Mr. President, I send an amendment to the desk and ask for its immediate consideration. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with, since copies have been given to both sides. Mr. President, I…
Mr. President, I send an amendment to the desk and ask for its immediate consideration.
Mr. President, I ask unanimous consent that reading of the amendment be dispensed with, since copies have been given to both sides.
Mr. President, I rise in opposition to the amendment offered by Senator Kennedy that would increase the Federal minimum wage. I have offered an amendment myself. Although both of the amendments would raise the minimum wage by the same amount, $1.10 over 18 months, only my amendment recognizes the enormous burden mandates such as this one have on American's small business and works to alleviate that. We probably ought to be in agreement on this since the numbers are the same. All I do is add some things that will offset those burdens that have been placed with the minimum wage.
When Senator Kennedy offered his original amendment, he referred to its economic effect as ``a drop in the bucket in the national payroll.'' A drop in the bucket in the national payroll? Comments like this are precisely why small business owners across the Nation feel that Washington, DC, politicians do not understand their needs.
We must also bear in mind that these are the people who create jobs, who provide an increasing percentage of employment for all workers, including those with minimum skills. It is usually the small business that takes a person who has minimum skills and trains them to a higher level. Quite often, they train them to a higher level where they even start their own business or they go to work for somebody else, taking the skills from where they are to an even higher level.
A lot of the problem with employment in the United States is that we don't have the people in the right places for the employment. They could be making more at what they are doing if they were in a different place. But sometimes they are not willing to move. They need more training, too. We have provisions for more training.
I would like to mention a little facility we have in Casper, WY, that will train people to work on oil rigs, and placement is 100 percent. The minimum is $16, and depending on what part of it you do, how long you are there, and what other skills you pick up, it goes considerably higher than that.
The mines in Campbell County, WY, are looking for additional employees. There are some requirements. You have to have a clean drug record. You have to be able to pass a drug test because when you are working around heavy equipment, if you don't have all of your capacities, you can hurt people, including yourself. That should not happen. So they do have requirements about having to have drug tests. But if you can pass the drug test, they will train you for the heavy equipment you need to operate in the mine. We are talking $50,000, $60,000, $70,000 without overtime, and then you have the right on both of those to have overtime as well, probably to the extent of whatever you are willing to put in and the law allows. There are some constraints on it since you are handling heavy equipment, but those are also nontraditional jobs.
We had a marvelous hearing in the HELP Committee. We had a person
from New York City. The young lady was talking about the training she had received in nontraditional jobs and the way her wages had increased. Quite frankly, at the present time she makes more than a U.S. Senator. What she is doing is putting rock trim on skyscrapers in New York. But there are some tremendous things out there, if a person gets the opportunity and takes the opportunity to increase their skills. If you are a minimum-skill person, if you are just doing the job and getting by and not learning anything, you are going to get minimum-skill wages.
I mentioned just getting by, just putting in the time. There is a difference. I know when my dad was interviewing people for the shoe business, he sometimes said, after he had interviewed them: That person told me they had 5 years' experience. I asked them a few questions, and what they had is 1 month's experience 60 times because they never learned anything from the first day they were on the job. They didn't have basic skills. He believed in training people and making sure they had, in 5 years, actually 5 years' worth experience. I can guarantee you, after the very first short training time, they never had minimum wage. But it is tied to the skills.
So to suggest that this is a drop in the bucket in the national payroll is a little bit offensive and does not recognize the job that small business is doing at getting people into the workforce and actually training them. It is particularly offensive to employers to suggest that a 41-percent increase in their labor cost, which is what is being proposed at this time, amounts to a drop in the bucket. A 41- percent increase in labor costs forces a small businessperson to face choices such as whether to increase prices, which often is not a choice, or face a potential loss of customers from lack of service or whether to reduce spending on health insurance coverage or other benefits to employees or to terminate employees. These choices are far more significant than a drop in the bucket, particularly if you are the employee who got terminated. It is a 100-percent problem to you.
Apart from its failure to mitigate the cost of this mandate for small businesses, the Kennedy amendment also fails to address the root of the problem for our lowest paid workers. I have touched on that a little bit. Congress, by simply imposing an artificial wage increase, will not meaningfully address the real issues of our lowest paid workers. Regardless of the size of any wage increase Congress might impose, the reality is that yesterday's lowest paid worker, assuming he still has a job, will continue to be tomorrow's lowest paid worker as well. That is not advancement. Advancement on the job and earned wage growth cannot be legislated. We do a disservice to all concerned, most especially the chronic low wage worker, to suggest that a Federal wage mandate is the answer.
What we need to focus on is not an artificially imposed number but on the acquisition and improvement of job and job-related skills. In this context, we should recognize that only 68 percent of the students entering the ninth grade 4 years ago are expected to graduate this year. And for minority students, that hovers right around 50 percent. In addition, we continue to experience a dropout rate of 11 percent per year. These noncompletions and dropout rates and the poor earnings capacities that come with them can't be fixed by a Federal wage policy. We have to get the kids to stay in school, to get the education. We have to make sure the education is relevant and that when they graduate at whatever level, there is a job out there for them and that the job is transportable, that they can take their skills other places in the country, as those areas open up, with a higher wage for those skills, and that they have the knowledge to be able to learn, to continue to advance their skills so that when they move, they get more.
What we want are the best jobs kept in America for the people who live in America. That is an opportunity we have but not with an artificially mandated minimum wage. I would hope that nobody in the United States would work at the minimum wage. I know for a fact that most of the people who start at minimum wage, if they pay attention to their job, are not in minimum wage very long. If they pick up the skills, they get paid for those skills. That is so that they don't go somewhere else and work. But if they don't have the skills, they are lucky to get a job at all. I have people I have hired before who couldn't read. What kind of opportunities do they have if they can't read? We have them in literacy programs. We moved them into GED programs and trained them in something they could do and be proud of, and that is a higher wage.
We must keep this in mind. The phrase ``minimum wage worker'' is an arbitrary designation. A more accurate description and one that should always be at the center of the debate is that we are seeking to address those workers who have few, if any, skills they need to compete for better jobs--that is what we are doing in the United States, competing--and then command higher wages. The effect may be low wages, but the cause is low skills. In short, the problem is not the minimum wage, the problem is minimum skills.
If we are to approach this debate in a constructive and candid way, we need to acknowledge certain basic principles of economics. Wages do not cause sales. Sales are needed to provide revenue to pay wages. Revenue drives wages. Wages can cause productivity, but the productivity has to come first to be able to afford the wages. When we raise the minimum wage, we are raising the price somehow. The people who get the minimum wage have to buy stuff just like everybody else. If the price goes up because a phony minimum wage went in, then their buying ability did not increase at all. How pleased can you be if you get more money and you can't buy anything more? What we are trying to do is set up a system where people will make more true wages and, with the true wages, be able to purchase more than they could before. Some of that is basic need, but we are hoping they all get past the basic need level and can get into the wants and desires as well, that they can be part of the American dream.
Skills, however, operate differently than wages. Skills do create sales, and sales produce revenue. Skills do create productivity. Skills get compensated with higher wages or people find another job. The employee simply goes elsewhere for higher wages. Wage increases without increased sales or higher productivity have to be paid for with higher prices. Higher prices wipe out wage increases. Skills, not artificial wage increases, produce true net gains in income for the individual and for the business. When it increases for the business, it increases their likelihood of keeping their job and getting to advance. The minimum wage should be for all workers what it is for most--a starting point in an individual's lifelong working career, their lifelong learning career. Those who advance in any jobs are the ones who look at it and say: How can I do this better? If they come up with a way to do it better, they will get more compensation. Their business will make more money or they will go start their own business, which is also a dream of mine, to get people to do that. I hold an inventors conference every year. The purpose of that conference is to get people to invent about their surroundings and their jobs and to find some product that they can make in Wyoming and ship around the world. I have found that anybody who has figured out a way to make a living in Wyoming lives in Wyoming. We are a little short on jobs out there. That is why we only have 494,612--that is last week's number--living in Wyoming. We hope to get past that half-million mark, but it does require jobs. The way to get jobs is to have the skills to be able to improve what you do.
The minimum wage should be for workers what it is for most; that is, a starting point in an individual's lifelong working career, their lifelong learning time. Viewed as a starting point, it becomes clear that the focus needs to be less on where an individual begins his or her working career. Instead, more emphasis should be placed on how an individual can best progress. Real wage growth happens every day, and it is not a function of Government mandate. It is the direct result of an individual becoming more skilled and, therefore, more valuable to his or her employer. As a former small business owner, I know that these entry-level jobs are a gateway into the workforce for people without skills or experience.
These minimum-skill jobs can open the door to better jobs and better lives for low-skilled workers because they get more skills if we give them the tools they need to succeed.
We have a great example in Cheyenne, WY, of minimum-skilled workers who were given the tools and the opportunity to reach the American dream. Mr. Jack Price, who is the owner of 8 McDonald's in Wyoming--and we use McDonald's as kind of a derogatory thing with people as being a minimum wage establishment; I assure you that people who start there, who learn something, are not at the minimum wage very long--has had 3 employees who started working at McDonald's at the minimum wage, and those 3 employees now own a total of 20 restaurants. They learned something. They started at minimum wage. They didn't like it, I am sure. They learned. They got experience. They delved into it and found out all they could about the business and wound up owning the business. That is what we want for people. It requires some individual initiative, and it does require starting at the bottom. With almost every job, you have to start at the bottom. If you learn it, you can progress in it. Three employees at McDonald's who started at the minimum wage now own 20 restaurants.
