[Congressional Record Volume 144, Number 1 (Tuesday, January 27, 1998)]
[Senate]
[Pages S51-S56]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KENNEDY (for himself, Mr. Wellstone, Ms. Moseley-Braun, 
        Ms. Mikulski, Mr. Kerry, Mr. Torricelli and Mrs. Boxer):
  S. 1573. A bill to amend the Fair Labor Standards Act of 1938 to 
increase the Federal minimum wage; to the Committee on Labor and Human 
Resources.


                   the fair minimum wage act of 1998

  Mr. KENNEDY. Mr. President, on behalf of Senators Wellstone, 
Mikulski, Moseley-Braun, Kerry, Torricelli, Boxer, and myself, I am 
introducing the Fair Minimum Wage Act of 1998, a bill to raise the 
minimum wage in three annual increases of 50 cents each in the next 
three years, to bring the minimum wage from its current level of $5.15 
an hour today to $6.65 an hour on September 1 in the year 2000. 
Congressmen Bonior and Gephardt are introducing identical legislation 
in the House of Representatives.
  After the third year, the legislation calls for the minimum wage to 
be indexed, so that it will rise automatically as the cost of living 
increases. Working Americans should not have to depend on the whim of 
Congress each election year to determine whether they are paid a fair 
minimum wage.
  In 1996, after a hard-fought battle in the last Congress, we raised 
the minimum wage, and the economy continued to grow. The scare tactics 
about lost jobs proved to be as false as they are self-serving. A 
recent study by the Economic Policy Institute documents that ``the sky 
hasn't fallen'' as a result of the last increase.
  Raising the minimum wage does not cause job loss for teenagers, 
adults, men, women, African-Americans, Latinos, or anyone else. 
Certainly, the 12 million Americans who would benefit from this 
legislation deserve the increase.
  We know who these workers are. Sixty percent are women. Nearly three-
quarters are adults. Half of those who would benefit from this bill 
work full-time. Over 80 percent of them work at least 20 hours a week. 
They are teachers' aides and child care providers. They are single 
heads of households with children. They are people who clean office 
buildings in countless communities across the country. Working 40 hours 
a week, 52 weeks a year, minimum wage workers earn $10,712 a year--
$2,600 below the poverty level for a family of three.
  No one who works for a living should have to live in poverty. In good 
conscience, we cannot continue to proclaim or celebrate the Nation's 
current prosperity while consigning millions who have jobs to live in 
continuing poverty.
  The value of the minimum wage still lags far behind inflation. To 
have the purchasing power that it had in 1968, the minimum wage today 
would have to be $7.33 an hour instead of the current level of $5.15 an 
hour. That fact is a measure of how far we have not just fallen short, 
but actually fallen back, in giving low-income workers their fair share 
of our extraordinary economic growth.
  In the past 30 years, the stock market, adjusted for inflation, has 
gone up by 115 percent, while the purchasing power of the minimum wage 
has gone down by 30 percent. Lavish end-of-the-year bonuses were 
recently distributed on Wall Street--but not to the working families on 
Main Street, who actually created the wealth in the first place.
  Americans understand that those on the bottom rungs of the economic 
ladder deserve a raise. Seventy-six percent of those surveyed in the 
January 21 ABC-Washington Post poll said they supported increasing the 
minimum wage.
  Seventy-seven percent of those surveyed by Peter Hart Research 
earlier this month specifically supported a three-year, $1.50 increase.
  The American people understand the unfairness of requiring working 
families to subsist on a sub-poverty minimum wage. Across the country, 
soup kitchens, food pantries and homeless shelters are increasingly 
serving the working poor, not just the unemployed. In 1996, according 
to the U.S. Conference of Mayors, 38 percent of those seeking emergency 
food aid held jobs --up from 23 percent in 1994. Low-paying jobs are 
the most frequently cited cause of hunger. Officials in 67 percent of 
the cities cited this factor.
  I look forward to the early enactment of this legislation. Twelve 
million working Americans deserve a helping hand. No one who works for 
a living should have to live in poverty.
  Mr. President, we have had the opportunity, since the minimum wage 
was increased in the last two years, to test the validity of the 
principal argument in opposition to this bill. We will hear this claim 
again this year on the floor of the U.S. Senate, and that is, that this 
adds to the problems of inflation. Yet, we have had virtually no 
inflation over these last 18 months.

