For my State and many others with lignite and low-rank coals, this 
legislation extends a tax credit incentive to produce and market 
alternative, environmentally friendly energy products. It will help 
high-technology energy businesses find investors who are willing to 
build multimillion dollar plants using new technologies to bring these 
alternative fuels to market.
  In closing, I wish to raise two issues. First, these tax benefits 
must be paid for. Unfortunately, one of the major sources of the 
funding is the extension of the airline ticket tax. This tax made sense 
when airline ticket prices were regulated. Under regulation, prices in 
small markets served by one or two airlines were basically the same as 
prices in large, heavily traveled, highly competitive markets. That is 
no longer true. Deregulation brought higher ticket prices to many rural 
states and smaller cities. Compounding that inequity, the 10-percent 
tax places a larger burden for supporting the Federal Aviation 
Administration on small markets.
  That is simply unfair. The airline ticket tax needs a major overhaul. 
The burden of paying for the FAA should not fall disproportionately on 
small markets. While this extension of the ticket tax will undoubtedly 
pass because it is attached to a bill that has so many positive 
benefits, we need to get about the business of reform before any 
additional extensions are made. Rural States like North and South 
Dakota, Montana, and Nebraska as well as small cities in every State 
will benefit from reform.
  We must also begin to develop new approaches to help stabilize the 
rural economy. Senator Hatch, Senator Harkin and others have drafted 
legislation to encourage the development of farmer-owned food-
processing cooperatives. While the prices of raw commodities fluctuate 
wildly from year-to-year depending on the weather, processed-food 
prices are far more stable. Farmers need to be able to process some of 
their own production for the market in order to stabilize their 
incomes. Farmers can do that through farmer-owned cooperatives. I 
applaud the efforts of Senators Hatch and Harkin and others. I hope 
that their legislation can be added to this bill in conference as a way 
to help bring some economic stability to the highly volatile farm 
sector.
  This small business legislation may be the most important piece of 
legislation Congress addresses this year. So far, this legislation has 
enjoyed bipartisan support. I recommend its passage without amendments. 
That would kill any chance of the legislation becoming law.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.
  Mrs. KASSEBAUM. Mr. President, I yield 4 minutes of the leader's time 
to the Senator from Texas.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mrs. HUTCHISON. Thank you, Mr. President, and I thank the Senator 
from Kansas for her leadership on this very important issue.
  Mr. President, I want to speak specifically about the homemaker IRA 
part of this bill. The homemaker IRA was put forward 3 years ago by 
myself and Senator Mikulski. It now has 62 cosponsors. This is a matter 
of simple fairness and equity. I cannot believe that we are standing 
here today talking about this issue, because if you work outside the 
home, you can set aside $2,000 a year which accrues tax free for your 
retirement security. But if you are a homemaker working at home, 
raising your children, contributing to this country and its stability, 
you are allowed to set aside $250 a year.
  If we can pass the homemaker IRA and allow the homemakers of this 
country to be equal in their ability to contribute to their retirement 
security for a one-income-earner couple, the difference will be 
$188,554 for a 30-year accumulation at $2,000 a year versus $335,000, a 
difference of $150,000, roughly. That is the difference in retirement 
security that we can make today if we can pass this very important 
bill.
  The homemaker IRA had also been passed in the Balanced Budget Act 
last year. It was included. It was vetoed by the President. This is a 
