[Congressional Record Volume 153, Number 20 (Thursday, February 1, 2007)]
[Senate]
[Pages S1488-S1490]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                FAIR MINIMUM WAGE ACT OF 2007--Continued

  Mr. HARKIN. Madam President, I rise to discuss an amendment I have 
filed to eliminate a provision that was added to the minimum wage bill 
regarding employee leasing firms, also known as professional employer 
organizations, or PEOs.
  I have fought for a clean minimum wage bill, on the grounds that 
workers have been waiting 10 long years for this raise. During that 
time, businesses have seen record profits and productivity--and that 
has been equally the case in States and regions that have raised the 
minimum wage. Yet now we are being asked to include this aggressively 
anti-worker PEO provision in order to pass a minimum wage increase in 
the Senate.
  For my colleagues and others who may not know what a PEO is, let me 
explain. It is an organization that handles administrative details for 
workers who actually do work for another company. For example, I might 
technically be employed by Tristate PEO, but I actually show up to work 
every day at Main Street Construction Company. Companies use PEOs so 
they don't have to handle the tax-and-benefits paperwork for many of 
their workers.
  The language in the PEO provision, however, seeks to make these PEOs 
the ``employer of record'' for tax purposes. PEOs have sought to become 
the ``employer of record'' under various laws because they would like 
to be able to tell employers that the PEOs can independently take care 
of payroll taxes, workers' compensation, unemployment

[[Page S1489]]