It is a great success story. That is where I would like people to go. This type of wage progression and success should be the norm for workers across the country. However, there are some minimum-skilled workers for whom stagnation at the lower tier wage is a longer term proposition.
The answer for these workers, however, is not to simply raise the lowest wage rung. Rather, these individuals must acquire the training and skills that result in meaningful and lasting wage growth. We must equip our workers with the skills they need to compete in technology- driven global economies.
It is estimated that 60 percent of tomorrow's jobs will require skills that only 20 percent of today's workers possess. Let me say that again. It is estimated that 60 percent of tomorrow's jobs will require skills that only 20 percent of today's workers possess.
Here is another interesting point. It is also estimated that the graduating student will likely change careers some 14 times in their life. There are a lot of people in America whose parents went to work for one company, worked there 30 years and retired. I am talking about a different world. It is estimated that the graduating students will likely change careers some 14 times in their life.
Here is the part that is even more stunning, and I am not talking about changing employers. I am talking about changing careers. Of those 14 careers, 10 of them have not even been invented yet. We don't even know what this change in technology is going to bring about, but we do know that people better be able to change to get those jobs, and they are going to have to change pretty dramatically. It is going to be based on the education they get and then the skills they acquire in the workforce after they get out of school. School is never out; learning is never over.
To support these needs, we do need a system in place that can support a lifetime of education, a lifetime of training and retraining for our workers. The end result will be the attainment of skills that provide meaningful wage growth and competition--successful competition--in the international marketplace.
As legislators, our efforts are better focused on ensuring that the tools and opportunities for training and enhancing skills over a worker's lifetime are available and fully utilized than they are on imposing an artificial wage increase that fails to address the real issues and, in the process, does more harm than good.
Skills and experience, not an artificial Federal wage hike, will lead to lasting wage security for American workers. We have to compete. It is an international competition. Skills count.
As chairman of the Health, Education, Labor, and Pensions Committee, one of my priorities is reauthorizing and improving the Nation's job training system that was created by the Workforce Investment Act. This law will help provide American workers with the skills they need to compete in the global economy. That will lead to real, not artificial, wage increases.
Last year, I was denied a conference committee being appointed to resolve the differences with the House on this important bill by the very people proposing this increase. This year, we reported it out of the HELP Committee by a unanimous voice vote again. It was unanimous coming out of committee 2 years ago, it was unanimous passing the floor of this body, it was unanimous passing out of committee again this year, and it is waiting to come to the floor. I am hoping we can get consent to get it over to a conference committee with the House.
This bill will start an estimated 900,000 people a year on a better career path. You can't tell me that some of the same people who are denied the opportunity in the last Congress now think a magic redetermination of the lowest wage for the lowest skills will change people's lives.
Outside the glare of election year politics, I hope we can quickly pass a job training bill that will truly improve the wages and lives of workers in this country.
Let's be clear about what a minimum wage hike will and will not do. First, we must realize that large increases in the minimum wage will hurt low-income, low-skilled individuals. Mandated hikes in the minimum wage do not cure poverty, and they clearly do not create jobs. The Congressional Budget Office has said:
Most economists would agree that an increase in the minimum
wage rate would cause firms to employ fewer low-wage workers
or employ them for fewer hours.
That is a CBO estimate, October 18, 1999.
What every student who has ever taken an economics course knows is if you increase the cost of something--in this case a minimum wage job-- you decrease the demand for those jobs. Misleading political rhetoric cannot change the basic principle of supply and demand. The majority of economists continue to affirm the job-killing nature of mandated wage increases. A recent poll concluded that 77 percent--that is nearly 17,000 economists; that is scary, isn't it?--but 77 percent, nearly 17,000 economists believe that a minimum wage hike causes job loss.
We simply cannot assume that a business that employs 50 minimum wage workers before this wage increase is enacted will still employ 50 minimum wage workers afterwards. Whether a business is in Washington or Wyoming, employers cannot absorb an increase in their costs without a corresponding decrease in the number of jobs or benefits they can provide workers. So we know there are losers when we raise the minimum wage, but who are the individuals who will benefit?
Minimum wage earners who support a family solely based on wage are actually few and far between. Fully 85 percent--85 percent--of the minimum wage earners live with their parents, have a working spouse or are living alone without children--85 percent; 41 percent live with a parent or relative; 23 percent are single or are the sole breadwinner in a house with no children; and 21 percent live with another wage earner.
Our research shows that poor targeting and other unintended consequences of the minimum wage make it terribly ineffective at reducing poverty in America, the intended purpose of the policy. In fact, two Stanford University economists concluded that a minimum wage increase is paid for by higher prices that hurt poor families the most.
A 2001 study conducted by Stanford University economists found that only 1 in 4 of the poorest 20 percent of families would benefit from an increase in the minimum wage. The way to improve--truly improve--the wages and salaries of these American workers is through education and training, not an artificial wage increase.
With these realities in mind, I am offering an amendment that recognizes the true cost of a minimum wage increase on American workers and businesses, particularly small businesses. My amendment includes a minimum wage increase of $1.10, which is just like Senator Kennedy's amendment right now. So we are really not talking about the minimum wage amount.
My amendment addresses other needs for reform and the needs of small businesses that create most of the jobs in this country. That is where the two amendments differ. I have added some things beyond the $1.10 minimum wage increase, and that is to smooth out the bump a little bit for these small businesses that are creating these jobs, that are providing the training, that are helping people get better skills so they can get better jobs.
So my amendment addresses other needs for reform and the needs of small businesses that create most of the jobs in this country. Therefore, my amendment is protective of economic growth and job creation. I think if we had worked this out in committee, probably the other side would have accepted what I am about to do in additional pieces to this bill, and a lot of this discussion would not have been necessary.
Let me briefly review the provisions contained in my amendment. In doing so, we must bear in mind that small businesses continue to be the engine of our economy and the greatest single source of job creation. Any wage increase that is imposed on small businesses poses difficulties for that business, the owner, and his or her employees. I will tell you, in small business, the employees recognize how tenuous their job is. There are not a whole lot of layers that can be laid off before they get to them because there is the owner and a couple of employees. And because there are just a few in the business, they know how the business operates. They know what the dollars coming in are and what the ability is to change that unless they can increase productivity or sales.
Any wage increase that is imposed on small businesses poses difficulties for that employer and his or her employees. My amendment recognizes that reality and provides a necessary measure of relief for those employers. My amendment would make the following changes that are critical, particularly for small business.
First, we would update the small business exemption. Having owned a small business in Wyoming, I can speak from personal experience about how difficult any minimum wage increase is for small business and job growth, particularly for the entry-level people during the first couple of months they are on the job.
Small businesses generate 70 percent of new jobs. Let me say that again. Small businesses generate 70 percent of new jobs. Since a negative impact of a minimum wage increase will affect small business most directly, we have proposed addressing the small business threshold which is set under current law at half a million dollars. If the original small business threshold, which was enacted in the 1960s, were to be adjusted for inflation, it would be over $1.5 million.
The small business threshold was last updated 15 years ago. In those ensuing years, the national minimum wage has been hiked, the economy has undergone dramatic shifts, and the way work is done in this country has changed forever. The pending amendment raises that threshold to $1 million to reflect those changes. It ought to be at $1.5 million. That is what inflation shows. But we are being reasonable. I like to be reasonable on any of the proposals I put forward. So instead of going from a half a million dollars to $1.5 million, this bill only raises it to $1 million to reflect part of those changes.
My amendment also incorporates bipartisan technical corrections that were originally proposed in 1990 by then-Small Business Committee Chairman Dale Bumpers, who used to serve on that side of the aisle when I was first here. It was cosponsored over the years by Senators Reid of Nevada, Harkin, Pryor, Mikulski, Baucus, Kohl, and many others.
As those Senators can attest, the Department of Labor disregarded the will of Congress and interpreted the existing small business threshold to have little or no meaning. The Labor Department would make a Federal case out of the most trivial paperwork infraction by the smallest businesses because of what it interpreted as a loophole in the law. Some would say that the 1989 bill to hike the minimum wage and small business threshold was unartfully drafted and permitted this result. Others say the Department is misreading the clear language of the statute.
Regardless, the fact is that a threshold enacted by Congress is not providing the balance and fairness that was intended. This amendment corrects that problem by stating clearly that the wage and overtime provisions of the Fair Labor Standards Act apply to employees working for enterprises engaged in commerce or engaged in the production of goods for commerce. My amendment also applies those wage-and-hour worker safeguards to home work solutions.
The second change: ensuring procedural fairness for small business. This next provision is commonsense, good Government legislation. Surely, we can all agree that small business owners, the individuals who do the most to drive our economy forward, deserve a break the first time they make an honest paperwork mistake when no one is hurt and the mistake is corrected.
Small business owners have told me over and over how hard they try to comply with all the rules and regulations imposed on them, mostly by the Federal Government. As a former owner of a small business myself, I know what they mean. Yet for all that work, a Government inspector can fine a small business owner for paperwork violations alone, even if the business has a completely spotless record and the employer immediately corrects the unintentional mistake. Who is hurt? Nobody is hurt, but it is an extra burden on small business.
I have to tell you a little bit about small business. They don't have a lot of employees. They don't have any specialists out there. Big business can hire people to take a look at the paperwork, and small business has to stay as lean and mean as they can to make a profit. Look at the difference between profits in your small businesses and your big businesses, and you will see they are staying pretty lean and mean.