  We will also hear that raising the minimum wage will cause the loss 
of hundreds of thousands of jobs. I can already hear the same tired, 
old arguments we have heard every time this body has debated an 
increase in the minimum wage--an estimate that we will lose anywhere 
from 200,000 to 300,000 to 400,000 jobs. Those were the statements made 
the last time we debated this issue on the floor of the Senate. And our 
good Republican friends in the House of Representatives said there was 
absolutely no way that their body was going to consider an increase in 
the minimum wage, and there was strong opposition over here among the 
Republican leadership in the Senate even to giving us an opportunity to 
vote on this measure. It was only after lengthy efforts that we were 
able actually to gain a vote and to develop bipartisan support for the 
minimum wage. Ultimately, the Senate of the United States and the House 
of Representatives responded after we added significant tax reductions 
for businesses to the legislation.
  Mr. President, if we do not take action now to increase the minimum 
wage, then the progress we made in the last two years is gradually 
going to deteriorate. Even with a three-year increase of 50 cents, 50 
cents, and 50 cents, by the third year the about 40 cents of the value 
of that $1.50 would have dissipated because of inflation. We are 
talking about working families who are trying to make it in this 
country, who have played an important role

[[Page S52]]

in this whole economic expansion. But those at the bottom rungs of the 
economic ladder have not gotten their fair share of the extraordinary 
prosperity that we are experiencing under President Clinton's 
leadership.
  So I don't understand why there is such opposition to the very modest 
increases that we are talking about, that even if implemented will 
hardly permit workers to provide for their families and be out of 
poverty. As a result of the 1996 welfare reform legislation, many, many 
more people were thrown into poverty. In many instances, they are not 
going to get the health care or the day care that they need, depending 
on a particular State's rules in this regard. But there will be 
millions of Americans who will be out there in the job market without 
the health care for their children that Medicaid would have provided or 
child care coverage that welfare benefits would have provided.
  What we are asking is that at least we pay them a livable wage. I 
don't think a single parent, with $10,000 or $12,000, is going to have 
the kind of child care that any of us would understand or respect. 
Yesterday, I was in Dorchester, Massachusetts, meeting with parents 
about an after school program, which has been in effect for a number of 
years. It's going to be expanded. The mayor of Boston calls it the 2-
to-6 program, and is trying to make available, in all parts of Boston, 
after-school programs for children. It is a very ambitious program. We 
have seen our Republican Governor indicate that he is supporting the 
after-school program. I listened to the parents who were out there, who 
talked about what happens after their children are 12 years old. The 
State of Massachusetts has a program that provides modest support for 
this kind of program for children up to 12 years old, but cuts it off 
there. Parents with tears in their eyes were saying, ``We work hard 
trying to provide for our families, and we just can't make it. Our 
children are going home and staying in an empty house in the 
afternoon.'' They pray that they are not going to get themselves in 
trouble, that the worst thing that will happen to them is they will 
just watch television. It might cost those parents $5 or $10 a week, 
maybe $20 a month to be able to have an after-school program. I expect 
that any single mom getting an increase in the minimum wage wouldn't 
think that much of a problem. That is happening in many communities in 
this country.
  The PRESIDING OFFICER. Under the previous order, the 10 minutes 
allocated to the Senator have expired.
  Mr. KENNEDY. I ask unanimous consent for 4 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KENNEDY. Mr. President, we will have a chance to debate this 
issue. It is not one that should take a great deal of time to review. 
We have been through this debate time and time again. It hasn't got the 
complexities of many of the proposals the President will be talking 
about tonight. It is basic and fundamental. Every Member of this body 
has addressed this issue and voted on it one way or the other. It is 
going to be really a reflection of our values.
  Finally, Mr. President, by not increasing the minimum wage, we leave 
many workers so poor that they are eligible for government assistance 
programs, such as food stamps. These programs are being paid for by 
other workers' taxes. In effect, these employees are subsidizing the 
businesses that aren't paying a fair wage. I think that is wrong.
  We will have a chance to review the latest economic information 
available. We have to address that issue. We understand it. Some of us 
believe that Americans who work hard and play by the rules ought to be 
able to get a livable wage as a matter of principle. To achieve that 
goal, we have to address the impact on inflation and job loss. We will 
make that argument and we will make it with a great deal of enthusiasm. 
Two articles from the Wall Street Journal show that the increase in the 
minimum wage did not cause job loss or increase inflation. I will 
include those articles in the Record at the appropriate place following 
my remarks. Here was the newspaper that opposed it hammer and tong the 
last time we had the increase. I do not suggest that they are going to 
editorialize in favor of it this time. But, nonetheless, the various 
studies have shown that there is no evidence that modest increases in 
the minimum wage would harm the economy or cause job loss.

