[Congressional Record Volume 143, Number 37 (Thursday, March 20, 1997)]
[Extensions of Remarks]
[Page E541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      JEROME GROSSMAN ON WHO BENEFITED FROM THE MINIMUM WAGE BILL

                                 ______
                                 

                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                        Thursday, March 20, 1997

  Mr. FRANK of Massachusetts. Mr. Speaker, while I was pleased to vote 
for the minimum wage increase, I regretted that in effect this minimal 
act of social justice had to be purchased by tax reductions, some of 
which were unjustified from the standpoint of the maximum efficiency of 
the tax code. In the accompanying article, Jerome Grossman, a prime 
example of a businessman who has been both successful in private 
enterprise while being an active crusader for social justice, notes 
that the corporate sector benefited significantly more than the working 
poor from this legislation. I think the central point is relevant 
whether one supported the legislation or not because it is an example 
of how efforts to aid poor people are often exaggerated in their 
impact, while far more valuable benefits conferred on wealthier members 
of our society are often ignored. Mr. Grossman's article from the 
Wellesley Townsman is very relevant in this regard.

              [From the Wellesley Townsman, Jan. 23, 1997]

             Who Will Really Pay for Minimum Wage Increase?

                          (By Jerome Grossman)

       Democrats claimed their biggest victory of 1996 with the 
     passage of a 90-cents-an-hour increase in the minimum wage. 
     President Clinton cited this accomplishment in virtually 
     every speech he made during his campaign for reelection. So 
     did almost every other Democrat running for federal office 
     seeking to prove that even though the Democratic party is in 
     the minority, it can force through legislation.
       The raise, which affected about 10 million workers, was the 
     first increase in five years. It attained a unique moral 
     status. Sen. Edward M. Kennedy wrote, ``Because of those 
     increases, we can be thankful today that the wolf is now 
     farther from the door for millions of deserving American 
     families . . . to do.''
       Initially, there had been fierce Republican opposition to 
     the measure. House Majority leader Dick Armey of Texas had 
     called the raise ``a folly'' and said he would ``fight the 
     minimum wage increase with every fibre of my being.'' 
     Representative Bill Goodling, R-Pa., chairman of the Economic 
     and Educational Opportunities Committee, said, ``For two 
     years, this minority (the Democrats) was in the majority and 
     they had the White House and not one word was ever mentioned 
     about the minimum wage.'' In fact, while the Clinton 
     administration eventually backed the increase, it was 
     virtually ignored from the time Clinton first moved into the 
     White House in 1993 until the election year loomed in late 
     1995.
       The AFL-CIO claims that their incessant advertising scared 
     Republican members of Congress in working-class districts and 
     indeed a large group of Republicans broke with the party 
     leadership in the House on the issue. Majority Leader Robert 
     Dole fought the measure vigorously until we left the Senate, 
     but, surprisingly, his successor, Trent Lott of Mississippi, 
     lifted the GOP siege and let the increase pass. Kennedy gives 
     Lott full credit.
       The key to passage was the transformation of the bill from 
     being primarily a workers' bill to primarily a business tax-
     break bill. As Goodling said, ``We knew that just raising the 
     minimum wage would be devastating unless you did the other 
     things in this package, the tax changes.''
       Most of the tax breaks, which were originally designed to 
     help small business, had bipartisan support. I suppose it 
     could be argued that small business needed special help. 
     Moralists could just as compellingly point out that all 
     businesses have a responsibility to pay their workers a 
     living wage, for the health of the workers and for their 
     greater efficiency.
       But in the deep recesses of congressional committees, 
     without public attention, tax cuts were added that will 
     benefit some of the largest companies in the United States, 
     including Hewlett-Packard Co., Johnson & Johnson, Microsoft 
     Corp., and Domino's Pizza Inc.
       As usual, the numbers clearly show who are the primary 
     beneficiaries of the minimum wage bill. Ten million workers 
     will gain 90 cents per hour; total increased wages for five 
     years equals $6.8 billion. The tax breaks for employers in 
     this bill will total $10.1 billion over five years. That 
     makes a net profit to business of $3.3 billion. As recently 
     as Dec. 1 the New York Times described the minimum wage as a 
     Republican ``surrender.'' A rather profitable ``surrender''; 
     the business lobbyists crying all the way to the bank.
       Business cannot even take the high road and say to their 
     workers, ``We gave you a raise, we are paying you more, we 
     did the right thing.'' Only we taxpayers can say that--
     because it is our money.

                          ____________________