insurance, and the like. However, in the past, PEOs have misrepresented 
what jobs are covered by workman's compensation--for instance, by 
characterizing construction workers as clerical. Under current law, 
legal responsibility for employer obligations typically remains partly 
or wholly with the worksite employer.
  Making a PEO the sole employer makes the evasion of labor and 
employment standards much easier. The National Employment Law Project 
and other worker-rights advocates have concluded that the language now 
in the bill would make it harder for employees to go to an arbiter and 
get unpaid overtime, unemployment insurance benefits, or workman's 
compensation benefits if the PEO collapses. And this is by no means 
hypothetical. Such collapses have happened not just with small, fly-by-
night operations, but with large PEOs like Administaff and Simplified 
Employment Services, SES.
  For example, when SES allowed health insurance premiums to go unpaid 
and then went bankrupt, it left employees like Melanie Martin out in 
the cold. She said ``We trusted him to pay our insurance premiums, and 
now I'm stuck with a $7,000 surgery bill. Every time I think about 
this, I cry.''
  In 2004, when MidAtlantic Postal Express in Roanoke, VA, went 
bankrupt, the U.S. Treasury wasn't the only one left holding the bag. 
Employees were left wondering where to turn for thousands of dollars in 
back pay. Victory Compensation Services was the PEO handling the 
workers' pay and benefits, and admitted that workers had no workman's 
compensation coverage even though MidAtlantic had paid Victory 
premiums. But Victory blamed MidAtlantic for the unpaid payroll.
  Now, let's say that you are newly unemployed trucker who is owed 
$7,000 in back pay. This is a complicated mess for a worker to try to 
navigate just to get a paycheck that he or she is owed.
  This is part of a larger, systemic problem. Working people in the 
United States feel less and less empowered in our you're-on-your-own 
society. Seventy percent of families are headed by either dual-income 
couples or a single parent. The housing bubble is bursting. 
Globalization is sending American jobs overseas. Pensions are being 
frozen at an unprecedented pace. The national savings rate has actually 
gone into negative figures. Women are working an average of 500 more 
hours more per year than in 1979. But productivity has increased 70 
percent since then. People are working harder and getting paid less.
  In this context of economic anxiety, we shouldn't be making it even 
harder for workers to organize, negotiate or enforce contracts, or 
fight for their rights under law. But that will be the sure-fire result 
if the final bill has this PEO provision in it.
  I urge my colleagues to strip this provision from the bill. We must 
not sacrifice worker rights in exchange for this modest and long-
overdue increase in the wages for those at the lowest rungs of the 
economic ladder.
  Mr. LEVIN. Madam President, I have long supported an increase in the 
minimum wage. I am pleased that, with the leadership of the new 
majority in Congress, this minimum wage increase will be passed by a 
bipartisan majority.
  In 1996 Congress raised the minimum wage by 90 cents an hour in two 
steps to $5.15 an hour. That increase was enacted more than 10 years 
ago. Since then, the real value of that wage has eroded by 21 percent 
and the nearly 5.5 million workers earning the minimum wage have 
already lost all of the gains from the 1996-1997 increase. Since then, 
Gallup polls have shown that 86 percent of small business owners do not 
think that the minimum wage affects their business, and nearly half of 
small business owners think that the minimum wage should be increased. 
Since then, 29 States, including Michigan, as well as the District of 
Columbia have recognized the importance of keeping our working families 
out of poverty by increasing State minimum wages.
  Unfortunately, since the 1970s, poverty has increased by 50 percent 
among full-time, year-round workers. Currently, 37 million Americans, 
including 13 million children, live in poverty. As the most prosperous 
nation in the world, our minimum wage should be a living wage, and it 
is not. When a father or mother works full time, 40 hours a week, year-
round, they should be able to lift their family out of poverty. A full-
time minimum wage laborer working 40 hours a week for 52 weeks earns 
$10,700 per year--more than $6,000 below the Federal poverty guidelines 
for a family of three.
  I believe that a full-time minimum wage job should provide a minimum 
standard of living in addition to giving workers the dignity that comes 
with a paycheck. These lower paid workers, many of whom have entered 
the workforce due to the welfare reform, should be rewarded for 
entering the workforce, not penalized by a poverty wage. A higher 
minimum wage has the potential to ensure that lower paid workers will 
be protected from falling into poverty and possibly back on the welfare 
rolls. The minimum wage increase during the recession in 1991 provided 
much needed income to poor people and helped to increase spending in 
the economy. 58 percent of the benefit of the 1996 increase went to 
families in the bottom 40 percent of income groups. Over one-third of 
the benefit went to the poorest families--those in the bottom 20 
percent of income groups.
  Today the real value of the minimum wage is $4.00 below what it was 
in 1968. To have the purchasing power it had in 1968, the minimum wage 
would have to be at least $9.37 an hour today, not $5.15. According to 
the United States Department of Labor, over 60 percent of minimum wage 
earners are women; almost 40 percent are minorities, and nearly 80 
percent are adults. These hardworking Americans deserve a fair deal.
  In addition to the long overdue minimum wage provision, this bill 
contains a package of tax provisions. I am pleased that these include a 
number of measures to crack down on abusive tax dodges, including an 
improvement to current law to end the tax benefits received by 
companies that reincorporate and set up shell headquarters in offshore 
tax havens.
  I am also pleased that the bill extends the work opportunity tax 
credit, which allows employers credit against wages for hiring workers 
from targeted groups such as recipients of public assistance, qualified 
veterans, and ``high risk'' youth. I have heard from a number of 
Michigan companies that the WOTC program is important to them in their 
hiring members of these targeted groups, and I am pleased that this 
provision will be extended through the end of 2012.
  I am also pleased that the tax provisions would put in place a limit 
on the amount that corporate executives and other highly paid employees 
can place tax-free into deferred compensation plans. Under current law, 
public companies cannot deduct more than $1 million per year for 
compensation paid to their top officers. However, compensation that is 
``deferred,'' meaning the employee doesn't have immediate access to it, 
is not subject to this $1 million limit; so deferred compensation 
packages have become a main way that company executives can get multi-
million dollar compensation packages while their companies continue to 
take a tax write-off.
  We have seen these excessive packages time and again in recent 
stories about runaway executive compensation totaling tens of millions 
of dollars. Tens and even hundreds of millions of dollars have been 
salted away in this fashion for corporate executives, and companies 
have simply found another way to game the system by excluding this 
``deferred compensation'' from those individuals' income for the year. 
It is more than time for Congress to put an end to this game which has 
fueled excessive executive pay.
  This bill would set a limit on the amount of compensation that could 
receive tax deferral at the lower of $1 million annually or the average 
of the previous 5 years compensation. The ability of corporate 
executives to defer tax on up to $1 million in compensation is still a 
significant benefit that stands in stark contrast to the minimum wage 
we are attempting to raise for those at the lowest end of the pay 
scale.
  It is only right that those who are at the low end of the pay scale 
who work hard should receive a fair wage and be able to support their 
families. These people do not always have the leverage to negotiate a 
fair salary. This bill to increase the minimum wage will help to move 
them to a more livable wage.
  Mr. INHOFE. Madam President, I will unavoidably miss the final vote 
on

[[Page S1490]]

the minimum wage bill but I come down here now to ask unanimous consent 
that the Record reflect, immediately after the vote, my announcement 
that I would have voted against this bill.
  In so doing, I remain consistent on the issue. Government is best 
when it is does not pick winners and losers--when it does not 
competitively advantage one group of people over another or one set of 
States over another.
  Senator DeMint offered an amendment to equally and fairly increase 
the minimum wage by $2.10 for each State over what the wage is today.
  The fact that the liberals voted against the DeMint amendment is 
proof that their bill as now constituted is really about damaging the 
competitiveness of middle America--the so-called red States, 
disparagingly called `'fly-over country'' by liberals--compared to the 
liberal fringe States.
  Without this amendment, the underlying legislation would partially 
exempt minimum wage workers in higher-cost States that already have 
State minimum wage rates greater than the Federal level of $5.15 an 
hour, and completely exempt minimum wage workers in highest-cost States 
that have State minimum wage rates near $7.25 an hour.
  The DeMint amendment would increase the Federal minimum wage equally 
for workers in all States at the same rate as H.R. 2 would increase the 
minimum wage from the current Federal minimum wage rate.
  Senator Kennedy's arguments against this amendment have been both 
confusing and contradictory. On the one hand, he said that we need a 
one-size-fits-all mandate, and then he said that Massachusetts has a 
higher cost of living.
  I will not stand for people in Washington, DC, damaging the 
competitiveness of Oklahoma against other States. If Oklahomans vote to 
change our own laws, that is one thing, but we are not going to buckle 
under to DC and the liberal fringe States.
  Thus I would vote nay.
  I ask unanimous consent that the following chart be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

