WASHINGTON — The Senate is set to vote on two bills this week that would increase the minimum wage and mend loopholes in the Central American Free Trade Agreement, but the prospects for their passage are unclear.
The House passed the bills early Saturday morning before adjourning for a five-week summer recess, but some Senate leaders are perturbed over the political maneuverings of their counterparts in the House, and that could influence the outcome of the votes.
If approved by the Senate and signed by the President, the minimum wage would increase for the first time in nearly 10 years to $7.25 from $5.15 an hour in a three-year phase-in. However, the bill could run aground in the Senate, because GOP House leaders paired the wage hike with a permanent cut in inheritance taxes for multimillionaires, a measure that has failed to gain enough support for Senate passage this year. The Senate defeated a measure in June to increase the minimum wage.
A second bill that aims to overhaul pension laws and end underfunding of employer-sponsored pension plans includes provisions making changes to CAFTA to help ease the impact of the implementation of the trade deal on U.S. companies doing business in the region.
Senate Majority Leader Bill Frist (R., Tenn.) said on the Senate floor Monday that he intended to bring up both bills for a vote before the Senate adjourns at the end of the week for a monthlong recess.
For retailers, the minimum wage and estate tax bill offers pluses and minuses. On the downside, smaller retailers and independent boutiques could be adversely affected by an increase in the federal minimum wage, although the impact will vary by state. On the plus side, the bill would extend to companies tax credit programs that expired at the end of 2005 and would permanently cut inheritance taxes for multimillionaires.
“We’ve always been concerned about the federal government raising the minimum wage because of how it impacts small businesses and even big businesses,” said Steve Pfister, senior vice president of government relations at the National Retail Federation. “We’ve always said the minimum wage should be dictated by the market. We have maintained that in this package, because this minimum wage hike is being moved for political reasons, we certainly, while not being thrilled with the minimum wage increase,” support certain provisions, such as tax breaks for businesses.
Related Articles
You May Also Like
Paul Kelly, senior vice president for federal and state government affairs at the Retail Industry Leaders Association, said the group’s members, which include Wal-Mart, supported tax credit extensions that give credits to employers for hiring and training people who were recently on public assistance. But they did not take a position on the minimum wage increases or estate tax cuts.
“The tax extensions are very important provisions in the bill for our members,” said Kelly, who noted that many companies have been burdened with administrative headaches because the programs expired at the end of the year.
The Senate majority leader said the Senate will also take up the pension bill, which contains provisions minimizing the impact of the implementation of CAFTA on U.S. retailers, importers and textile producers. The move by the House is aimed at fulfilling commitments made to House textile-state members to secure their votes on the controversial trade accord, which narrowly passed last year.
The provisions give the President limited authority to change the rule of origin in CAFTA for pocketing and lining to a U.S. or regional-only requirement. As the trade law stands now, apparel manufacturers in the CAFTA region can use Asian pocketing and lining fabrics, which the domestic textile industry has argued severely hurts U.S. pocketing and lining producers.
“The opportunities are few and far between if the Senate fails to vote on it this week,” said Cass Johnson, president of the National Council of Textile Organizations, which has pressed Congress to approve the CAFTA changes quickly.
The bill would also allow retailers and apparel importers that produce apparel in Central America to apply for retroactive refunds on unintended duties they have been paying due to the staggered implementation of the trade accord.
“This is a very positive step,” said Stephen Lamar, senior vice president at the American Apparel & Footwear Association, acknowledging there is some concern the Senate might not vote this week. “If companies don’t know the environment they are trading under, they are less eager to place business in the region, and that is something we want to avoid.”