bill I hope we will be able to see signed by the President. It is very 
important for the many small business advantages, as well as the 
homemaker advantages in retirement security. It is very important that 
we send the bill to the President and that he sign it.
  This is a big bill. It is a bill that has a lot in it. It has the 
minimum wage, we have the Bond amendment, and we have the Kennedy 
amendment. I am very concerned about the potential of adopting the 
Kennedy amendment, which is a retroactive minimum wage increase and the 
fact that that could kill the homemaker IRA bill, because I cannot vote 
for a retroactive increase in wages that someone who is now in the 
middle of the summer, who might have an inn or a restaurant and has set 
prices according to what the wage scale is to all of a sudden wake up 
and find that the costs are 20-percent higher.
  I cannot vote for that. I think it is wrong. So I hope that we will 
be able to pass this bill in a responsible way with some exceptions for 
small business to give them the ability to continue to compete because 
they do not have the advantages of the efficiencies of a large 
business.
  I hope that we will be able to pass the Bond amendment which will 
have a minimum wage increase but one that can be provided and planned 
for, one that will have some small business exemptions so that they 
will still be able to compete.
  I hope we can put together a package that will be signed by the 
President that will be bipartisan, that will have the Bond amendment 
protections of our small business people as we are also protecting the 
homemakers and the people who are not now allowed to set aside $2,000 a 
year for their retirement security but could if they worked outside the 
home.
  I commend Senator Kassebaum and Senator Mikulski who have been 
working on homemaker IRA's for 3 years and the many cosponsors that we 
have for that bill. I hope that we can put together a bill that will 
not kill the small businesses of our country, and at the same time that 
we can help the homemakers who are contributing to the stability of our 
country every day and do not have the same advantages of retirement 
security that those who work outside the home do. Thank you, Mr. 
President.
  Mrs. KASSEBAUM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mrs. KASSEBAUM. Mr. President, I commend Senator Hutchison and 
Senator Mikulski for the leadership they have provided on the homemaker 
IRA's. I am pleased to have been a cosponsor, along with a number of 
others. I think it is a very beneficial aspect of the Finance Committee 
legislation that is before us. Senator Hutchison and Senator Mikulski 
have fought some valiant battles to bring this to the public's 
attention, particularly to the attention of the Congress.
  I now will yield the remaining time on the bill to the senior Senator 
from Missouri, Mr. Bond.
  The PRESIDING OFFICER. The senior Senator from Missouri is 
recognized.
  Mr. BOND. I thank the Chair. Might I inquire how much time is 
available?
  The PRESIDING OFFICER. There are 13 minutes 35 seconds remaining.
  Mr. BOND. I thank the Chair.
  Mrs. KASSEBAUM. Mr. President, I say to my colleague, there are a few 
minutes more of leader's time if the Senator from Missouri feels he 
needs a few extra minutes.
  Mr. BOND. I thank the distinguished Chair of the Labor Committee.
  Mr. President, I rise today to talk about the provisions in my 
amendment and to give some background to my colleagues on why this 
amendment is important. I think by now everybody knows it would allow 
small businesses, the smallest of the small, grossing less than 
$500,000, the opportunity to continue to pay the minimum wage at $4.25. 
Businesses grossing above $500,000 would begin paying $4.75 on January 
1, 1997, and $5.15 on January 1, 1998.
  Without this provision, this would be a retroactive minimum wage 
increase. As the Senator from Texas has already pointed out, it means 
that businesses who have laid out their plans, issued price lists, or 
bid on contracts will find that somebody is going around and

