[Congressional Record Volume 145, Number 157 (Tuesday, November 9, 1999)]
[Senate]
[Pages S14409-S14410]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENZI:
  S. 1887. A bill to amend the Fair Labor Standards Act of 1938 to 
provide for an increase in the minimum wage and protect the rights of 
States that have adopted State minimum wage laws; to the Committee on 
Health, Education, Labor, and Pensions.


               minimum wage state flexibility act of 1999

  Mr. ENZI. Mr. President, as I have listened to those Senators who 
support an increase in the minimum wage speak today--and I've listened 
closely--what I've heard them repeatedly say is that the minimum wage 
is not high enough for workers to afford to put food on the table, pay 
rent or take care of their families. This is a vital point for any 
American family, so I've listened carefully to see if anyone who 
supports an increase could explain why folks in rural states and 
counties have identical living standards of people residing in New York 
City or Boston or Los Angeles. Interestingly enough, this question has 
been essentially left unanswered. No one who supports an increase has 
been able to explain how wages affect workers differently in different 
states, and why that matters so much when we are talking about 
increasing the minimum wage. In an effort to ensure that no worker gets 
left behind and that we are considering all economic scenarios, I feel 
compelled to stand up here and talk about it--about why the number of 
dollars a worker gets paid has a drastically different impact from one 
state to another and even from one county to another. We must consider 
how increasing the minimum wage can make jobs in rural states and 
counties even more scarce; and, about how a wage hike can add even more 
people to the welfare rolls.
  We have heard the old adage that people are entitled to their own 
opinions, but not their own facts. Well, here are the facts. It costs 
over twice as much to live in New York City than it does to live in 
Cheyenne, WY. That's a fact. A $25,000 salary in Cheyenne has the same 
buying power as a $51,000 salary in New York, a $32,000 salary in 
Boston, or a $30,000 salary in Los Angeles. In other words, the average 
Wyoming worker can buy more than twice as much for the same wage as a 
worker in Manhattan. Twice as much. To put an even finer point on this 
staggering disparity, if the average worker in New York City is looking 
to rent an apartment, she would have to spend a whopping $2,730 per 
month--that's almost six times as expensive as the average apartment in 
Cheyenne. An apartment in Cheyenne only costs $481 on average per 
month.
  What about buying a home? The price difference between urban cities 
and rural towns is just as alarming. In New York, the average home 
costs $533,000; in Boston, it costs $244,000 and here in Washington, 
DC, it costs $205,000. In Cheyenne, the cost of the average house is 
much, much less: $116,000. In other rural towns, it's far below 
$100,000--even $50,000.
  Let's look at other necessities. In New York, it is 50 percent more 
expensive to buy groceries than it is in Cheyenne. In Boston, the cost 
of utilities are almost double what they are in Cheyenne. And in Los 
Angeles, medical expenses are a third higher than in Cheyenne. My point 
is this: the cost of living in New York, or Boston, or Los Angeles is 
drastically higher than it is in rural towns. This is not one person's 
opinion--it's a fact. And so to propose a wage level increase across 
the board and from coast to coast has an impact on these empirical 
disparities. It is like saying that rent for every apartment in this 
country must not be any higher than an apartment rent in rural towns, 
or that every bag of groceries must not cost any more than what it 
costs at a small town grocery store. No one would ever propose that, 
which is the reason I feel the need to ensure that such economic 
differences are, at the very least, debated.