  Mr. President, I don't know what will be in the President's State of 
the Union speech tonight. There are some reports that he will indicate 
support for an increase in the minimum wage. And if he does I hope that 
our Chambers will show support for that proposal because I know it will 
make all the difference in the world for millions of Americans and 
their families. Increasing the minimum wage will allow them to look to 
the future with a greater sense of hope.
  Mr. WELLSTONE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I ask unanimous consent that morning 
business be extended for 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WELLSTONE. Mr. President, I have a couple of questions that I may 
want to put to my colleague in just a moment.
  Mr. President, the Senator from Massachusetts touched on two concerns 
that I want to speak about for a brief period of time. The Senator 
mentioned welfare. Earlier when I was speaking I didn't talk about the 
welfare bill. But I want the Senator to know that as we see the reports 
that this has been a huge success because there are 4 million fewer 
people receiving welfare assistance, I think there has been a lot of 
confusion. Welfare reform doesn't mean that there are fewer people on 
welfare. It doesn't mean you reduce the number of people receiving 
assistance. It means you reduce poverty. That is what it is about. It 
works if you are reducing the poverty for these families which are 90 
percent women and children.
  When I have been traveling around the country it is heartbreaking. 
The Senator talks about after school. There are 3- and 4-year olds home 
alone right now. That should not be the case because mothers are told 
to work. There are also preschoolers who are in very ad hoc 
arrangements with a relative for this week or that week, then somebody 
else the next week. We don't have affordable child care. In East LA in 
Los Angeles there is a waiting list of 30,000 for affordable child 
care. The President will be speaking about that tonight. Mr. President, 
there are first- and second-graders.
  I met a woman in Los Angeles who broke down crying because she is so 
scared because her first-grader goes home alone--she is at work--to a 
very dangerous housing project, and is told to lock the door, and take 
no phone calls. There are children who don't play outside right now.
  So when the Senator from Massachusetts talked about child care, I 
just want to emphasize the fact that welfare reform only means 
reduction of poverty. It means that children are in safe places 
receiving good child care. That is not happening.
  Mr. President, I also want to point out that there are too many 
mothers who in our community colleges who are now told, ``You cannot 
pursue your education. You have to work.'' The job is $5.15, and if the 
minimum wage isn't higher one year later they will be worse off.
  I am going to have an amendment for student deferment for those 
mothers because that is toward economic self-sufficiency, and another 
amendment that is going to require States to provide to Health and 
Human Services the data in 6 months as to how many families are moving 
toward economic self-sufficiency because you just can't eliminate 
people from assistance and cut off assistance if people do not have the 
jobs and decent wages.
  Mr. President, I wanted to ask the Senator this question. The Senator 
from Massachusetts was speaking to an issue that I hear about 
everywhere I go, and it sounds like the President is going to be 
speaking to it, which is that I think people in our country believe 
that if you play by the rules of the game and you work 40 hours a week 
or thereabouts 52 weeks a year you ought not to be poor in America. 
That is what this is about. The last time we had a debate on the 
minimum wage the Senator from Massachusetts just insisted that the 
Senate would address

[[Page S53]]

this issue. Does the Senator intend to make this such a precise 
priority for his work that one way or another all Senators are going to 
be voting on this? Are we going to have it on the floor of the Senate? 
Are we going to have the debate? Are we going to have a vote on it so 
all Senators can be held accountable to working families, or not?

  Mr. KENNEDY. Absolutely, Senator. We will vote on this issue, and the 
earlier the better as far as I am concerned, so that minimum wage 
earners can continue the progress that they have made during the last 2 
years. We will vote on this measure. I think that those who are opposed 
to it will give the Senate the opportunity to vote on it--at least I 
certainly hope they will. But the Senator is quite correct. We will 
vote on it one way or the other, and I think we take to heart that 
Congressman Gephardt, Congressman Bonior and others have an identical 
bill. They are strongly committed. As Senators remember, there is a 
more complicated rule process over in the House of Representatives. But 
there is no reason in the world that we in the Senate cannot have an 
opportunity to vote on that measure and attach it to legislation and 
send it over to the House. We will do that and continue to do it until 
we are successful.
  Mr. WELLSTONE. Mr. President, I am an original cosponsor. I am 
pleased to hear that because that is part of what I am here for as a 
Senator.
  Let me ask the Senator from Massachusetts one final question. We 
don't just look at polls. But does the Senator have, in terms of what 
people in the country have been saying about raising the minimum wage 
50 cents a year over the next 3 years--and we index it after that--is 
there broad public support that is a matter of simple elementary 
judgment?
  Mr. KENNEDY. The Senator is correct. It is interesting that studies 
from this month show even greater support for the increase than we saw 
when we began this debate in the last Congress. Most Americans 
understand that we have had this extraordinary prosperity for millions 
of Americans over the period of the last 6 years. Most Americans 
understand that it has been working families who have made a 
difference. Those families include minimum wage earners--teachers' 
aides, who work in classrooms; health care aides, who work in nursing 
homes; and people who clean office buildings in communities across the 
country. Those men and women work hard, and they take pride in their 
work. Many of them have children, and we all know how hard it is to try 
to raise a family on $5.15 an hour. All those workers ask is to be 
treated fairly.
  One of the most startling developments in the last few years is the 
number of working families who are using soup kitchens, food pantries 
and homeless shelters in cities across the country. The U.S. Conference 
of Mayors released a study showing that in 1996, 38% of those seeking 
emergency food aid are working--not unemployed. This is up from 23% in 
1994. And, officials in two-thirds of the cities cited low wages as a 
primary reason for hunger. I don't know whether the Senator has this 
problem in rural communities in his region of the Nation. But in urban 
areas, almost 40 percent of those seeking emergency food aid are 
working, and they still can't make it.
  All we are saying is that if you are working you shouldn't have to go 
to a soup kitchen. When you are working, you shouldn't have to bring 
your children to a soup kitchen in order to be fed. The minimum wage is 
designed to prevent such problems. It has been a part of the fabric of 
our society since the late 1930's, and it has been something which has 
had bipartisan support in the past. We are hopeful that it will have 
bipartisan support this time. Ultimately we will have it. But it had 
bipartisan support under President Bush, and President Nixon supported 
the increase as well. And Republicans in this body have supported it, 
too.
  Many of our colleagues are constantly talking about the importance of 
rewarding work in our society. But when you have people who are able-
bodied, who want to work, and who have jobs--there is something wrong 
if they can't make it on their own. There is something wrong if we do 
not try to address that problem.

