August 04, 2006
The Death Of The Trifecta
The “Trifecta” fusion legislation was drawn up by Republicans and endorsed by Sen. Maj. Leader Bill Frist as a way to supply his vulnerable incumbents with a graceful political out on the minimum wage and to send them home with two solid, tax-cutting accomplishments. It became a self-described Hail Mary to shine his image as Majority Leader before he retires. There are 14 legislative days until Congress begins to campaign full-time.
Frist had already bruised the feelings of two important committee chairmen, Sen. Mike Enzi and Sen. Chuck Grassley by agreeing with House Republicans to jumble a permanent "fix" of the inheritance tax with the minimum wage increase and business tax reduction extenders.
Republicans, with the tacit approval of National Restuarant Association and the Chamber of Commerce, had resigned themselves to a wage increase provided the tip credit and the business tax extenders passed without amendment. The National Federation of Independent Business made it known that its members would swallow a minimum wage hike as long as Congress permanently reduced the burden of what they called the “Death Tax.”
For Democrats, the dilemma was almost diabolical. Raising the minimum wage was, in fact, an urgent priority for many liberals, and the pressure from labor lobbyists was intense. But a high-profile failure for Republicans would give their challengers in competitive House and Senate races a new cudgel.
Democrats made the choice as a caucus: the enticement of the wage notwithstanding, its provisions on tipped workers were too risky. The drawbacks to passage outweighed the benefits. “Bad policy and good politics,” said one senior Senate aide.
Minority Leader Harry Reid (D-NV) reached into his closet and put on his whip clothing for perhaps the last time in this Congress. He started making telephone calls to a half dozen wavering Democrats last Friday and never stopped.
Maria Cantwell, the first-term senator from Washington State facing a spirited and well-financed challenger in Mike McGavick, was a critical swing vote. The Senate bill already included goodies for the timber industry and other sweeteners. But Cantwell was bothered by the minimum wage provision and telephoned Frist with her concerns.
Many states, especially those with powerful service union sectors, including Reid’s Nevada and Cantwell’s Washington, had passed laws to prevent employers from deducting tips to reach the required minimum wage. Section 402 of the bill stated that “any State” or county or city whose law “excludes all of a tipped employee’s tips” from “being considered wages” would not be able to “establish or enforce the minimum wage provisions” of that law unless the state decided to write new legislation.
The upshot of that thicket of legislese: in states that excluded tips from the minimum wage, tens of thousands of workers might actually see their wages go down. The Congressional Budget Office’s score of the bill was likewise explicit. The bill “would preempt the minimum wage laws of states that exclude tips from being considered wages in determining if certain employees have been paid the applicable minimum wage." [MARC AMBINDER]
That interpretation didn’t sit right with Frist. The U.S. Department of Labor, which would enforce the legislation nationally, told Frist’s office that under no circumstances could the new law reduce the current wages of any worker. The tip adjustment would kick in only if a state decided to increase its laws above the current level.
Cantwell’s legislative director, Jennifer Griffith, asked her staff to run that interpretation by the Washington state agency that enforces wage regulations.
Gary Weeks, the state department of labor’s director, responded quickly. The bill would require Washington State to count tips toward the minimum wage level. It would, in Weeks’, words, “nullify” an employer’s obligation to pay the full $7.63 that Washington State required. True, the bill allowed state legislatures to reinstate the full, non-tipped wage. But in the meantime, wrote Weeks, workers who received tips “would see a decrease in income.”
Frist’s legislation manager, Rohit Kumar, looked into Washington state law and made an overture. The Senate would rewrite the tips wages provisions to explicitly exclude Washington State in one important area. If the state left its minimum wage at its current level -- $7.63 an hour – the tip credit wouldn’t be triggered and no worker would lose any money.
Cantwell said no. That would hamstring her state legislature from further increasing the minimum wage.
Frustrated, Kumar asked Griffith what type of fix Cantwell would accept.
Simple, responded Griffith: delete the tip provisions entirely.
That request broke Frist’s patience. He tried to approach Cantwell on the Senate floor. She shied away, according to Frist aides. A telephone call placed to Cantwell’s office wasn’t returned; Cantwell’s office says they never received one.
Frist was done dealing. He thought he had negotiated in good faith and was prepared to extend Cantwell the extraordinarily courtesy of exempting her state and just a few others from laws that would be enforced in the rest. Privately sympathetic to a higher minimum wage, Frist was concerned, his aides say, that the cost to employers of an increase unfettered by reasonable allowance for tips would be too high. In any event, the House would never accept it.
By late Wednesday night, it was clear to vote counters in both parties that Frist was short of cloture. “It became obvious that the Democrats were not going to step up. They were going to hide behind confusing the issue,” said one senior Republican aide.
Reid suggested to Frist that he hold the vote on Thursday, rather than Friday. At about 8:15 Thursday night, Frist announced the vote. Better to get it over with and get the bitter bill out of the way. Frist changed his vote to “no” at the last minute, a token move that allows him, in theory, to resubmit the vote for cloture again.
In Frist’s view, Cantwell’s desire to prove that the Senate was gridlocked trumped her willingness to compromise. She was responsible for denying workers any wage relief and businesses new incentives to grow.
Early Friday, the National Republican Senatorial Committee sent out a press release saying publicly what Frist couldn’t. “Cantwell’s Deception,” it was titled. NRSC’s Brian Walton wrote that "Instead of voting to deliver for the people of Washington state, Maria Cantwell gave into political pressure and hid behind a fabricated excuse.”