I remember the first hearing I held in Wyoming after I became a Senator was on small business issues.
One has to remember, Wyoming has kind of a small population. So I was thrilled when people from about 100 businesses showed up for this hearing.
Afterwards, one of the reporters came up to me and said: Were you not kind of disappointed in the turnout?
I said, no, I was not disappointed in the turnout. These are small businesses we are talking about, and if they had an extra person to spend half a day at a hearing, they would fire them, as they have, to stay mean and lean, to stay in business.
So there is a whole world of difference in trying to meet some of the Federal paperwork mandates that are fineable. They are hard enough to learn about, so the first mistake that does not affect anybody and is corrected immediately ought not to be a fine. Even the best intentioned employer can get caught in the myriad of burdensome paperwork requirements imposed on them by the Federal Government.
The owners of small businesses are not asking to be excused from the obligations or regulations, but they do believe they deserve a break if they have previously complied perfectly with the law.
As Jack Gold, the owner of a small family business in New Jersey, told Congress a few years ago at one of our hearings:
No matter how hard you try to make your business safe for
your employees, customers, neighbors and family members, in
the end, if a government inspector wants to get you, they can
get you. The government cannot tell me that they care more
for my family's safety and my company's reputation than I do.
When one has a small business, the people who work there are part of a family. Small business men and women who are first-time violators of paperwork regulations deserve our protection.
The third change: Providing regulatory relief for small businesses. As any increase in the minimum wage places burdens on small employers, it is only fair that we simultaneously address the ongoing problem of agencies not fully complying with congressional directives contained within the Small Business Regulatory Enforcement Fairness Act.
I will say that again: The Small Business Regulatory Enforcement Fairness Act. The titles are long to read, let alone the bills that go with them.
Under the law, agencies are required to publish small entity compliance guides for those rules that require a
regulatory flexibility analysis. Unfortunately, agencies have either ignored this requirement, or when they tried to comply have not done so fully or carefully. Now, the previous issue I talked about was small businesses having a little imperfection in a regulation for the first time and correcting it immediately. Now we are talking about the Federal Government having problems and ignoring requirements.
We do not have a penalty for that, but it is something to which the Federal agencies have to pay attention, and my amendment does this by including specific provisions that the Government Accounting Office has suggested to improve the clarity of the requirements. People ought to be able to read the rules and know what they say without having to hire a specialist or a lawyer.
The fourth change: Removing the barriers to a flexible time arrangement. My amendment includes legislation that could have a monumental impact on the lives of thousands of working men, women, and families in America. This legislation could give employees greater flexibility in meeting and balancing the demands of work and family. The demand for family time is evident.
Let me give some of the latest statistics. Seventy percent of employees do not think there is a healthy balance between their work and their personal life. Seventy percent of the employees say that family is their most important priority.
The family time provision in my amendment addresses these concerns head on. It gives employees the option of flexing their schedules over a 2-week period. In other words, employees would have 10 flexible hours they could work in 1 week in order to take 10 hours off in the next week.
We are not shifting pay periods or anything. We are making arrangements that if the employer and the employee agree, there can be a shift in their work schedule. Here is a really important part. Flexible work arrangements have been available in the Federal Government for over two decades. We are not asking for anything that the Federal Government does not already allow for Federal employees.
I have to say, one of the problems and one of the reasons this came to my attention is that Cheyenne, WY--that is our biggest city in Wyoming--has a little over 53,000 people. That is the capital. We have a lot of Government workers there because it is the capital. The Government workers are allowed to take flextime.
The private businesses that are there are not allowed to give flextime. So we have one spouse who works for the Government who can shift their schedule around to take an afternoon off to go watch their child play soccer in another town--and we have to drive some long distances in Wyoming to get to the other towns to watch the soccer games--but the other parent cannot because the other parent is working for a private company.
Why would we discriminate that way? Why would we allow Government workers to do some things that the private ones cannot do under the same law?
Flexible work arrangements have been available in the Federal Government for over two decades. This program has been so successful that in 1994 President Clinton issued an Executive order extending it to parts of the Federal Government that had not yet had the benefits of the program. President Clinton then stated:
The broad use of flexible arrangements to enable Federal
employees to better balance their work and family
responsibilities can increase employee effectiveness and job
satisfaction while decreasing turnover rates and absenteeism.
Now, why would we not want that to be in the private sector, too? I mean, the private sector ought to have broad use of flexible arrangements to enable their employees to better balance their work and family responsibilities, which would increase employee effectiveness and job satisfaction while decreasing turnover rates and absenteeism.
That sounds reasonable to me, that what we said the Government could benefit from that the private sector could benefit from, too. Why are we not allowing the private sector to do that?
I could not agree more with President Clinton, but we now need to go further and extend this privilege to private-sector workers. We know this legislation is not a total solution. We know there are many other provisions under the 65-year-old Fair Labor Standards Act that need our attention, but the flexible time provision is an important part of the solution. It gives employees a choice, the same choice as Federal workers.
I want to give a little bit of a summary on that flextime proposal because this is a key part of it. I have heard some flak before and, again, I think if we were debating this in the committee situation and working it out when we were not in front of the TV cameras that we would probably come up with this as a reasonable solution. It would be included in a bill, and we would probably pass it through by unanimous consent. But it gets mixed in with the minimum wage debate, and needs to be, so I want to make sure people understand this.
The flextime proposal would provide employees with the option of choosing time paid off for working overtime hours through a voluntary agreement with their employer. It will do this by allowing them the option of flexing their schedule over a 2-week period. In other words, employees would have up to 10 flexible hours they could work in 1 week in order to take paid time off during the following week.
I do not want anybody confusing this with a comp time provision that was put in before. This does not include the comp time provision. So any accusations that this is taking overtime away from anybody, I would contend, even under the comp time solution is not valid. Under a flextime proposal, it is not valid. Again, it is the same thing that we decided that Federal employees could have, and if we would put any extra strain on a Federal employee I am sure that would be illegal under wage and labor laws. So what we are proposing is the same thing as Federal workers.
Now, as I mentioned, this provision will allow them the option of flexing their schedules over a 2-week period, give them up to 10 flexible hours they could work in 1 week in order to take paid time off during the following week. This program would be strictly voluntary. No employer and no employee can be forced to enter into a flextime agreement. However, this legislation prohibits intimidation, threats, and coercion by the employers and would provide penalties for violations of the prohibition. The flextime legislation will not take away anyone's right to overtime pay.
The authority to allow employees flextime also sunsets 5 years after enactment of the bill. I am that confident that it will be proven to be a necessity for the employees, so much so that in all 50 States they will be demanding that their Senator keep flextime for them. The only reason it is not being demanded in all 50 States at the present time is because there are a bunch of employees who have not heard about it. Employees in Government areas such as Cheyenne, WY, have heard about it because, as I mentioned, one spouse has the right because they work for the Government. The other spouse does not have the right because they work for private business.
I have to say, both of those spouses are really upset that we have not changed the law. We need to do that.
Sometimes there is some criticism of this so I have to repeat again the flextime proposal does not affect the sanctity of the 40-hour week. The 40-hour week remains the law. Under the flextime proposal an employee would earn overtime in the very same way he or she currently does, by working more than 40 hours in the same 7-day period. This proposal does not impact any worker who prefers to receive monetary overtime compensation. It will not require employees to take compensatory time--I should say flextime. I do not even want that word ``compensatory'' in there because I do not want any confusion, as has been stated previously. Previously, we have offered flextime and comp time. This is a flextime proposal.
It will not require employees to take flextime, nor will it require employers to offer it. The bill contains numerous safeguards to protect the employee and to ensure the choice and selection of flextime. It is truly voluntary on the part of the employee.
The proposal does not prevent an employee from changing his or her mind
after he or she chooses time off in lieu of monetary compensation. An employee can choose at any time to cash out any and all time off. The employer must make the payoff.
The fifth change I am making: extending the restaurant employee tip credit. A major employer of entry-level workers is the food service industry. The industry relies on what is known as the tip credit, which allows an employer to apply a portion of the employee's tip income against the employer's obligation to pay the minimum wage.
Currently, the Federal law requires a cash wage of at least $2.13 an hour for tipped employees, and it allows an employer to take a tip credit of up to $3.02 of the current minimum wage. To protect tipped employees, current law provides that a tip credit cannot reduce an employee's wages below the required minimum wage. Employees report tips to the employers, ensuring that an adequate amount of tips are earned.
The facts are that seven States--Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington--do not allow a tip credit, however, requiring raises for an hourly employee when States increase their minimum wage. The lack of a tip credit requires these employers to give raises to their most highly compensated employees, the tipped staff, under State minimum wage laws. Non-tipped employees in these States, in these businesses, are negatively impacted by the mandated flow of scarce labor dollars to the tipped positions. In addition, employers in these States are put at a competitive disadvantage with their colleagues in the rest of the country who can allocate employee compensation in a more equitable manner.
My amendment expands the tip credit to non-tip credit States, consistent with the initial establishment of the credit under the Fair Labor Standards Act.
I can probably give a little better and more detailed explanation. What is the tip credit? The tip credit allows an employer to apply a portion of an employee's tip income against the employer's obligation to pay the minimum wage. Federal law requires a cash wage of at least $2.13 an hour, and it allows an employer to take a tip credit of up to $3.02 of the current minimum wage.