  Mr. WELLSTONE. I have one final question.
  The people who contribute don't have a lot. They are not the heavy 
hitters. They are not the ones always here in Washington to lobby us.
  How does the Senator think we could win this fight?
  Mr. KENNEDY. The Senator makes a good point because the 
organizations, the National Federation of Independent Businesses, the 
National Restaurant Association and others are out there already trying 
to discourage people from supporting this program. We will have a 
chance to deal with their arguments when we see what has actually 
happened in terms of the expansion of the restaurant industry and 
employment among restaurant workers. The Senator is no less interested 
in expanded employment or adequate income for restaurant workers than I 
am, and they still have done better with our modest increases in the 
past, and they will in the future.
  I want to ask if the Senator will agree with me on one other 
proposition. We will hear during the debate that at least a quarter of 
these are teenagers who are making the minimum wage. In my State, 
tuition at the University of Massachusetts in Boston costs $4297. These 
students are still 18 and 19 years old. They are teenagers, and many of 
them are working. These students need the money.
  Mr. WELLSTONE. Mr. President, it is my time. I ask unanimous consent 
to have 4 more minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KENNEDY. Many of their parents never went to college. These are 
teenagers. These students are trying to earn enough to buy their books 
and maybe attend an athletic event once in a while or be able to pay in 
order to rent athletic equipment. These students--and yes, they are 
teenagers--are working long and hard, and they deserve the increase, 
too.
  Mr. WELLSTONE. Mr. President, the Senator asked about Minnesota. Just 
two final points.
  One, I was speaking on the floor earlier and I said that I think most 
families are focused on how you earn a decent living and how you give 
your children the care you know they need and deserve. I think the 
minimum wage bill is an important step in that direction along with 
whatever we can do on affordable child care and health care. That is 
the key to family income in this country.
  I spoke earlier about the record of inequality. Secretary Reich had a 
very important piece in the New York Times about it. But now we see, 
Mr. President, a merger with education because, as a matter of fact, I 
say to my colleagues and my friend from Massachusetts what I find when 
I travel around Minnesota--and I was a college teacher for 20 years--is 
that many students are taking 6 years to graduate and not 4 years 
because now students are working on the average of 25 or 30 hours a 
week at two minimum-wage jobs.
  So we now are talking about a piece of legislation that speaks to the 
issue of how families can have more income and also how students can 
afford their higher education. Many of these students are 18 and 19. 
But let's not trivialize the teen part. They are young women and young 
men who are working hard to be able to go to school. You had better 
believe that this minimum wage bill is really of critical importance to 
these young people as to whether or not they are going to be able to 
complete their education and do well financially.
  So the Senator is absolutely correct. There is the strongest 
correlation to education and affordable education which I think all of 
us agree is an absolutely crucial issue.
  Mr. President, today I am co-sponsoring a bill introduced by my 
colleague and friend Senator Ted Kennedy, cosponsored by a number of 
others, a measure which I consider to be one of the most important 
items we can pass and enact this year--the ``American Family Fair 
Minimum Wage Act of 1998.'' Our bill would increase the minimum wage by 
50 cents a year during each of the next three years. After that, it 
would index further increases in the minimum wage to increases in the 
cost of living.
  This 3-year increase of $1.50--raising the federal minimum wage to 
$6.65/hour by September 1 of the year 2000, and