  It is different--supporters of an increase will argue--because the 
increase just sets a floor, a minimum wage for workers. States like New 
York, and California, and Massachusetts can tack on to that if they 
wish. But doesn't that just beg the question? If there is a minimum 
wage disparity for workers in those states with higher costs of living, 
then why are we raising the minimum wage in every state just to 
compensate for those states where it costs more to live? Why are we 
endangering the economic stability of rural states and counties by not 
considering this reality?
  The raw statistics show that job growth in Wyoming is exactly half of 
job growth nationwide--it's growing, but just not as quick as we would 
like. Each year, at least 50 percent of Wyoming's college graduates 
leave the state, unable to find work because there aren't enough 
businesses to keep pace. What that translates into is this: if the 
minimum wage increase passes, rural areas cold face fewer jobs than 
they already provide. What every student who has ever taken an 
economics course knows is that if you increase the price of something 
(in this case, a minimum wage job), you decrease the demand for those 
jobs. Indeed, a survey of members of the American Economic Association 
revealed that 77 percent of economists believe that a minimum wage hike 
causes job loss. For states that already struggle just to grow small 
businesses and increase the number of jobs they produce, such an 
outcome can be detrimental. And for those parents in Wyoming who tell 
me over and over again how tired they are of seeing their kids leave 
the state to attend college elsewhere--simply because there are not 
enough part-time and full-time entry level jobs to get experience from 
and help pay for their education. One restaurant owner in a small town 
told me that he would increase the wage, but that would mean 5 less 
jobs for bus boys. After the last increase, I also recall college 
students complaining because college grants--or work studies--were 
negatively impacted. What happened was that grant amounts weren't 
increased, so the minimum wage hike resulted in less hours available 
per student under the grant. Students said that it resulted in a net 
loss for them. It's because of unforeseen situations like these, I am 
compelled to bring this issue to the table.
  The legislation I'm proposing today is an attempt to save 
rural states and

[[Page S14410]]

counties from losing even more precious jobs because ``Inside the 
Beltway'' types think that a minimum wage hike might help workers in 
higher cost of living states like Massachusetts, California, and New 
York. This legislation, which I call ``State Flexibility,'' is not a 
perfect solution. What this bill would do is give some discretion back 
to the states to decide whether it wants to remain at the increased 
federal rate of $6.15 an hour, or whether a wage that's 15 percent 
under the federal wage works better for the economic growth--and the 
workers--of that state.

  Here's how the bill would work. First, just so that there is no 
confusion, it would not prevent any federal minimum wage increases from 
applying nationally. But this legislation would provide state 
legislators the ability to set the minimum wage for the state, or a 
county within the state, at 15 percent under the federal floor. This 
legislation would also allow a Governor on a ``temporary'' basis to set 
the minimum wage for a state or a county at 15 percent less than the 
federal floor for reasons such as high unemployment, slow economic 
growth or potential harm to the state's welfare-to-work programs. I 
have listened carefully to the concerns of one-size-fits-all wage hike 
advocates, who say that the proposed increase is for workers. I agree, 
which is precisely why I'm advocating this approach--to ensure that 
welfare-to-work moms and dads living in counties with high unemployment 
rates aren't excluded. I am confident that nobody in this Chamber wants 
to leave anyone behind.
  I've talked quite a bit today about how increasing the minimum wage 
would affect the small business owner. Having owned a small business in 
Wyoming for 27 years, I can speak with some experience about just how 
detrimental an increase would be on small employers and job growth, and 
how this legislation would offer some flexibility to rural states and 
counties. But one area that I've been learning more about is how bad an 
increase would be on folks who have just recently entered the job 
market through welfare-to-work programs. What I've read has startled 
me, and as a former small business owner, the statistics pertaining to 
rural regions of the country make tangible sense to me. So much sense, 
in fact, that I am more convinced than ever that just increasing the 
minimum wage is not as sound a policy as advocates suggest.
  First. Just as a minimum wage increase would slow job creation in 
rural states and negatively affect people who have been employed in 
their field for years, college students looking for jobs, or new 
graduates, it would also severely impact welfare recipients looking for 
work. University of Wisconsin economist Peter Brandon has actually 
determined that minimum wage hikes actually increase duration on 
welfare by more than 40 percent.
  Second. The Educational Testing Service has concluded that fully two-
thirds of welfare recipients have skills that qualify, at best, for 
entry-level employment, and many fall far below. And what researchers 
at Boston University have shown is that lower-skilled adults are 
displaced after a minimum wage hike by teens and students who are 
perceived as having better skills.
  Third. Undoubtedly due to the above, research from Michigan State 
University shows that minimum wage hikes push as many families into 
poverty (due to job loss, for example), as they pull out of poverty.
  These daunting statistics sound alarms if we haphazardly push through 
a minimum wage hike that has a heck of a good sound bite, but an awful 
aftertaste when the dust settles and a number of workers are left 
behind. This proposal, however, speaks to this point. If a state 
legislature or a Governor sees a potential for a detrimental impact on 
welfare to work programs within that state, they can act to keep the 
rate at 15 percent under the federal floor. This is simple, rational 
discretion. This legislation instills the same ideals incorporated in 
the 1996 Welfare Reform Act and the 1998 Workforce Investment Act. 
Congress and the President entrusted states with administering welfare-
to-work and our nation's job training programs. This bill would 
complement those landmark laws by saying that states can adjust the 
mandatory wage--ensuring that no worker gets left behind. We must not 
turn a blind eye when state flexibility matters most.
  As chairman of the Senate Subcommittee on Employment, Safety and 
Training, my colleagues can be assured that the problem of economic 
disparities spurred by the lack of consideration by federal mandates 
will continue until we take a closer look. It's real and it deserves 
our attention. It is my hope that by discussing this bill, the Senate 
will begin to exclude the politics from the minimum wage debate and 
start examining the full spectrum of this issue. I am serious about 
addressing this and I fully intend to debate it during the second 
session. The media and interest groups have asked that we not 
politicize the minimum wage. I couldn't agree more, which is why I ask 
you to carefully consider not leaving anyone behind. 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. 1887