Seven States do not allow a tip credit, instead requiring the tipped employees receive the same minimum wage as other employees. Non-tipped employees are negatively impacted by the flow of scarce labor dollars. This amendment expands the tip credit to non-tip credit States, consistent with the initial establishment of the credit under the Fair Labor Standards Act. Therefore, States which do not currently recognize the tip credit will be allowed to take a credit for tips of up to $3.02 of the minimum wage, which will be $6.25. For other current law, this calculation will be based on employees' own reporting of tips to their employers.
There is a false accusation out there, and it happened in previous debates. The Democrats misconstrued the effect of this change and alleged it would nullify all State wage-and-hour statutes in States that do not have a tip credit. This was never the intent of the provision, and additional language has been added to clarify that only affects the minimum wage rate provisions. Furthermore, the provision will only affect States that currently lack a tip credit. So we have added language to clarify it so it is only the minimum wage rate provisions. That is a very important part of that.
The sixth provision is a small business tax relief. I apologize for having to explain all of these on the floor. Again, this would be much better as committee work, but that has not been the opportunity.
If we are to impose greater burdens on small businesses, we should give them tax relief at the same time. My amendment would extend small business expensing, simplify the cash accounting methods, and provide depreciation relief for restaurants. All these tax provisions are fully offset; they are paid for. But they, again, smooth the bumps on those businesses that will be most impacted by an increase in the minimum wage, which gives them a way to be able to pay the increase in the minimum wage. Remember, that has to be paid for, too. Otherwise it drives them out of business, which means fewer jobs or it requires them to reduce other benefits, and often there are not other benefits.
In total, the additional provisions of my amendment are intended to mitigate the small business impact of a $1.10 increase in the minimum wage. I share the view of my colleagues, if we are going to impose such a mandate on the Federal level, we must do our best to soften its blow. This may be the best we can do today, but I entreat all of my colleagues to look at the true root of the problem for minimum wage workers, and that is minimum skills. We all share the same goals, to help American workers find and keep well-paying jobs. Minimum skills, not minimum wages, are the problem. Education and training will solve that problem and lead to the kind of increased wages and better jobs we all want to create for our Nation's workers.
Let's work together to get the Workforce Investment Act passed and conferenced--conferenced this time--so the President can sign it and get higher skills training accelerated.
Let me run through quickly what those six proposals are: raise the minimum wage by $1.10 over 18 months--we agree on that; permit family flextime for workers so that workers in private business have the same opportunity as workers in the public sector; increase the small business exemption from the Fair Labor Standards Act so that the small business level changes from $500,000 to $1 million; the small business one-time paperwork errors relief, when it is for the first time and corrected immediately; the small business regulatory relief actually being operated to protect small businesses; the minimum wage tip credit for restaurant workers; and then some other small business tax relief mainly aimed at those businesses that will be most affected by what we are doing.
I urge my colleagues to oppose the amendment offered by Senator Kennedy and urge all Senators to support my amendment so we get the whole process taken care of. Again, I thank my colleagues for their patience. I needed to explain this in some detail since it has not been handled in committee.
I yield the floor.
I yield the Senator such time as he may consume.
Mr. President, I yield myself such time as I need. I probably need quite a bit because the problem with debate on the floor of the Senate is that we don't listen to each other. I have said a lot of times that in committee, we are a much more informal group when we are marking up things. Consequently, if there is a misunderstanding or a disparity, we can get together and we can talk about it and we can find out how people were wrong.
I am disappointed that we haven't talked about this. A lot of these have been available before. But what the American people get to see is the 20 percent of the stuff that we will not agree on and, worse than that, probably 40 percent of the stuff that we don't want to listen to.
There have been some gross misstatements here. I want to start with just the last one, talking about allowing people to do whatever they want without a fine. That is such a gross misstatement that I am really disappointed in the opposition. I even heard the opposition say that that would allow people to have oilspills. I don't know how oilspills fall in the category of a first-time paperwork collection. That is all it applies to. If a small business makes a mistake sending data to the Government, just data, just a form--they miss a little bit on the form or they miss the deadline slightly and they immediately correct it and it doesn't hurt anybody--that is all that provision does.
If you are a small businessman out there trying to comply with the thousands of pages we have in a whole bunch of different areas, and you miss one paperwork deadline, you can be fined pretty severely. That is paperwork. That is not oilspills. That is not EPA. That is not any of the other things. It is data collection. That is what the amendment says, data collection. Read the whole amendment. If a small businessman misses a deadline or makes a mistake on paperwork and it is correctable and it is corrected immediately and it doesn't harm any employee, then they are not subject to the fine that time. That is a small concession to the small businessman, a very small concession.
On this whole bill, I am absolutely amazed. We are talking about the same $1.10 increase on the Democratic side that we are talking about in my amendment. There is no difference. Both of them provide for a $1.10 increase over the same period of time. We are not talking about which side is going to put people in poverty. Obviously, there is no listening from that side.
I have to be upset when it is claimed that apparently the minimum wage is the reason for Katrina. You can't go that far, folks. You can't. There isn't a connection between the minimum wage and Katrina happening. There isn't. Yes, there were people involved in that tragedy who were at the minimum wage, just as there are people under the minimum wage across the whole United States. But there isn't a connection with Katrina. It makes nice rhetoric. That is what we tend to do on the floor, make rhetoric. We ought to be making policy. What I have here is good policy for small business.
I also heard some statements about how all the small businessmen are wealthy, and they do that on the backs of employees. First, they are not all wealthy. Secondly, the implication that they are unethical to get that money is also not correct. There are small businesses out there that wind up paying their employees more than they get, even if the employee is on the minimum wage. There is no guarantee for the small business owner. We have to remember that.
I was surprised that the other side didn't say: Here is the chance to get the minimum wage increase and to help small business, not to harm employees. There is nothing in here that harms employees.
Part of the rhetoric was, we are taking away the 40-hour workweek. No, we are not. We are matching Federal employees' benefits to private employee benefits. That is it. What the Federal employees are allowed to do, we say that all employees ought to be able to do. How is that taking away overtime? Because it doesn't take away overtime from the Federal employees, so it also wouldn't take away overtime from the private employees. There is a provision in this amendment that says there cannot be coercion. They talk about forcing people to work on the weekend. That provision says that it has to be in an agreement between the employer and the employee. It truly is designed to be able to get them in a position where, without losing any money, they can have some extra time at the time that they want to have it.
I mentioned before--obviously, nobody was listening--that where this comes up the most is where there are Federal employees married to private employees. The Federal employee gets this special break where he or she can rearrange their schedule so that they
work a little more one week and then they can get time off the next week without any penalty. But the spouse who works in the same town but for a private employer is told by Federal law: You can't have that benefit.
That is wrong. Why can't we, after two decades of seeing that it works for the Federal Government, believe that it might work for private business? If it doesn't work, I would be one of the first ones to move to get it out of there, but it is going to work. There is no indication it would not work.
I think if we sat down and talked about these proposals, there would be some agreement on both sides of the aisle. It has become one of those rhetoric things where we can appeal to the base by blasting the Republicans for having any kind of a proposal, such as this, that would help small businessmen.
There are a lot of statements I ought to correct. One of them is 2 pages versus 85 pages. Clearly, 85 pages versus 2 pages, but that is like me trying to imply they have a Federal Tax Code idea and it is just send your money to the Federal Government. That would not be true. That is what they are saying when they say 2 pages versus 85 pages.
I have additional pages because of the provisions I have talked with the Democrats about and tried to nail down in a very clarified way so there could not be those objections. It is a few pages to do six different things for small business. That is not a lot. Small business is the one that takes the bump on this proposal. I am trying to smooth out the bump, not at the cost of the employee, but as a little bit of help to an employer. And it is offset. It is paid for. We are not driving up the deficit by doing any of these things, but we are providing a way for them to stay in business and provide an increased minimum wage for their employees.
I heard a comment that there were no net new jobs in the private sector in the last 4\1/2\ years. Overall, it could be a true statement. I don't know; I have not checked it. But I do know that in the small business sector, there have been some huge net job increases.
Unemployment in the United States is about the same as it was. There has been an increase in population. Those people have been employed. Where have they been employed? In small businesses. We know that big business lost employees. They keep downsizing. They call it rightsizing; I call it losing jobs. But the small business sector has picked up those jobs.
There are people out there generating ideas willing to take risk. Anybody out there who thinks if you have a small business all you do is open the doors and make a lot of money is wrong. Talk to the small businessmen in your community. See how many of them in the middle of the night sit straight up in bed and say: How do I meet payroll tomorrow? But they do, and they solve it, and one of the ways they usually do that is they don't pay themselves. Later, when they make some more money, they may make up for what they lost in that period of time. But talk about no flexibility, they do not have any flexibility; they have to pay their employees. A lot of people who go into business find out it is not the cakewalk they thought it would be.
When I was a small businessman we used to employ some extra people during the slow time so we would have them during the time when we needed them, during the back-to-school rush and the Christmas rush. We were always a little bit disappointed after we paid them through the slow times, when we were not making the money, to then have them leave at the busy times or be sick at the busy times. We understand sick. People get sick. Sometimes as an owner we were sick, but that did not mean we could not come to work because we had to keep the business running.
Small business is different than big business. It runs on fewer people. That is why we call it small business. The small business people have to compensate different ways for themselves, meaning if they are short an employee, the trip they were going to take, the meeting they were going to go to, which could be to buy products for the store, is canceled because somebody has to be there to run the store to provide the customer service. That is how small business works.