[[Page S54]]

pegging it to inflation in succeeding years--is the most immediate and 
practical step we can take to deliver to American working families a 
message of economic justice and principle. The message is this: if you 
work hard and play by the rules in America, you should not live in 
poverty. Unfortunately, that is not necessarily the case today for many 
working Americans with families. We need to address that problem.
  Full time work at minimum wage generates an income of approximately 
$10,700 a year. That's $2,600 below the poverty line for a family of 
three in this country. Minimum wage is not a living wage in America 
today. Even after the most recent increase, the federal minimum wage is 
worth far less in real dollars than it was in the 1960s and 1970s.
  Remember, the minimum wage disproportionately affects women. Sixty 
percent of those earning the minimum wage are women. Teachers' aides, 
child care providers, service-sector employees--some of the hardest 
working people in America, performing crucial tasks. Many of these 
women are single heads of households with child. One of the quickest 
ways we as a Congress could take a step toward real gender equity with 
regard to pay would be to pass an increase in the minimum wage and send 
it to the President. I am sure he will sign it. That would immediately 
improve the economic situation of millions of working women, many with 
families.
  Increasing the minimum wage will benefit those who need it most in 
America--adults, women, working families. Seventy-five percent of those 
currently receiving minimum wage workers are adults; 60 percent are 
women; 50 percent work more than 35 hours a week; 82 percent work at 
least 20 hours a week.
  Look at a few numbers which tell a story.
  The Center for Budget and Policy Priorities recently released a 
report showing that income inequality grew in 48 of 50 states since the 
late 1970s. The decline in real incomes of the poorest one-fifth of 
families with children in America averaged 21 percent, or $2,500.
  Since 1968, the stock market, adjusted for inflation, grew by 115 
percent while the purchasing power of the minimum wage declined by 30 
percent.
  To reflect the purchasing power it maintained in 1968, today's 
minimum wage would have to be at $7.33/hour, not $5.15. So even a 
carefully charted increase to $6.65/hour will not make up the entire 
difference, but it will put us back on a road to responsibly 
representing our constituents.
  For nearly the last two decades, the bottom 20 percent of income 
earners in this country haven't experienced growth like most Americans. 
Instead, they have lost 9 percent in real family income growth, while 
the top 20 percent have gained more than 26 percent.
  Our bill is about justice. In recent weeks and months, I have 
traveled around this country: East and South Central Los Angeles, 
Baltimore, Chicago, the Mississippi Delta, Appalachia, as well as in my 
home state of Minnesota. I have repeatedly seen the struggles of hard 
working, dedicated people who want to improve their lives, but they 
can't find jobs that will pay them a livable wage.
  Now increasing the minimum wage will not compromise the economy and 
it will not harm the falling unemployment rate. Consider that in 
September 1996, just one month prior to the minimum wage increase from 
$4.25 to $4.75, the national unemployment rate was at 5.2 percent. By 
December 1997, two months after the second annual increase to $5.15, 
the U.S. unemployment rate fell to 4.2 percent. And retail trade jobs, 
where a disproportionate amount of low wage workers are employed, 
increased slightly. Job opportunities in this country are not 
compromised by this legislation. In fact, the very importance and value 
of job opportunities to all Americans is exactly what is enforced by 
this legislation.
  Today's economy continues to perform well. Yet the minimum wage--part 
of that same economy--has progressively fallen back. In 1996, we 
started to pave the right path to justice by increasing the minimum 
wage, but more must be done.
  So I stand in support as the first co-sponsor of this bill and urge 
Democrats and Republicans alike to support Senator Kennedy's initiative 
and to support the American workforce by passing the Family Fair 
Minimum Wage Act of 1998. Thank you.
  Mr. President, I yield the floor.
  Mr. KENNEDY. Mr. President, I ask for 2 final minutes.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. KENNEDY. Mr. President, this chart here illustrates very clearly 
the purchasing power of the minimum wage since 1959. All of these 
figures are in 1997 dollars, adjusted for inflation. In 1968 the real 
value of the minimum wage was $7.33. In 1995 it was down to $4.32 an 
hour. In the 1996 legislation, we added two additional steps. On 
September 1, 1997, the second step took effect, raising the minimum 
wage's value to $5.15 an hour. If we do nothing, by the year 2000, it 
will be $4.66 an hour. Our legislation proposes that it go up to $6.18, 
in three steps. Again, this is the what the minimum wage will buy in 
1997 dollars, if our legislation becomes law. Even that increase will 
leave minimum wage earners below where they were in the 1960s and 
1970s. The legislation is a very modest step forward, and I believe 
that working families have earned it.
  I thank the Chair. I ask unanimous consent that the two articles that 
I mentioned be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

   Economists Alter Minimum-Wage View--New Data Show Small Increase 
                           Doesn't Cost Jobs

                           (By David Wessel)

       Washington.--Revisiting their own controversial research, a 
     pair of prominent economists concluded that better data 
     support their original assertion: Raising the minimum wage 
     moderately doesn't cost jobs.
       In the new work, David Card of the University of California 
     at Berkeley and Alan Krueger of Princeton University used 
     reports filed by employers and collated by the U.S. Bureau of 
     Labor Statistics. Their earlier work, an influential element 
     in Democrats' successful campaign to lift the minimum wage, 
     relied on a telephone survey of employers that their critics 
     attacked.
       With the new data, the economists looked at fast-food 
     employment in New Jersey and Pennsylvania at two key points: 
     first, after an 80-cent-an-hour increase in New Jersey's 
     minimum wage in April 1992 that didn't affect workers in 
     Pennsylvania and, second, after an October 1996 50-cent 
     increase in the federal minimum wage to $4.75. The federal 
     increase only affected Pennsylvania because New Jersey's 
     minimum wage was above the federal level.