[[Page S7464]]

reaching into their pockets and pulling out money that might not be 
there. Without the delayed effective date, it is possible that small 
businesses or a business of any size might find themselves working 
under existing arrangements, contracts, price lists, for a loss if we 
do the unheard of step of imposing a retroactive minimum wage. That 
alone, I think, mandates the passage of this amendment.

  In addition, we provide a training wage. A training wage is important 
not only to get teenagers and young people into work, but to get people 
coming off of welfare into a job, getting them started in the habits 
that make a job a productive commitment and teach the skills that are 
needed to hold a job.
  The most important part of this amendment, however, is the small 
business exemption. Why do we set out the exemption for the smallest of 
the small businesses? Mr. President, as chairman of the Small Business 
Committee, I have had the opportunity to talk with and, most 
importantly, to listen to many small businesses around this country.
  It is obvious to me that my colleagues, who are talking about how it 
is no problem for small businesses to have a 20-percent increase in 
what they pay minimum wage workers, have not been listening to the 
small businesses. They do not know what burdens they are under. These 
people who are getting started, they have an idea. They are willing to 
take a risk. They are willing to take it all on their own shoulders. 
They may work out of their house. They put their savings into their 
ideas. Most of them work far more than a 40-hour work week. They are 
just getting started--they are just getting started. If they become 
successful, like a Microsoft, as soon as they hit $500,000 annual gross 
revenue, then the minimum wage goes up to the full amount provided in 
this bill.
  Who does this affect? Well, Mr. President, among the people it 
affects are the National Association of Women Business Owners, NAWBO. 
This business organization has pointed out that between 1987 and 1996 
the growth of women-owned firms continued to outpace the overall growth 
of business by nearly 2 to 1 and revenues generated by women-owned 
enterprises by more than triple. Almost 8 million women-owned 
businesses exist in the United States, and many of those, as we have 
heard in testimony before our committee, are very small businesses just 
getting started. If they are getting started, if they are making a 
success, we do not want to penalize them and their workers by imposing 
on those smallest of the small businesses a burden that they cannot 
handle.
  These are Main Street businesses, mom and pop, and in many instances 
a mom operation, working out of their garage, working out of their 
basement, with 3 to 4 to 5 to 10 employees. This kind of increase in 
the minimum wage is a 20-percent increase in their payroll costs for 
those minimum wage workers. That is a real problem. That is why the 
Administrator of the Small Business Administration under President 
Clinton, Phil Lader, back on March 2, 1995, wrote to Secretary Reich, 
the Secretary of Labor, saying, ``On balance, however, I believe that a 
tiered system''--a lower minimum wage for the smallest businesses-- 
``would serve two public policy objectives: promoting small businesses 
and preserving jobs.''
  It is obvious that since then the ear to small business has lost out 
in this administration. Organized labor and the Secretary of 
``organized'' Labor have had their way. The Small Business 
Administration is now saying they no longer support that. But when he 
was speaking as a person who listens to small business, he said very 
clearly we need a two-tiered system.

  President Clinton has announced, as most of you have heard, that 
exempting the smallest of the small businesses is a poison pill. I 
frankly think that shows how little he understands how tight margins 
these smallest of the small businesses work on. He has promised to veto 
the legislation for that and a host of other provisions. I have to say 
that I am very surprised and disappointed about the President's 
characterization because the small business exemption has traditionally 
had broad bipartisan support in this body.
  Special minimum wage provisions for small businesses are not a new 
concept. The Fair Labor Standards Act has contained small business 
exemptions for well over 30 years. When the minimum wage was increased 
in 1989, Congress made several changes designed to expand small 
business protections. Congress eliminated the exemption from minimum 
wage and overtime provisions for retail and service establishments 
grossing under $362,500 and replaced it with a $500,000 threshold for 
all types of businesses.
  Unfortunately, the 1989 amendments did not provide a true exemption. 
People did not realize at the time they did not provide the exemption 
and actually expanded coverage of small businesses because Congress 
failed to amend the portion of the minimum wage provision that covered 
individual employees. As a result, all employees engaged in commerce 
are covered by the minimum wage provision regardless of the revenue of 
their employers, despite the fact that this Congress, people on both 
sides of the aisle, thought they were giving the small business 
exemption.
  I was stunned to hear Senator Kennedy call this amendment cynical, 
devious, and shameful. What a difference an election year makes, Mr. 
President. It is obvious to me from reading the numerous floor 
statements made in 1989 that Congress thought it was protecting small 
businesses grossing under $500,000 from the Federal minimum wage and 
overtime provisions.
  For example, Senator Kennedy explained on the Senate floor that the 
Labor Committee:

     really bent over in our committee to try to consider the 
     impact of the increase of the minimum wage on small business. 
     That is why, when we initially considered the $4.65 minimum 
     wage, we increased the threshold exemption for small business 
     from $362,000 to $500,000 . . . we have been responsive, we 
     believe, to the concerns of the small business community.'

  Those are Senator Kennedy's own words. I ask, was that statement 
cynical, devious, and shameful? If not, what are the statements today?
  A number of other people have come to the floor. I saw my good friend 
from North Dakota speak just a few moments ago on the minimum wage. 
April 11, 1989, he said on the floor,

       The expanded enterprise test will do much to blunt the 
     effect of increasing the minimum wage on small businesses. It 
     is something the administration rightly sought, and I am glad 
     it has been included in both the committee-reported bill and 
     the compromise.