I can tell you, too, when you have a small business, the employees are more like family, and so they have insight into more of what is happening in the company than they would in a big company. In a big company, if they know about their own department, it is probably a big deal. In a small company, they know about the whole business. They probably do things in the whole business and they know how tentative the whole business is.
Talk to some of the small businessmen in your own community. Find out what kind of a ``wealthy'' life they live. You will find out most of what they earn they have to put back into the business to keep it growing.
Another significant part of what they earn they have to pay in taxes because the tax structure is set up so that most of what they make looks as though it is personal wage, and that puts them in a very high tax bracket and they wind up paying that out.
Being in small business is not a cakewalk. When the Federal Government forces on them any new regulation, that causes problems.
I also heard a statement that the minimum wage increase only applied to one-tenth of 1 percent of the national payroll. That is another myth I need to address, because, again, having been in business, I know that when the minimum wage rises, it raises all wages. If you have somebody else who is in a tier above the minimum wage, and you raise the minimum wage, you eliminate part of the tier. Nobody can do that in small business because everybody knows what everybody makes. So you raise that one and then you raise the one above that, and then you raise the one above that.
We are not talking about an impact on one-tenth of 1 percent of the national payroll. We are not just talking about those people at the bottom of the ladder; we are talking about most of the people in the United States.
I would like to give all of the people in the United States a pay raise. The problem with giving everybody a pay raise is that it has to be paid for. Somebody has to pay that bill. It is not like the Federal Government. The employer out there, particularly the small businessman--well, even the big businessman--cannot print their own money, so they cannot run deficits very long or they are out of business.
How will businesses go about paying for a raise in the minimum wage? Let's see, you can do it by having less people; but, that is people losing jobs, and I don't know of a single small businessman out there who likes to get rid of people. They feel for these people who work for them. They know these people who work for them. And when they lay them off, they see the hurt in their eyes. In small businesses, it is the little guy who has to look them in the eye and say: I have to have one less employee because I am paying others more. In some businesses, when there is a tight spot and the boss goes to them and says: ``Look, I have this problem, I am not going to be able to make wages so I am going to have to let somebody go'', the people in the business will often say: ``In the short term, we will take a little less because we understand the problem; we don't want you to be forced to lay off anybody.''
That is not the option when the higher wage is mandated, there is no slack to get through a particularly hard time, even if it is a short one. We are talking about the prospect of people losing jobs. That is, unfortunately, one way mandated, increased wages can be paid for. For every businessman I know this would be the least preferable way to meet increased cost, but it is certainly one of the possibilities.
Another possibility is that they can raise their prices. This almost certainly will happen. Essentially, if we raise most of the wages in the country, we are also going to raise most of the prices in the country just to cover the increase in the wage. If what I buy increases in cost, did I get a raise? Not really. So we can create these phony, feel-good pay increases, but if they do not increase buying power, they do not do anything.
What is another way that increases in the minimum wage can be for ? I certainly don't like either of the two options I just noted. Another way to pay for wage increases is to have more productivity. We had one chart that
showed that productivity has gone up. Some of those productivity gains have arisen partly because we have mechanized more. Unfortunately such productivity gains do not employ more people. It switches the way products are made and drives up productivity per person. But increases in productivity will help keep people around at higher wages.
The employees who are out there and are being creative and are looking at their job and saying: ``There has to be a better way of doing this'', and are coming up with improved ways of doing business usually get rewarded. They get more money.
I remember when I was going to college, I was taking a course in Fortran. One of my friends worked at the May D & F Company. He did some inventory work for them. This is in the old days when you had to write your program out by hand and then take it to a card punch operator. They punched the cards for you, and then you would go over the huge mainframe, and run cards through that. When you got them back, you had a bug list and you could rewrite lines so it would work. And the next day you get cards punched again. Eventually you get through the bugs and get this little simple thing done that today a child on a home computer could probably do in about, oh, 20 minutes. But we were amazed at the capacity, the productivity that this provided.
One of my fellow students figured out in doing inventory, that instead of the 40-hour week he was putting in to accomplish the work, that he could write a program, run it through the university computer on class time, and do the same amount of work in 1 hour. Now here is where I was pleased with the company he worked for. They let him do that and they paid him for 40 hours. He was thrilled. He is now a programmer.
What he did was increase his skill level and get paid more for it. That is what we are talking about here. There are a lot of people who start at minimum wage jobs. If they pay attention to the job, I bet they are not at the minimum wage, for most of them, for more than a month, and then they get promoted. They get a pay raise, a real pay raise because they did not force the price up, they increased their productivity.
I mentioned this morning that there is a fellow in Cheyenne, WY, who owns eight McDonald's. Some people try to suggest that working in food service is a bad job, and we kind of run them down. We should never run down any job that people do with their hands.
If you are like that small businessman--and I contend most small businessmen are that way--not trying to take advantage of their employees, but trying to help their employees, these employees can go through a program and get not only a lot of increases in position, but they can actually own a McDonald's--that's right, own it. The McDonald's owner I referred to this morning has had three employees who started at minimum wage and who today own 20 McDonald's. That is the achievement of the American dream.
They did not achieve what they did because of the minimum wage. They achieved this success and advancement because they increased their skill level. That is the key. We have programs that help people increase their skill level. I would be willing to bet that the Federal programs to increase skill level are minimal compared to the business efforts to increase the skill level of their employees. That is how employers increase and improve their business. They help their employees. They do not beat up on their employees. They help their employees.
The smaller the business, I am willing to bet, the more they help their employees. That is what we are talking about here--helping the employees, helping them get higher skill levels.
We do have a Federal program--and I am hoping we can get it through the Senate by unanimous consent or even with some limited debate, whatever it takes and whatever will fit in this packed schedule between now and Thanksgiving . There is some important legislation we need to do. One of them is passing the Workforce Investment Act.
The Workforce Investment Act will provide for about 900,000 people a year--a year--to be trained in higher skilled jobs.
That can be people who are unemployed or people who are employed but trained to higher skilled jobs. I also would like to put in a little plug for Wyoming at this point. We are short of people. We are the least populated State in the Nation. Previously, one of the reasons has been we did not have jobs. Now we have jobs. We do not have people to operate them. So we have started some special training programs in my state so people can work in some of the mines. One might say, Oh, I do not want to be in a mine. Mines are dirty and unsafe places. I want everyone to take a look at the record because there are rules with which they have to comply.
I once had a fellow from Japan, who worked for a newspaper, who was fascinated that I did not do national media, I guess, and he wondered if he could follow me for a day. I said he could follow me for a day if he came to Wyoming and followed me for a day. His paper let him do that. I also invited him to visit a mine.
He came, and we did one of our normal weekend things my wife and I do in Wyoming. We go back to Wyoming most weekends and we travel a different part of Wyoming. We hit all the towns, no matter what size. On that particular trip, we went to Wright, WY, Midwest, Edgerton, Kaycee, and Buffalo, and we held town meetings. I met with schoolkids and businessmen in those places.
I remember the first town that we were in. I think I got to talk to 115 kids at the school. I talked to about 30 businessmen. I had about 40 people show up for a town meeting.
He said: You do not get to meet with many people.
I said: Take a look at the little brochure I gave you that outlined where we were going today and what the populations were.
He said: My goodness, you got to talk to 90 percent of the people.
I said: What size building would that take in Tokyo?
One advantage of being in Wyoming is we get to talk to most of the citizens.
The next day, I did not go with him, but he went to one of our coal mines. We have 14 coal mines in Campbell County. I hope people will come out and take a look at them. If you are using electricity, there is a good chance that you are using electricity from the coal mined in Campbell County, WY. It supplies a third of the coal in the Nation because it is considered clean coal. It does not have a lot of the chemicals in it. We send some to West Virginia. We send some to Kentucky. We send it to most States. In those States, they mix it with their coal, and they meet the clean air standards. That is one of the reasons we mine so much coal.
He went through the mine, took a look at it, and looked at their safety record. I was very pleased when I saw what he had written, which was that he believed Wyoming had participatory democracy. Most States cannot do that because of the bigger populations. On the coal mining, he said he expected it to be dirty and unsafe. He found that it was clean and safe.
Now, here is the real telling part of this story. The next year, he brought his family to Wyoming. In Wyoming, we have Yellowstone Park, the Grand Tetons National Park. We have the first national forest. We have the first national monument, Devil's Tower. He brought his family to see the little towns he had visited and how far apart they were. He brought them to a coal mine because he was impressed.
So come out and work in our coal mines. You can make $50,000 $60,000, $70,000, $80,000 a year.
For women, that would probably be a nontraditional job, but there are a lot of women working in the mines. One of the reasons they can is because it is all huge heavy equipment that has all kinds of things on it that are ergonomic and that make it easy to operate. A woman can drive a coal truck that I guess two of these trucks might fit in this chamber, but I doubt it. The wheels on those things are about 18 feet tall, which means they are 18 feet in diameter. It might fit in the room this way. It is huge equipment. One would be fascinated to see it. Women drive those, and they make the same wage as men. Of course, that is a Federal law, and it ought to be. That helps to get rid of some of those disparities we have between what women make
and men make. Sometimes it is taking nontraditional jobs like that. These are good-paying jobs.
They used to be able to put out an application and then select from those people who had experience on that kind of heavy equipment. They could select the best operator for that piece of equipment. The world is changing. There are fewer people out there to take those jobs, so they now will train someone to run this heavy equipment with no experience.