                          Little or No Effect

       ``The New Jersey (1992) minimum wage increase had either no 
     effect, or a small positive effect, on fast-food industry 
     employment in New Jersey vis-a-vis eastern Pennsylvania,'' 
     the economists conclude. Between February and November 1992, 
     fast-food employment grew by 3% in New Jersey but fell by 
     between 1% and 3% in eastern Pennsylvania. What's more, after 
     the October 1996 wage boost that affected only Pennsylvania, 
     fast-food employment rose more sharply in that state than New 
     Jersey. Between December 1995 and December 1996, fast-food 
     employment grew by 11% in eastern Pennsylvania counties and 
     by 2% in New Jersey.
       The argument by Mr. Card and Mr. Krueger, a former chief 
     economist in the Clinton Labor Department, challenged the 
     conventional wisdom among mainstream economists that raising 
     the price of workers' labor meant employers would buy less of 
     it. The Clinton administration embraced it. House Speaker 
     Newt Gingrich derided it as ``spurious'' and House Majority 
     Leader Richard Armey, an economist, called it 
     ``counterintuitive.'' Several big-name economists dismissed 
     it.
       The details of the analysis and data drew fire first from 
     an employers' group, the Employment Policy Institute, that 
     gathered data of its own to refute it. Later, economists 
     David Neumark of Michigan State University and William 
     Wascher of the Federal Reserve Board supplemented EPI's data 
     with data of their own and argued that fast-food payrolls did 
     what economic textbooks predicted; grew more slowly in New 
     Jersey than in Pennsylvania after the 1992 New Jersey wage 
     increase.


                          Remains Unpersuaded

       Mr. Wascher isn't persuaded by the new data. ``We never 
     found very strong negative effects of the minimum wage on 
     fast-food establishments,'' he said yesterday. ``We 
     speculated these franchise agreements are very restrictive 
     and that the bigger effects might be at mom-and-pop 
     establishments.'' He said BLS data for all eating and 
     drinking establishments, not just fast-food outlets, show 
     that payrolls in New Jersey generally rise more than those in 
     Pennsylvania between February and November, but that the 
     difference was smaller in 1992 when the New Jersey minimum 
     wage was raised than in 1991 or 1993.
       The new Card-Krueger work, to be published shortly as a 
     working paper by Princeton, hasn't been widely circulated yet 
     among

[[Page S55]]

     their critics. The authors acknowledge that their data don't 
     tell whether employers facing higher minimum wages reduce the 
     average hours per worker; the figures only count how many 
     people were employed.
       Despite assertions from employer groups and many mainstream 
     economists that lifting the minimum wage would reduce the 
     number of jobs available to young and unskilled workers and 
     increase unemployment, the recent strength of the economy has 
     pushed the jobless rate down. Retailers and other employers 
     of low-wage workers are complaining more about labor 
     shortages than wage increases.
       The federal minimum wage was lifted to $5.15 an hour on 
     Sept. 1, 1997.
                                                                    ____


Chicken Feed: Minimum Wage Is Up, But a Fast-Food Chain Notices Little 
  Impact--Economic Boom Lifts Profit; Firm's Main Problem Is Hiring, 
             Retaining People--Pressures on Job Are Rising

                        (By Bernard Wysocki Jr.)

       Falls Church, Va.--The minimum wage was a hot issue 18 
     months ago, pitting business against labor, Republicans 
     against Democrats.
       In April 1996, David Rosenstein, a fast-food entrepreneur, 
     staunchly opposed a proposed two-step rise to $5.15 an hour 
     as ``a bad idea.'' The middle managers at his 13 Popeyes 
     Chicken & Biscuits restaurants didn't know how they would 
     cope.
       How times have changed.
       Today, despite the now-higher minimum wage, Mr. 
     Rosenstein's restaurants are prospering. Operating profits 
     are up 11% from last year on a 10% rise in sales, which are 
     running at a $14 million annual clip. He recently raised 
     prices. He has opened a new store. And in a sign of boom 
     times, he knocked out a wall and doubled the size of his 
     spacious office.
       ``The economy is good. Business is good,'' says the 49-
     year-old Mr. Rosenstein, whose restaurants are franchisees of 
     Atlanta-based AFC Enterprises. What about that minimum-wage 
     increase? ``I think we saw it in more dire terms than it 
     worked out,'' he says.