  Senator Bingaman, during the 1989 minimum wage debates, on November 
7, 1989:

       This legislation also includes an increase in the exemption 
     for small businesses from $362,500 to $500,000. This increase 
     helps alleviate some of the concerns expressed by small 
     businesses throughout the Nation.

  Mr. President, those concerns are still there, and even more so, 
particularly when small business found that the 1989 amendments were 
not responsive to the concerns of small business because what was 
billed as a change exempting more businesses, actually resulted in 
broader coverage, since the businesses grossing under $362,500 lost 
their exemption.
  Mr. President, this amendment is more modest than what Congress 
intended in 1989 because no small business with employees engaged in 
commerce would be completely exempted from the Federal minimum wage and 
overtime provisions would not be impacted.
  My colleague from Arkansas and the ranking member of the Small 
Business Committee, Senator Bumpers, introduced in 1991 a bill that 
would have corrected the problems caused by the 1989 amendments. If 
enacted, the Bumpers legislation would have provided an exemption from 
minimum wage and overtime provisions for retail and service 
establishments grossing under $362,500. All other small businesses 
grossing under $500,000 would have been exempted from the 1989 
increase. In essence, a three-tiered system, no minimum wage below 
$362,500, the existing minimum wage up to $500,000, and the increase 
above. That bill had 48 cosponsors, 26 Republicans and 22 Democrats--
Twelve of those Democrats are still in the Senate. I call on them to 
support a concept less far reaching than what they introduced and 
sponsored as a bill in 1989.
  When Senator Bumpers introduced his bill on February 5, 1991, he 
said,

       The clear intention was to protect the jobs of those who 
     work in the smallest companies from the backlash of a higher 
     Federal wage. However, the small business exemption has

[[Page S7465]]

     inadvertently been rendered useless because of a subsequent 
     conforming amendment * * *

  Later on he says,

       We have, without intending to do so, given small businesses 
     an exemption which is meaningless and which has added to 
     their problems.

  Congressional Quarterly, doing a story on June 8, 1996, quoted 
Senator Bumpers as saying,

       I've been a small businessman with less than $500,000 in 
     sales and I know this thing could be pretty detrimental.

  Senator Kerrey, reacting to a statement that Democrats in the House 
said the proposal would lead to the creation of a new class of 
exploited workers said, ``If they were good Democrats, they were,'' 
referring to demagoging the issue.
  Senator Pryor, on February 5, speaking in support of the Bumpers bill 
said,

       While these rates--talking then of a minimum wage increase 
     from $3.80 to $4.25--While these rates may not seem high, to 
     a mom and pop enterprise operating on a razor thin profit 
     margin, it could be the final wave that takes them under.

  This seemingly innocuous omission in wording has in effect precluded 
almost all small businesses from qualifying for the exemption Congress 
obviously intended. If any of my colleagues have any doubt about 
congressional intent, all they have to do is go back and read the 
Record during the debate. Both proponents and opponents laud the small 
business exemption.
  Now, Mr. President, my amendment does not go as far as the proposal 
made by Senator Bumpers in 1991. Unlike the Bumpers amendment, there is 
no complete exemption from any business from the Federal minimum wage. 
The amendment does not affect the FLSA overtime provisions. The 
amendment simply maintains the status quo for America's small business 
by allowing them to continue to pay $4.25.
  Mr. President, I see I am probably approaching the end of my time, 
and I ask for 5 minutes of the leader's time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. Mr. President, what we have today is an opportunity to 
correct this mistake made in 1989 by enacting legislation that reflects 
both Congress intent in 1989 and the Bumpers legislation that had such 
broad bipartisan support in 1991. This amendment does not go as far as 
what was intended in 1989 by a Democrat Congress and a Republican 
President and supported in 1991 by a bipartisan group of Senators. 
Twelve of the twenty-two Democrats who cosponsored Senator Bumpers' 
bill in 1991 are still in the Senate. I call on them today to maintain 
their earlier position so we can pass this amendment that is so 
important to America's small business.
  Let me focus just a minute on a couple of things that had been stated 
in the media that this amendment does and does not do. Some statements 
have been made that the amendment provides a complete exemption from 
any minimum wage. I have stated that is simply not true. For those 
exempted, it keeps the minimum wage at $4.25.
  President Clinton talked about the amendment causing employees of 
small businesses to be ineligible for an increase in their wages and 
locked in to the current minimum wage. Who do we think provides wages 
in this country? Is it Congress in its largess? No; it is the people 
who have committed their time, resources, energy, and their capital to 
providing the best jobs they can and the products and services that the 
marketplace will take. Anybody who understands a market economy knows 
that everyone in America is eligible for a raise.
  The minimum wage is a floor, not a ceiling, and nothing in our 
capital system or nothing in my amendment sets an upper limit on how 
much a worker can earn. The purpose of the small business amendment is, 
in fact, to make sure that America's workers continue to have the 
opportunity to enter into the small business work force and earn raises 
in the future.
  I also ought to address the statements that have been made on this 
floor totally, I think, without justification, that some 10.5 million 
workers would be covered by this minimum wage exemption. That simply is 
out of whole cloth. There are 10.5 million workers who are employed by 
businesses grossing under $500,000, but this amendment does not affect 
nearly that many. There are 11 States that have higher minimum wages. 
Those workers would not be affected. It takes it down to 8.8 
million. How many of those actually work at minimum wage? We do not 
have the accurate figures, but the Small Business Administration's 
advocacy counsel said approximately 10 percent of the workers in small 
business earn the minimum wage. So we are talking roughly 10 percent of 
8 million to 9 million people, or 800,000 to 900,000 people.