There is one little catch for some people, and that is that they have to have a clean drug record. They have to be able to pass a drug test because they do not want people running over somebody with this huge piece of equipment.
We have some of those mines that have gone 2, 3, 4 years without a lost-time accident. No lost-time accident, let alone a death. How safe is that? Safer than most of the businesses in the United States.
Like I say, this equipment is designed so that it is easy to operate, it is air-conditioned. The person is inside the whole day. And they are having trouble getting employees at $50,000, $60,000, $70,000, $80,000 a year.
We have a special training center in Casper, WY, for people who want to work in the oil industry. They will take completely untrained people and train them to work in the oil fields and have 100 percent placement on the people who graduate from there. Again, the only catch is a clean drug record, they must be able to pass a drug test. It is a good living.
I am making the point that skills are important. If one does not have the skills, there are ways to get the skills.
The only people who are poor are the people who do not have hope. Now, that is a quote from ``The World Is Flat'' by Thomas Friedman. The only people who are poor are the people who do not have hope. In the United States, everyone should have hope. Everyone should be able to find some way to increase their skill level and get a better job.
When I make those trips around Wyoming, I go to a lot of schools. I talk to a lot of kids. They are making choices down in first and second grade about what is going to happen to their employment capability. I am very pleased with the Wyoming kids. I believe they do an outstanding job. I have had an opportunity to work with some of the kids in the District. The first year I was here, the school board learned when the first day of school opened that the roofs leaked. I do not think that was a good time for the school board to figure that out, but that is what happened. They decided that since the high school students did not have anyplace to go to school, that maybe we could take them as interns on the Hill.
I agreed to take some. The first young lady I talked to, I said: What do you want to be? She said: I want to be a doctor. I was pleased. This is a ninth grader. She has her goal set on being a doctor. I found out later that day that she could not read. Now, what does one think the chances are of a ninth grader ever being a doctor if they can't read? It is not going to happen probably. Well, instead of her working in my office, I sent her to a literacy class. When we finished the internship, I offered to pay her to go to the literacy class. She never showed up. So I am pretty sure she is not a doctor anywhere.
Kids are making choices about what they can do with the decisions they make. I am hoping they make good decisions. I am hoping they get into science and math and work those skills through and make some good decisions as they get into high school to learn where their talents lie.
I have had a person on my staff ever since I got here. Her name is Katherine McGuire. She used to be my legislative director. Now she directs a committee I am on. Her college degree was in agriculture. Her parents did not have a ranch, so I was not sure about that. Then she went on to get a master's degree in agricultural economics. I asked her how that happened. She said: I got some really good advice when I was early in high school from a teacher who said, Every one of you kids ought to have something you can do with your hands because you can always fall back on that. She took that advice. She looked at the agricultural field. She got a degree in that, and then she got an agricultural economics degree. She still has that fallback position. It is important for kids in the country to be thinking about things like that.
There is not any job in the United States that is not needed. Some of the ones that are hands-on are going to be the most needed. The way the economy should work, those should be some of the highest paid.
I am reminded of a fellow who came to solve a little problem in a house where they were having a pipe leak. He climbed under the sink and worked for about 5 minutes and had it fixed.
When he got ready to leave, he said: That will be $75.
The owner of the home said: Seventy-five dollars? You only worked on that for 5 minutes.
He said: Actually, for my time, I only charged you a nickel. The rest of that is for the knowledge I had of how to change that pipe.
So knowledge is worth something. Skills are worth something. Skills are the way one gets higher wages. We can impose any kind of a minimum wage, and what we do is drive up wages so that there has to be more money to cover that wage, which will probably come from higher prices, which wipe out the benefit of the wage.
Another argument that has been made, which I will refute, is that this amendment is taking away overtime. There is no overtime taken away in this. We have flextime in it. Again, I want to repeat, that is the same benefit the Federal Government employees get, and we are just extending exactly the same thing to private employees. If there is anybody in this place who thinks we are taking away from overtime, we should not have given the Federal employees that disadvantage. Of course it is not a disadvantage. They do not get overtime taken away from them. They get to rearrange their schedule so that it helps them in times they want to take off.
It does have to be done in conjunction with the employer. The employee and the employer have to agree. Right now, even if the employee and the employer agree, in the private sector, it is illegal. In the public sector, it is fine. So why would we object to extending to those small businessmen and particularly the people who work for them the same opportunity a Federal employee has?
That covers a few of the misconceptions that I think we got from listening to the last hour and a half of rhetoric about this issue. I am kind of surprised that they have not adopted this amendment and taken credit with the small business community for helping out small businesses while they get the $1.10 increase in minimum wage that both of us are talking about. Both bills have the $1.10, the same amount of raise, the same time period. So all we are talking about is whether, in addition to giving small businesses help, we also help the small businesses to be able to afford it, be able to put some cushion in there so they can pay this increase in the minimum wage and the increase that will go to all of their other employees because one does not just raise the bottom wage; it forces the next tier up to get a raise and the tier above that to get a raise. So virtually everybody is getting a raise. I know I always had to do that when I was in business. I do not know of any other employer who is not faced with the same situation. So we are not just talking about that minimum wage earner, we are talking about many more people.
Let me run through the six basic things we are providing. The first one is updating the small business exemption. Small business generates 70 percent of new jobs. Right now, the small business exemption covers businesses that gross less than half a million dollars. When was that law put into effect? It was in 1960. There has been no update or change since that time. Has there been any inflation during that amount of time? I think so. In fact, if we were doing the adjustment according to wages, that would be over $1.5 million--not half a million but $1.5 million. So what did I do? I compromised on that one. I should have gone for the whole $1.5 million. If I hadn't thought the other side of the aisle was going to be upset over adjusting to inflation, I would have gone the whole $1.5 million, but I did not. I tried to be reasonable on this one. I went in between the two. Like I say, it has
been awhile since we readjusted that threshold and the economy has undergone some dramatic shifts and the way work has been done in this country has changed forever.
My amendment also incorporates some bipartisan technical corrections that were originally proposed in 1990 by the then Small Business Committee chairman. This is very important. The Senate at that time had a majority of Democrats, so the Small Business Committee chairman was a Democrat. That chairman was Dale Bumpers, who was in the Senate when I got here.
The same thing was cosponsored over the years by Senator Reid of Nevada, Senator Harkin of Iowa, Senator Pryor of Arkansas, Senator Mikulski of Maryland, Senator Baucus of Montana, and Senator Kohl of Wisconsin.
There were many others, too. All that I named were the Democrats who thought that these technical corrections could be useful to small business. So I hope those Senators who are still here would vote for that.
As those Senators can attest, the Department of Labor disregarded the will of Congress and interpreted the existing small business threshold to have little or no meaning. The Department is misreading the clear language of the statute. This amendment corrects the problem by stating clearly that the wage and overtime provisions of the Fair Labor Standards Act apply to employees working for enterprises engaged in commerce or engaged in production of goods for commerce.
My amendment also applies these wage-and-hour worker safeguards to homework situations. That is very important.
The second thing it does is ensure procedural fairness for small business. That is just commonsense, good Government legislation. Surely, we can all agree that small business owners, the individuals who do the most to drive the economy forward, deserve a break the first time they make an honest paperwork mistake; a first-time, honest, paperwork mistake, where no one is hurt and the mistake is corrected. That is very limited.
The paperwork small businesses face is certainly not limited. Paperwork is practically unlimited for a small businessman. But this amendment is very limited. Small business owners have told me over and over again how hard they try to comply with all the rules and regulations imposed on them, mostly by the Federal Government. As a former owner of a small business, I know what they mean. Because I did accounting for small businesses, I know what they mean. I filled out a lot of that paperwork. I want you to know I got it right. I didn't have any first-time violations. But that is because I was supposed to know about the kind of paperwork that I was doing, and I was being paid for taking care of that. It is one way a small businessman can have a specialist--they can hire an accountant to do some of the paperwork for them. But for the most part, they do their own paperwork.
Yet for all that work, a Government inspector can fine a small business owner for paperwork violations alone, even if the business has a completely spotless record and the employer immediately corrects the unintentional mistake. Even the best intentioned employer can get caught in the myriad of burdensome paperwork requirements imposed on them by the Federal Government. The owners of small businesses are not asking to be excused from any obligations or regulations--although they would probably like for us to do that, and it wouldn't hurt for us to have a commission that would review all those things and see if anybody actually uses the paperwork that is required.
One of the forms I used to get to work on was an annual OSHA report. Annually, they had to fill out a form that showed what accidents had occurred--lost-time accidents--and they had to post that in the break room and they had to file it with the Federal Government.
Any time you have an accident or a near miss, it is good to sit down and talk to your employees about it, have them sit down and figure out how it could have been avoided. That will save accidents and lives. It isn't the paperwork that saves the accidents and lives, it is actually talking about it, timely talking about it, not a report that is filled out at the end of the year and stuck up on the bulletin board where people may or may not read it.
Incidentally, I hope everybody will take a look at that form because it is not that readable. It is not that useful. It could be a lot more useful. It actually could help prevent accidents. It doesn't.
It gets sent to the Federal Government. What do you think happens to that form? Nothing useful. There could be a good use for it. We actually could compile that and find out, in the different industries, what sorts of things were happening and share that with those industries. We do not do that. That is a wasted piece of paper. But if you do not send it the first year you are in business and you have been working like crazy to meet payroll and January 31 comes around and it is about the third of February and somebody says, Did you send in that OSHA report? Actually, I think that one goes the end of February, so it is the 1st or 2nd of March. They say, Did you send that in?