                              few protests

       Indeed, the minimum-wage increase has turned into one of 
     the nonevents of 1997, thanks mostly to the economy's 
     continuing strength. Low-wage Americans--nearly 10 million 
     workers, by some estimates--got a raise. But amid the current 
     prosperity, hardly anybody noticed. So, when the second step, 
     a 40-cent-an-hour raise, kicked in seven weeks ago, on Sept. 
     1, few cheered, but even fewer protested.
       Critics had argued that higher wages would squeeze profits 
     because employers, beset by competitors, couldn't raise 
     prices. Nationwide, it is hard to generalize about that. But 
     Mr. Rosenstein recently raised nearly every price on his 
     menu--biscuits went up 20% and the average item 5%--with 
     hardly a peep from customers. ``I'm surprised, very 
     surprised,'' says Kenneth Hahn, the chain's director of 
     operations.
       Others had warned that raising the minimum wage would 
     create inflated pay demands by those making slightly above-
     minimum wages. Not here. Work crews at Mr. Rosenstein's 
     Virginia stores were averaging $5.54 an hour in 1996 and get 
     only $5.60 today--a raise of 1%.
       And although some academics say higher wages draw better-
     skilled teenagers out of school and into the workplace, 
     displacing lower-skilled people, the Popeyes managers see 
     nothing of the kind. If anything, their talent pool is 
     weakening, drained by the booming economy.


                           collateral damage

       Even though Mr. Rosenstein's worst fears weren't realized, 
     lots of other things have happened in the past 18 months.
       A tour of these Popeyes stores and conversations with the 
     fry cooks and biscuit makers, the store supervisors and 
     managers indicate that while the minimum-wage issue has 
     retreated to the back burner of American politics, the big 
     issues now are, in a sense, the collateral damage of the 
     economic boom; intensified competition, a scarcity of good 
     workers, high staff turnover and job burnout.
       The wage increase itself has had major impact at only one 
     outlet, at the Popeyes store on Rhode Island Avenue in the 
     District of Columbia. There, the local hourly minimum is set 
     at $1 over the federal minimum, and on Sept. 1, the 
     district's minimum went to $6.15. Managers have cut back 
     hours and piled more work on employees. Mr. Rosenstein says 
     the operating profits at this one outlet fell to $34,000 for 
     the 12 months ended Aug. 31 from $46,000 a year earlier.


                          Escaping to Maryland

       And so, when his Metropolitan Restaurant Management Co. 
     looked for expansion sites in and around Washington, he went 
     across the line into Maryland and opened there, largely to 
     escape the $6.15 wage.
       As several U.S. cities propose a so-called living wage, 
     with minimums higher than the federal one, opponents such as 
     the employer-backed Employment Policies Institute in 
     Washington argue that low-wage employers will shun higher-
     wage locales. There may be something to that, as shown by Mr. 
     Rosenstein's unwillingness to open another store in the high-
     wage district.
       The really gut issue facing his company, however, is 
     intensified competition. That may seem ironic: Its financial 
     results are good, and the price increases have held. But on 
     the darker side, the managers and the workers alike say that, 
     on a day-to-day operating basis, the competitive environment 
     has become tougher.
       Back in the spring of 1996, Mohammed Isah, who manages the 
     Popeyes store on City Line Avenue in West Philadelphia, 
     fretted about the impending wage increase and wondered where 
     the extra productivity he would need would come from. He 
     vowed to scale back part-timers' hours and increase their 
     workloads.
       And he did. Sitting at one of his tables, Mr. Isah, once a 
     bank manager in his native Nigeria, nods in the direction of 
     a middle-age employee sweeping the floor. When the wage went 
     up on Sept. 1 he halved her hours. Meantime, full-timers have 
     taken up that slack. Nowadays, one person sets up the 
     registers, then starts the biscuits, then does assorted 
     odd tasks before business picks up at lunch time. Mr. Isah 
     freely concedes that people are working twice as hard for 
     their modest raise.
       Yet the increased minimum wage isn't what is really driving 
     Mr. Isah's hardball productivity drive. A few months ago, a 
     Kentucky Fried Chicken outlet opened just a half-mile down 
     City Line Avenue. Even the Popeyes managers agree that it's 
     quite a site for a fast-food place: a renovated old home with 
     fireplaces, walls sconces and a winding staircase.
       When Kentucky Fried Chicken opened, Mr. Isah's sales 
     declined. Although some business has now returned, his sales 
     are running 2% below 1996 levels, and his operating profit is 
     down 10%. His bosses say he is a good, hard-working manager, 
     but the harsh business environment is putting pressure on him 
     and his staff. ``You have people doing two or three people's 
     jobs. Eventually, it gets to them,'' he says, and they are 
     burning out from overwork. Turnover is rising as good people 
     search for jobs elsewhere. Looking ahead, he sees more 
     problems. He even has a written list of his concerns: Morale 
     will drop. Quality of work will fall. Dependability will 
     wane. Absenteeism will rise.


