Would a true blue Democrat vote to cut wages below the current minimum wage for workers in Washington State? The Republicans in the US House of Representatives have prepared a Faustian bargain for Democratic Senators in Washington State and 6 other states with their just passed H.B. 5970. While the bill purports to raise the minimum wage, for many workers in Washington State it does the opposite.
We posted on this bill yesterday noting that Washington State’s 3 Republican Congressman (Reichert, McMorris and Hastings) voted for H.B. 5970. On the surface it seems to raise the minimum wage over 3 years but the details say otherwise for many workers in Washington State.
As Rose Eisenbrey of Counterpunch notes:
“The Estate Tax and Extension of Tax Relief Act of 2006, H.R. 5970, which passed the House on July 29, raises the minimum wage for most employees. But for many employees in seven states, H.R. 5970 means a wage cut. Section 402 of the bill strikes down state laws that require employers to pay a full minimum wage without relying on tips from customers to reach the minimum level.1 States that have those laws will see the minimum wage for tipped employees fall as much as $5.50 per hour.
Seven states-Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington-exclude, in the words of H.R. 5970, ” all of a tipped employee’s tips from being considered as wages in determining if such tipped employee has been paid the applicable minimum wage rate.” According to Section 402, therefore, the “minimum wage rate provisions” of those state laws may not be enforced “with respect to tipped employees.” Tipped employees (defined as any employee who earns more than $30 per month in tips) would be left without any minimum wage protection under state law in those seven states.
In most cases, the tipped employees would be subject to the federal minimum wage law, which allows employers to pay as little as $2.13 an hour and to rely on customers’ tips to make up the rest of the $5.15 minimum wage. This is known as a “tip credit.” Thus, in Washington, tipped employees would see their minimum wage cut from its current $7.63 an hour (plus tips) to $5.15 an hour (including tips). Employers would see their minimum wage obligation to tipped employees fall by $5.50 an hour-from $7.63 an hour to $2.13 an hour (assuming $3.02 in customer tips). For example, an employee who is currently paid the state minimum age of $7.63 an hour and receives $3.02 in tips earns a total of $10.65 per hour. Under the House-passed bill, the employer would be permitted to pay only $2.13 an hour and count the customers’ tips to make up the rest of the $5.15 federal minimum wage. The employee would lose $5.50 per hour in pay.”
The bill also raises the tax exemption on estate taxes to $5 million per person. Stashed away in the bill is a provision to keep the sales tax exemption on Federal income taxes and provisions to aid timber companies.
While some of the provisions in this bill might tempt some to support it, it is a lose/lose for Washington State voters and workers. We already have the highest minimum wage in the country at $7.63 an hour, so we gain nothing here. As noted above, Washington workers actually lose.ose.
And loss of the estate tax dollars means a huge cut in Federal tax dollars for services that benefit lower income people. The estate tax affects a few thousand people who are millionaires.
The vote should be an easy one for Cantwell and Murray. Whatever benefits are in the bill are more than offset by lowering the minimum hourly wage for many Washington workers.