----------------------------------------------------------------------------------------------------------------
                                 Current       Kennedy Proposal                    DeMint Proposal
                                 MinWage ---------------------------  $ Wage ---------------------------  $ Wage
             State                 In       2007     2008     2009     Hike     2007     2008     2009     Hike
                                 Effect    $5.85    $6.55    $7.25             $0.70    $1.40    $2.10
----------------------------------------------------------------------------------------------------------------
Alabama.......................     $5.15    $5.85    $6.55    $7.25    $2.10    $5.85    $6.55    $7.25    $2.10
Alaska........................      7.15     7.15     7.15     7.25     0.10     7.85     8.55     9.25     2.10
Arizona.......................      6.75     6.75     6.75     7.25     0.50     7.45     8.15     8.85     2.10
Arkansas......................      6.25     6.25     6.55     7.25     1.00     6.95     7.65     8.35     2.10
California....................      7.50     7.50     8.00     8.00     0.50     8.20     8.90     9.60     2.10
Colorado......................      6.85     6.85     6.85     7.25     0.40     7.55     8.25     8.95     2.10
Connecticut...................      7.65     7.65     7.65     7.65       --     8.39     9.10     9.80     2.15
Delaware......................      6.65     6.65     7.15     7.25     0.60     7.35     8.05     8.75     2.10
District of Columbia..........      7.00     7.00     7.55     8.25     1.25     8.70     9.40    10.10     3.10
Florida.......................      6.67     6.67     6.67     7.25     0.58     7.37     8.07     8.77     2.10
Georgia.......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Hawaii........................      7.25     7.25     7.25     7.25       --     7.95     8.65     9.35     2.10
Idaho.........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Illinois......................      6.50     7.50     7.75     8.00     1.50     7.20     7.90     8.60     2.10
Indiana.......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Iowa..........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Kansas........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Kentucky......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Louisiana.....................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Maine.........................      6.75     7.00     7.00     7.25     0.50     7.45     8.15     8.85     2.10
Maryland......................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
Massachusetts.................      7.50     7.50     8.00     8.00     0.50     8.30     9.00     9.70     2.10
Michigan......................      6.95     7.15     7.40     7.40     0.45     7.65     8.35     9.05     2.10
Minnesota.....................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
Mississippi...................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Missouri......................      6.50     6.50     6.55     7.25     0.75     7.20     7.90     8.60     2.10
Montana.......................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
Nebraska......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Nevada........................      6.15     6.85     7.65     8.25     2.10     7.85     8.55     9.25     2.10
New Hampshire.................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
New Jersey....................      7.15     7.15     7.15     7.25     0.10     7.85     8.55     9.25     2.10
New Mexico....................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
New York......................      7.15     7.15     7.15     7.25     0.10     7.85     8.55     9.25     2.10
North Carolina................      6.15     6.15     6.55     7.25     1.10     6.85     7.55     8.25     2.10
North Dakota..................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Ohio..........................      6.85     6.85     6.85     7.25     0.40     7.55     8.25     8.95     2.10
Oklahoma......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Oregon........................      7.80     7.80     7.80     7.80       --     8.50     9.20     9.90     2.10
Pennsylvania..................      6.25     6.25     6.55     7.25     1.00     6.95     7.65     8.35     2.10
Rhode Island..................      7.40     7.40     7.40     7.40       --     8.10     8.80     9.50     2.10
South Carolina................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
South Dakota..................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Tennessee.....................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Texas.........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Utah..........................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Vermont.......................      7.53     7.53     7.53     7.53       --     8.23     8.93     9.63     2.10
Virginia......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
Washington....................      7.93     7.93     7.93     7.93       --     8.63     9.33    10.03     2.10
West Virginia.................      5.85     5.85     6.55     7.25     1.40     6.55     7.25     7.95     2.10
Wisconsin.....................      6.50     6.50     6.55     7.25     0.75     7.20     7.90     8.60     2.10
Wyoming.......................      5.15     5.85     6.55     7.25     2.10     5.85     6.55     7.25     2.10
----------------------------------------------------------------------------------------------------------------
22 States--Fully Impacted.
18 States--Partially Impacted.
10 States--Not Impacted.