  Phil Lader, the Administrator of the SBA, agrees with me--has agreed 
with me in the past before he got his arms twisted--that the small 
business exemption is a good policy because it impacts a small number 
of employees while ensuring that firms at the margin will not be forced 
to cut jobs or not grow. In the letter I cited earlier from Mr. Lader 
to the Secretary of Labor, he said, ``an exemption for the smallest of 
small businesses makes sense.'' Mr. Lader went on to state that:

       An exemption allowing the minimum wage to stay at its 
     present level for firms would be a way of crediting the 
     smallest employers for costs they incur: (1) by employing 
     young workers in their first jobs; (2) by providing general 
     skills training to workers; (3) by hiring a large fraction of 
     part time, seasonal and contingent workers, and (4) by 
     bearing the cost of turnover associated with minimum wage 
     jobs.

  Mr. Lader also pointed out that:

       By maintaining the status quo, the smallest of small 
     businesses will be able to continue to provide jobs to the 
     marginally employable, an important public policy goal during 
     a time of near-full employment.

  Mr. Lader concludes by saying he believes that:

     rather than penalize workers in small firms, maintaining the 
     present minimum wage would enable these small employers to 
     sustain present employment levels without imposing the need 
     to make difficult choices to preserve profitability.

  I agree with that position. I think that comes from a good 
understanding of what small businesses have been saying. I am sorry 
that he has not been able to maintain that position because the policy 
of the White House has changed.
  If you listen to small businesses, as members of the Small Business 
Committee have, as I have done, and as the Small Business 
Administration has done, you will know that small businesses, while 
they have difficult battles in the marketplace, fear nothing more than 
the heavy hand of the Federal Government--in this case the mom and pop 
or the mom operation with 5 and 10 employees getting a 20-percent 
increase in minimum wage mandated by the Federal Government which could 
force them to lay off 20 percent of their workers. That is one out of 
five, two out of 10, four out of 20.
  People have called this cruel to say they can be exempt. Mr. 
President, I think it is far crueler to throw these people out of work 
by saying to small business that we cannot allow you to continue to pay 
$4.25 an hour and make a profit on the business that you have 
undertaken.
  Small businesses under 500,000 deserve an exemption. On a bipartisan 
basis Congress in the past thought they were giving them that 
exemption. It is time to make good on the promises made by the 
statements from our distinguished colleagues on the other side of the 
aisle, as well as this body.
  Mr. Lader and I both believe that an exemption for the smallest of 
small businesses makes sense because it saves jobs. Unlike a 
corporation that can pass increased labor costs on to the consumer, the 
small, local grocery store or florist or hardware store doesn't have 
that option and the owner is who is dealing with a 5-percent profit 
margin is not taking home much money himself.
  Mr. Lader's point about providing jobs to the marginally employable 
is even more important today than it was 1-year ago when the letter was 
written. The Department of Labor just announced that unemployment is at 
a 6-year low. As Federal and State governments try to maintain this 
level of employment and struggle to reform our present welfare system, 
it is vital that we be able to rely on small businesses to continue to 
provide jobs. I think that we should take Mr. Lader's advice and allow 
these small businesses to remain at the current minimum wage so that 
two important public policy goals Mr. Lader mentions--promoting small 
businesses and preserving jobs--can be met.