                         Risk of Vicious Circle

       The Popeyes managers know that trimming staff can be self-
     defeating, and they haven't eliminated any full-time 
     positions in the past 18 months. If hours drop, service 
     declines, and sales and profit can suffer. A vicious circle 
     can develop.
       Mr. Rosenstein's New Castle, Del., outlet along busy Route 
     13 is gripped by more competition--not only for business but 
     also for talent. The store manager there left the company 
     earlier this year to run a Boston Market outlet. The Popeyes 
     chain, which pays its store managers $30,000 to $45,000 a 
     year, couldn't match the Boston Market pay, Frank Williams, 
     the district manager, says. Outer managers had to pitch in 
     until a replacement was found.
       As the store suffered from patchwork management, business 
     faltered. In addition, crew hours were cut back, and 
     cleanliness suffered. That's the sort of thing that really 
     rankles Mr. Williams, and, on a recent day, he was sitting in 
     the New Castle restaurant, drawing up a long list of tasks 
     for his store manager.
       Popeyes managers are in a bind. They can push their people 
     only so far, especially in an economy with so many job 
     opportunities. They need to keep their employees. In the more 
     prosperous locations, such as the Popeyes in Rockville, Md., 
     an acute labor shortage keeps pushing up the work crews' pay. 
     In April 1996, it averaged $6.01 an hour; today, it averages 
     $6.42 Managers there say the increase has nothing to do with 
     federal law and everything to do with supply and demand.
       ``My senior fry cook, he makes $8.75 an hour,'' says Mohsen 
     Eghtesadi, district manager for Metropolitan's two Maryland 
     restaurants. He waves his hand toward the Rockville Pike, a 
     busy commercial strip. ``Look at all these sit-down 
     restaurants opening up. They can pay $10 an hour, $12 an 
     hour. For us to keep good employees, we really have to 
     increase their pay.''
       ``It's a chicken war,'' Mr. Eghtesadi says. He adds, with a 
     wry smile, ``And we are chicken warriors.''


                       much competition for staff

       His problems are just a tiny example of the sharper 
     competition for talent. With much of the economy thriving, 
     the national unemployment rate has dropped below 5%. In the 
     fast-food business, expansion-minded chains need experienced 
     supervisors and managers. Even good fry cooks, earning $8 an 
     hour or so, are constantly vulnerable to raids by other 
     chains.
       Mr. Hahn, the director of operations, spends far more time 
     these days weeding out the losers among job candidates. The 
     chain does extensive background checks on all supervisors and 
     puts managerial candidates through a series of psychological 
     pencil-and-paper tests. The Popeyes bosses try to find 
     candidates whose profiles match those of their successful 
     store managers. Matchups have become rare.
       At entry-level employment, more applicants are young women 
     looking for jobs as part of the welfare-to-work movement. 
     With fast-food employers inundated by welfare recipients, the 
     minimum-wage issue takes a back seat to other concerns.
       Seven weeks ago, Sharie Ross got a raise to $5.15 an hour, 
     serving up fast food at the New Castle outlet, up from the 
     $5-an-hour minimum in Delaware. She hardly noticed because, 
     as a welfare-to-work employee, her main worry is the gradual 
     loss of her welfare benefits.

[[Page S56]]

       ``I still get food stamps; that's $98 a month,'' says Ms. 
     Ross, 20. But when she started work five months ago, the 
     state of Delaware picked up the cost of day care for her two 
     children. To her, keeping that $200-a-month subsidy is more 
     important than a few cents an hour in extra pay.
       Yet a booming economy can mask all sorts of operating 
     difficulties. That is true in many businesses, and it is true 
     at Mr. Rosenstein's fried-chicken empire. One rule of thumb: 
     If sales growth continues, all the other problems are 
     manageable. In the past 18 months, sales at many of Mr. 
     Rosenstein's stores have grown at double digits--and have 
     surprised him. ``You budget for a 2% or 3% rise. To budget 
     for a 10% rise is, well, irresponsible,'' he says.
       But in his Prince William County, Va., stores, sales are 
     booming. He pulls out his sales projections--$3,751,000 this 
     year, up more than 10%. His hourly wage costs are up 7%, 
     mostly because hours worked are up 6%. His projected 1997 
     profit at these stores is $270,000, up from $234,000 last 
     year.
       Mr. Rosenstein thinks his company will continue to be 
     prosperous if the economy keeps booming. But, he adds, ``If 
     there's a downturn, it's going to be nasty.''
  Mr. KENNEDY. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record. 
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1573

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Minimum Wage Act of 
     1998''.

     SEC. 2. MINIMUM WAGE INCREASE.

       (a) Wage.--Paragraph (1) of section 6(a) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.65 an hour during the year beginning on September 
     1, 1998;
       ``(B) $6.15 an hour during the year beginning on September 
     1, 1999;
       ``(C) $6.65 an hour during the year beginning on September 
     1, 2000; and
       ``(D) beginning on September 1, 2001, $6.65 an hour, as 
     adjusted by the Secretary on each September 1 to reflect 
     increases in the Consumer Price Index for All Urban Consumers 
     during the most recent 12-month period for which data are 
     available.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect on September 1, 1998.
                                 ______