       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 ``Minimum Wage State 
     Flexibility Act of 1999''.

     SEC. 2. STATE MINIMUM WAGES AND AREA STANDARDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) is amended by adding at the end the 
     following:
       ``(h) State Minimum Wages.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section and sections 13(a) and 14, an employer in a 
     State that has adopted minimum wage legislation that meets 
     the requirements of paragraph (2) shall pay to each of its 
     employees a wage at a rate that is not less than the rate 
     provided for in such State's minimum wage legislation.
       ``(2) Requirement.--This section and sections 13(a) and 14 
     shall only apply in such States that have adopted minimum 
     wage legislation that sets wages for at least 95 percent of 
     the workers within the State at an hourly rate that is not 
     less than 85 percent of the hourly rate generally applicable 
     for the year involved under subsection (a).
       ``(3) Emergency circumstances.--The chief executive officer 
     of a State, through an executive order (or its equivalent), 
     may set wages applicable to at least 95 percent of the 
     employees within the State (or particular county of the 
     State) at an hourly rate that is not less than 85 percent of 
     the hourly rate generally applicable for the year involved 
     under subsection (a) if any of the following circumstances 
     exist:
       ``(A) The State welfare-to-work programs would be 
     sufficiently harmed by mandating a minimum wage rate above an 
     hourly rate equal to 85 percent of the hourly rate required 
     under subsection (a).
       ``(B) The State (or county) is experiencing a period of 
     high unemployment.
       ``(C) The State (or county) is experiencing a period of 
     slow economic growth.
     This paragraph shall only apply to an executive order (or its 
     equivalent) that is effective for a period of 12 months or 
     less.''.
       (b) Applicability of Minimum Wage to the Territories.--
     Notwithstanding section 5 of the Fair Labor Standards Act (29 
     U.S.C. 205), the provisions of section 6 of such Act (29 
     U.S.C. 206) shall apply to the territories and possessions of 
     the United States (including the Commonwealth of the Northern 
     Mariana Islands) in the same manner as such provisions apply 
     to the States.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on April 1, 
     2000.
       (2) Exception for certain states.--In the case of a State 
     which the Secretary of Labor identifies as having a 
     legislature which is not scheduled to meet prior to the 
     effective date described in paragraph (1) in a legislative 
     session, the date specified in such paragraph shall be the 
     first day of the first calendar quarter beginning after the 
     close of the first legislative session of the State 
     legislature that begins on or after such effective date, and 
     in which a State law described in section 6(h)(2) of the Fair 
     Labor Standards Act of 1938 (as added by subsection (a)) may 
     be considered. For purposes of the previous sentence, in the 
     case of a State that has a 2-year legislative session, each 
     year of such session shall be deemed to be a separate regular 
     session of the State legislature.
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