[[Page S7466]]

  My amendment also contains several provisions that have already 
passed the House. The first two provisions were noncontroversial on the 
House sides and I believe that the same will hold true on this side. 
First, the amendment clarifies that employees do not have to be paid 
for time spent driving to and from work in company vehicles. Second, 
the overtime exemption for computer professionals making over $27.63 
per hour is maintained.
  My amendment also contains the same tip credit provision that passed 
the House. Tipped employees would continue to be paid at least $2.13 
per hour by their employers and would also earn tips. If the cash wage 
of $2.13 and the tips did not add up to the Federal minimum wage, then 
the employer would make up the difference. Thus, tipped employees, like 
all other employees, would earn at least the Federal minimum wage.
  My amendment contains an opportunity wage that would allow employers 
to pay first-time employees $4.25 for 180 consecutive days. This 
provision is designed to get unskilled people into the job market where 
they can develop the good work habits that make advancement possible. 
My amendment expands on the 90-day time period in the House bill 
because employers are more likely to hire unskilled workers that they 
have sufficient time to train. Unlike the House provision, my amendment 
does not include an age limit because unskilled workers of all ages 
much be permitted to enter the work force more easily.
  As my distinguished colleague, Senator Chafee, pointed out on the 
floor recently, Senators from both sides of the aisle are demanding 
that people get off of welfare and work and we must provide some 
incentive to employers for hiring unskilled workers. These people will 
be working at this first jobs and will be provided with the skills they 
need to advance and earn more.
  Mr. Kennedy said recently that the ``downsized, laid-off workers in a 
time of high unemployment'' will be hurt the most by the opportunity 
wage. I would point again to the figures released recently by the 
Department of Labor that show that unemployment has fallen to 5.3 
percent, the lowest level in 6 years, and that wages are up to $11.82 
per hour on average. President Clinton hailed the numbers as showing 
that ``wages for American workers are finally on the rise again. These 
figures indicate that the laid-off steelworker and the officeworker 
with 30 years of experience that Senator Kennedy spoke of are not going 
to be earning the opportunity wage. Instead, the opportunity wage is 
going to allow access to the job market for unskilled workers with 
little or no job experience, workers who otherwise would not have been 
hired at all.
  My amendment delays the implementation of the minimum wage increase 
until January 1, 1997. This delay will help small businesses adjust and 
minimize job loss. This is particularly true for small retailers that 
hire more workers during the holiday season. A delay is also important 
for employers that have committed to hiring teenagers for summer jobs. 
As Federal funding for summer youth job programs dries up, we must 
support private efforts.
  America's small businesses have been extremely successful and have 
created the vast majority of new jobs in the last decade. If we want 
this level of growth to continue, and if we want to give America's 
workers the opportunity to get in on the ground floor of some of 
today's most profitable businesses, we must protect these businesses 
from Federal mandates. I urge you to support my amendment so that the 
opportunities available in America's small businesses continue grow.


                      UNANIMOUS-CONSENT AGREEMENT

  Mr. BOND. Mr. President, I now ask unanimous consent that, 
notwithstanding the previous order, at 2:15 p.m. today the Democratic 
leader be permitted to make a statement utilizing his leader time to be 
followed by the recognition of the majority leader to make closing 
remarks on H.R. 3448, also using leader time; further, that immediately 
following those remarks the Senate then proceed to the previously 
ordered votes with the first vote limited to the standard 15 minutes 
and all additional stacked votes reduced to 10 minutes in length.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. Mr. President, I yield the floor.

                          ____________________