Oh, no, I didn't.
He can be fined for that, even though on the 4th of March he fills out the paperwork, posts it in the break room and sends it in and has, during this whole year, been recording all of the accidents in a readable form, talking to his employees about it, and solving the problem.
Why should he be fined for that? Nobody is going to use it. But that is the kind of paperwork violations we are talking about. Remember, it is a Government inspector fining a small business owner for paperwork violations alone--paperwork violations alone, not the oilspills that you heard about earlier. That would not be a paperwork violation. That would be a most definite violation, outside of paperwork. So they have to have a paperwork violation alone and the business has to have a completely spotless record and the employer has to immediately correct the unintentional mistake.
Surely we ought to be able to give small business owners who are trying their best a break on mistakes that don't hurt anyone. Even the best intentioned employer can get caught in that myriad of paperwork requirements.
They are not asking to be excused. What they are asking for is a break, if they have previously complied, they didn't hurt anybody, have a completely spotless record, and they correct for the unintentional mistake.
One small businessman who I had testify before my committee a few years ago when I was working on some of the OSHA things and I was a subcommittee chairman of the Workforce Safety and Training Subcommittee of this same committee, he told Congress:
No matter how hard you try to make your business safe for
your employees, customers, neighbors and family members, in
the end, if a Government inspector wants you they can get
you. The Government cannot tell me that they care more for my
family's safety and my company's reputation than I do.
Small businessmen and women who are the first-time violators of paperwork regulations that don't hurt anyone deserve a break.
Let's talk about providing some regulatory relief for small business. You can see these are not costly things I am talking about here. They should not be controversial. They are pretty common sense. I think we could sit down and draft a bill and probably agree on a lot of this still if we had not polarized ourselves on the floor of the Senate first. It is one of the worst things we do, polarize things instead of work them out. If we try to work them out, we can probably come to agreement on 80 percent of the issues. That is usually what we can do when we work things out together.
The third thing my amendment would do is provide regulatory relief for small businesses. Any increase in the minimum wage places burdens on small employers. It is only fair that we simultaneously address the ongoing problem of agencies not fully complying with the congressional directive that is contained within the Small Business Regulatory Enforcement Fairness Act. Under the law, agencies are required to publish Small Entity Compliance Guides for those rules that require a regulatory flexibility analysis. Unfortunately, agencies have either ignored this requirement or, when they try to comply, they have not done so fully or carefully. My amendment addresses this lapse by including specific revisions that the Government
Accountability Office has suggested to improve the clarity of the Compliance Guides.
The Government Accountability Office suggested that we should clarify the requirements; not change them, clarify them. It would force the Federal agencies to take into consideration the ways that they are harming small business by placing non-commonsense, confusing rules and regulations on them. It is a chance for the small businessman to say: If you impose that, I don't see where it goes anywhere. I don't see where it does anything. Why would you impose that on me?
It is an opportunity for small businesses to respond when the Federal Government is about to change the way they do their business. And it is a law that we passed. Congress said: You have to do this. You cannot affect small businesses without listening to them.
I ought to rephrase that. You can't affect small business unless you present them an opportunity to speak. There is no requirement that the Federal Government listen. No matter what the small businessman says, the agency that is affecting small business does not have to listen. They have to accept the comments. But, currently, that law is not clear enough that they even accept the comments.
I have seen some documents that small business people have sent in to the Federal Government about a problem with a law or regulation that they were trying to comply with. The response they got was, ``No response necessary.''
I have no idea why ``no response necessary'' is a response. That doesn't answer the question. Of course one of our problems is one-size- fits-all Government. We think we can sit in Washington and figure out a rule that will apply to the whole country and to every kind of a business out there and every kind of a job that is out there. That is egotism at its highest, I think. The businesses that are out there have constructive comments to offer about ways to do things better. But you know what? We don't let them contribute.
We vote on a lot of legislation that affects small businesses, and it is only right that they have some opportunity to express their thoughts on how that is going to affect them and in many cases to suggest a better idea.
One of the reasons I go back to Wyoming most weekends is so that I can go around and talk to those people who are doing real jobs. Often, when I talk to them, they say: ``I have got this little Federal requirement that I have to meet and I don't understand it.'' Often, I don't understand it either. But what I like to say is: ``What do you think we ought to do about that?'' By golly, you wouldn't believe some of the commonsense, simple things they suggest that would achieve the same Federal principle in a less complicated, straight-forward way. Often, the problem arises because we don't talk about the issue with the people who are actually doing the work out there. There are a lot of people out there doing a good job, working hard, and trying to figure out what in the heck it is we did in Washington. This is one small place where they are supposed to have input. We said: ``You are supposed to get input.'' Actually, I would like for them to say not only that you get input, but that the Federal Government has to listen as well. That should be the goal.
Let me move on to another one of the six small things that my amendment calls for.
My amendment seeks removal of the barriers to flexible time arrangements in the workplace. I have covered this a couple of times. I need to cover it a couple more times because obviously the other side of the aisle doesn't understand what I am talking about yet. I will try it yet a different way.
What we are talking about is legislation that could have a monumental impact on the lives of thousands of working men and women and families in America. The legislation would give employees greater flexibility in meeting and balancing the demands of working families. The demand for family time is evident. Let me share with you some of the latest statistics: Seventy percent of employees do not think there is a healthy balance between their work and their personal life. Seventy percent of employees say the family is their most important priority. The family time provision in my amendment addresses these concerns head on. It gives the employee the option of flexing their schedules over a 2-week period. In other words, employees would have 10 flexible hours they could work in 1 week in order to take 10 hours off in the next week.
Flexible work arrangements have long been available for employees of the Federal Government. Government employees have been able to do this for two decades, and no one has said: ``You took away the overtime right of Federal employees''.
The flex time program was so successful that in 1994 President Clinton issued an Executive Order extending it to the parts of the Federal Government that had not yet had the benefit for the program. That wasn't a Republican idea then. It might have been in the beginning. But none of these things matter whether they are Republican ideas or Democratic ideas.
It was a Democratic President who extended that benefit to all of the Federal Government and said:
Broad use of the flexible arrangement enables Federal
employees to better balance their work and family
responsibilities and increase employee effectiveness and job
satisfaction while decreasing turnover rates and absenteeism.
That sounds pretty good to me. However, while employees in the Federal Government have these rights, employees working for a small company in Wyoming don't have the same rights. They may be married to somebody in the Federal Government who has these rights and can rearrange their schedule to do things. But the spouse in the private sector and the employer in the private sector are not allowed to make a similar arrangement. That shouldn't ever happen in America. For years, Federal government employees have had these rights--rights that were extended by a Democrat President of the United States who noted: These arrangements work, reduce turnover, and reduce absenteeism. How can you provide these rights to Federal employees and not allow other people the very same right?
I have heard some arguments that with flexible time arrangements employees in the private sector would be forced to do things such as work on a weekend. That is not correct. The bill specifically prohibits any coercion in making these flex time agreements. It has to be a mutual agreement between the employee and the employer.
Unlike the Federal Government, there are businesses out there that do work on weekends. There are people out there who would like to be able to shift their schedule one week to the next without losing their pay, without having to take a day off, and they are willing to do that by working a little bit more in one week and a little less in the next week and having the funds they anticipated, similar to Federal employees.
I don't understand how we can say that is wrong.
I couldn't agree more with former President Clinton. I did not agree with him a lot, but that is one of the things he had right. Now we need to go further and extend this privilege to the private sector workers.
We know this legislation is not a total solution. We know there are many other provisions under this 65-year-old Fair Labor Standards Act that need our attention. But the flexible time provision is an important part of the solution. It gives employees a choice, the same choice as Federal workers. If we are going to keep that from applying to the private sector, maybe we ought to take that away from the Federal employees so they can get their full rights.
Does anyone on the other side of the aisle really want to do that? Do you want to see a revolution? It is the kind of revolution that small business employees may soon provide as well, as they become aware that they have been denied this benefit.
Mr. President, what is the remaining time?
Thank you. I still have two provisions that I need to run through, and I wanted to make sure I got underway on that before my time expires.
The fifth provision in my amendment is extending the restaurant employee
tip credit. The food service industry relies on what is called a tip credit, which allows an employer to apply a portion of an employee's tip income--income they are getting on the job--against the employer's obligation to pay the minimum wage.
To protect the tipped employees, current law requires that a tip credit cannot reduce an employee's wages below the required minimum wage. Employees report tips to the employer because the employer has to report it. Tips that are earned are reported.
We have a few States that do not allow a tip credit. Increases in the Federal minimum wage would require raises for all affected employees in all States. Lack of a tip credit in some States could result in employers having to give raises to what are often are their most highly compensated employees--the tipped staff. As a result the nontipped employees are negatively impacted by the mandated flow of scarce labor dollars to the tip positions. In addition, the employers in these States are put at a competitive disadvantage with their colleagues and the rest of the country that can allocate employee compensation in a more equitable manner.
I must also note that my amendment clarifies that the tip credit provision does not apply all parts of a State wage law. That argument that was used the last time the tip credit was brought up. That is clarified in this amendment. That should not be an argument anymore. The tip credit provision applies only in States that do not have a tip credit; and, only to the minimum wage portion of that State's overall wage hour law.
The sixth and final provision in my amendment is one which provides small business tax relief. As I noted before, some of the people who pay the most taxes in the United States are small business owners. Even the money that business owners put back into the business to reinvest has to have the taxes paid on it. That is at the highest tax rate in the country. If we are going to impose even greater burdens on small businesses, we should give them some tax relief at the same time.
My amendment would extend small business expensing. It would simplify cash accounting methods that make it a little easier for them to do their accounting, and it would provide restaurant depreciation relief.
All of these tax provisions are fully offset. In total, the additional provisions of my amendment are intended to mitigate the small business impact of a $1.10 increase in the minimum wage.
These steps are a partial way in which the cost of a minimum wage increase can be addressed. They will help the businesses that must absorb these increased costs. I share the view of many of my colleagues regarding such an increase on the Federal level. We must do our best to soften the blow. This may be the best means to that end.
I would also encourage all of my colleagues to look at the true root of the problem of minimum wage workers, and that is minimum skills. We all share the same goal--I don't think anybody can deny that--and that is to help American workers find and keep well-paying jobs. I am even going beyond that. I hope they get to own their own businesses. We must, however, realize that minimum skills--not minimum wages--is the problem. Education and training will solve that problem and lead to the kind of increased wages and better jobs we all want to create for the Nation's workers.
Let us work together to get that Workforce Investment Act passed, and go to conference. We didn't get that done 2 years ago. Without the conference, those 900,000 people a year that could be getting paid a higher amount are not. We need to get it passed and get it conferenced. We need to get the President to sign it, and as a result, higher skills and training will be accelerated, and wages in this country will go up.
I urge my colleagues to oppose the amendment offered by Senator Kennedy and support my amendment that raises the wage by the same amount, but then has additional provisions, that provides small business benefits and soften the impact of the increases on the businesses that will have to pay them. If you are interested in small business, you need to support my amendment.
I yield the floor. I reserve the remainder of my time.
Mr. President, how much time do I have remaining?
Notify me when I have 3 minutes remaining.
I will go through the GOP alternatives again. They ought to be bipartisan alternatives. I am afraid in previous discussions they got polarized in spite of changes to the extent that some god policy initiatives that deserve bipartisan support will never have support from the other side. That would be a tragedy.
When the opposition says that my amendment does not have a minimum wage increase, I wonder what bill he is looking at. My bill has a $1.10 increase over the same period of time as his, although I think he is going to make a small change to his bill because there is a slight paperwork problem--but since it is the first-time paperwork problem it probably ought to be forgiven, just like my proposal would forgive small business first-time paperwork errors.
What we are talking about is six provisions that soften the blow of the increased mandate on small businesses.
First, permit family flextime for workers. Employees have the option of flexing their schedules over a 2-week period so they can work more hours 1 week and take hours off the next. The argument we have heard is that we are cutting overtime pay.
If flextime is a pay cut, then Senator Kennedy and many of the Senate Democrats have voted to inflict pay cuts on workers. If flextime is wrong, then so was former President Clinton in 1994 when he extended it to all Federal employees because it increased effectiveness and job satisfaction and decreased turnover rates and absenteeism, the same thing it will do in the private sector. Why cannot somebody married to a Federal employee have the same advantage the Federal employee has?
Second, it would increase small business exemptions from the Fair Labor Standards Act. We have had, since the 1960s, the small business exemption has applied to businesses with $500,000 in receipts. This exemption amount has lagged behind inflation. The small business exemption should be at about $1.5 million. We are only raising it to $1 million.
Every Federal labor law has a small business threshold. To the Civil Rights Act of 1964, it was 15 employees. For the Family and Medical Leave Act, the threshold is 50 employees. Proponents minimum wage increases assert it is necessary to adjust the minimum wage to account for inflation. For the same reason, it only makes sense to adjust a small business threshold as well.
The real value adjusted for inflation of the small business exemption established in the 1960s exceeds $1.5 million. Senator Kennedy uses his benchmark as the minimum wage rate for the same era. The Republican proposal is restrained and reasonable.
The third issue is relief for small business, one-time paperwork errors. Small business people making paperwork errors would receive an automatic forgiveness for the first mistake in paperwork matters. It applies only to routine administrative paperwork requirements imposed on small business by the Federal Government. This is commonsense protection for small businesses from the otherwise ``gotcha'' mentality of Government inspectors and only applies to businesses with spotless records who immediately correct the unintentional mistakes. My amendment also gives small businesses regulatory relief by increasing federal agencies compliance, review, and enforcement of the Small Business Regulatory Enforcement Fairness Act. It requires better compliance assistance for small businesses. Federal Government officials have given too often short shrift to the existing requirement to solicit public compliance guidelines. The Republican package includes specific provisions that the Government Accounting Office suggested to improve the clarity of these requirements.
Another provision of my amendment relates to the minimum wage tip credit for restaurant workers. This is so the restaurant can be sure all employees are being treated fairly, not just the high tip employees.
We also have small business tax relief in the form of simplified cash accounting methods for small businesses. It will mean they do not have to see accountants as often. As an accountant, I think that is a good idea.
It gives quicker depreciation for restaurants, who are a major employer for low skilled workers, and all of the tax provisions are fully offset.
The very modest tax cuts were targeted directly to businesses most likely to have minimum wage workers. Remember that in spite of the rhetoric, this amendment increases the minimum wage in the same amount and on the same dates that Senator Kennedy's two-page proposal does. The difference is that my amendment attempts to smooth some of the bumps for those employers who will be most adversely affected by the increase.
These tax benefits will help small businesses that employ low-skills workers survive without drastic cuts in employment. We are trying to help the small business so that they will be able to afford the increase in the minimum wage. It is not an easy thing to come to the Senate and ask for a minimum wage increase. I am sure Senator Kennedy knows that. He has been working on it a long time. I appreciate he dropped it back to what the Republicans were asking for earlier and what we have in my proposal at the present time.
I yield the floor and reserve the remainder of my time.
I rise to summarize my comments regarding the amendments and to urge my colleagues to cast a vote against the Kennedy amendment and in favor of the minimum wage amendment I have offered.
What is before the Senate are two amendments that raise the minimum wage by the same amount, $1.10 over 18 months. The difference between the bills is that the Kennedy amendment, while raising the minimum wage the same amount as my amendment, fails to acknowledge that any raise in the minimum wage has some negative consequences on the employers, particularly small employers, who must find
the means to pay for the increase. The fact is that a negative economic impact on a small employer will probably result in a negative impact on that small employer's employees. This is an important aspect. When you give a pay increase, you have to find a way to pay for it.
My amendment recognizes that reality and provides some relief for those employers. It should be borne in mind these employers, particularly small employers, are the source of the vast majority of jobs that are held by minimum wage workers. We have to continue to keep these businesses viable and growing as a source of job creation. As I said before, I wish for the people working in those places to be the ones owning the business, and I have shared some examples of how that happens.
I ask that everyone bear in mind it is little solace to an individual earning minimum wage to learn that the minimum wage is increased but that he or she no longer has a job at which she can now earn the higher wage, or that it is not worth anything anymore because inflation took it away.
It is for this reason my amendment contains not only the same increase as Senator Kennedy's amendment but includes provisions designed to soften the blow and ensure that those most-affected businesses continue to create jobs and entry-level, low-skilled employment opportunities.
I urge my colleagues to reject the amendment offered by Senator Kennedy and to vote in favor of the more balanced and comprehensive approach to the minimum wage which is represented by my amendment.
I ask for a unanimous consent request that following the scheduled votes at 4:30 the Senate proceed to the vote in relation to the motion to suspend the rules in relation to the Dorgan amendment No. 2078, with no amendment in order to the amendment prior to the vote; provided there be 2 minutes equally divided prior to the vote. I further ask that Senator Dorgan be recognized for up to 5 minutes prior to the start of the scheduled votes.
I yield back my remaining time.
Thank you, Mr. President.
Mr. President, I urge my colleagues to oppose the Kennedy amendment. Both amendments have the $1.10 minimum wage increase in them. But only my amendment provides for some way to offset that mandate so that small businesses which employ minimum
wage workers can afford the minimum wage.
My colleague's amendment will harm small businesses' economic growth and job creation. It would raise the cost for small businesses without providing any relief to soften the blow, forcing employers to make difficult choices, such as raising prices, reducing employee benefits, or terminating employees.
I urge my colleagues to support my amendment. My amendment protects small businesses' economic growth and job creation. As I said, they both raise the minimum wage by $1.10, to $6.25, in two steps of 55 cents over 18 months.
My amendment recognizes and addresses the fact that all minimum wage increases have certain costs. My amendment protects against the negative impact of this wage hike on small businesses, the biggest source of job creation. This proposal is responsible and reasonable and designed not to dislocate or unintentionally harm workers.
I ask you to support my amendment.
I thank the Chair.
Mr. President, I ask my colleagues to vote for my amendment,
which raises the minimum wage level by the same amount as the previous amendment. The reason this amendment deserves your support whereas the last one did not is that my amendment has some small business offsets that will actually give them a chance to be able to pay the minimum wage increase without having to lay people off, without having to accept some other alternatives that would be very detrimental to employees. This amendment helps the small business people that employ minimum wage workers by giving them some tax breaks which are all offset. This amendment also includes five other good policy initiatives which I have mentioned previously in great detail.
I would ask that you vote for this amendment and provide small businesses with the help they need to be able to afford a minimum wage increase.
Mr. President, I move to waive the applicable section of the Budget Act and I ask for the yeas and nays.