McGavick was “profoundly disappointed” in Cantwell’s vote, according to the Associated Press.
Cantwell headed back to Washington State to campaign on Friday knowing that she’d given her opponent an issue but confident that she’d stuck to her principles.
Posted at 08:15 PM
Comments
I fail to understand the neutrality of the phrase "a permanent fix of the inheritance tax."
Jeff H | 08.04.06 08:33 PM
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Could it be that instead of moving for partisan gain, the Democrats just didn't believe that slashing the estate tax and perhaps the wages of minimum wage earners in half a dozen states just wasn't good policy?
Jonathan Singer | 08.04.06 09:56 PM
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Why are employer being allowed to pay their workers who receive tip income $2.13 an hour instead on $5.15 an hour? Consumers who tip workers are obviously attempting to increase these worker's earning and yet our federal government seems to think that these worker's wages should be lowered. When our federal government lowers minimum wage for tipped workers, it negates the benefits consumer's have attempted to bestow on these workers. If the workers are not benefiting from the consumer's tip, someone else must be benefiting.
You see, our federal government has passed a law which allows employers an ability to fraudulently benefit themselves to the consumer's tip. Obviously if consumers are tipping at the same time employers are being allowed to reduce their workers hourly wages, the tips which are being presented will not benefit the worker. The reduced hourly wages will negate much or all of benefit to the employee and the benefit of the consumer's tip will instead go to the employer who is now saving money because consumer's have tipped his workers.
The federal tip credit is a law which fraudulently steals the benefits of the consumer's tip so that employers may benefit themselves to the moneys presented. Proof of my assertion can be witnessed across our country as businesses blatantly solicit tips with tip jars where for decades tips were never solicited. Businesses now know that they may financially benefit themselves to the consumer's tip without any consent on the part of the consumer. Businesses have succeeded in lobbying are federal government for an ability to steal their worker's tips.
Imagine working in a restaurant where you receive $40 in tips every day. Now imagine your employer being allowed to reduce your hourly wages by $40 a day because you received tips.
Does it really matter whether employers are allowed to reduce the employee's hourly wages or allowed to steal the employee's tips? Both amount to the same thing. If you receive $40 in tips and your employer is allowed to reduce your wages by $40 that day, you are going to lose out on the $40 customers gave you. You may go home with $40 in tips in hand, however your paycheck will be shorted $40 and in the end you will benefit nothing from the $40 you were given. Now, imagine what would happen if your employer were simply allowed to steal your tips. If you receive $40 in tips and your employer is allowed to steal that $40 in tips, you are again going to lose out on the $40 customers gave you so that in the end you will benefit nothing from the $40 you were given.just like you did when your employer was allowed to reduce your hourly wages. I guess our federal government thinks we are too stupid to figure out that their tip credit bill is nothing more than a bill allowing businesses to commit blatant crimes. They seem to think that they can camouflage the truth with a little fancy wording and some meaningless rhetoric.
The tip credit is nothing but fraud on the consumer and theft of the tipped employee's property.While employees will go home with nothing extra in many cases, their employers will go home with an extra $40 in their pocket because they have been allowed to reduce their worker's wages, save money and profit themselves to the tips consumers are presenting their workers.
The Federal tip credit must be repealed on the grounds that it is not only fraud on the consumer but an injustice to the workers. The tips consumers present to certain workers in the service industry are being turned into financial benefits for business owners. Please note that employers are and will continue to solicit tips from the public now that our government has allowed businesses an ability to take the consumer's tip for themselves. Look at all the tip jars that have popped up over the last several decades. The reason business are putting out tip jars is because our government has passed a law which, despite it's good intentions, does nothing more than allow business owners an ability to benefit themselves to the consumer's tip.
In a recent vote in the Senate, four Democrats joined 52 Republicans in a vote to expand the federal tip credit to all states. The tip credit is a law passed back in the 1960's which establishes a $2.12 minimum wage for all workers who receive tip income. Since state laws may be stricter than federal law, seven states have opted to require employers to pay tipped workers $5.15 an hour or more instead of the federal tip credit rate of $2.13 an hour.
The question that remains is, why are employers being allowed to pay tipped workers less in hourly wages? The public is obviously tipping them to increase their earnings and yet our federal government is attempting to decrease their earnings. Why?
The tip credit was passed for one reason and one reason alone. Business owners want an ability to steal their worker's tips. Imagine working in a restaurant where you receive $40 in tips every day. Now imagine your employer being allowed to reduce your hourly wages by $40 a day because you received tips. Who is benefiting from the $40 consumers gave you? You will go home with nothing more than what you would have gone home with had customers not even tipped you. You see, if an employee doesn't receive tips, he must be paid $5.15 an hour or the prevailing state minimum wage. Your employer, on the other hand, saw a reduction in staffing costs and as such the consumer's $40 tip became savings for the employer and subsequently direct profits for the employer.
Our government seems to think that, despite the fact customers have given you $40 in tips, you should only be paid minimum wage. Why would they not want you to actually have the $40 that was given you? Why are their efforts clearly directed at depriving you of the additional income consumer's have attempted to bestow on you?
Our federal government has passed a law that blatantly allows businesses an ability to steal their worker's tips. Instead of openly allowing employers an ability to steal their worker's tips, our government has devised a means by which employers can indirectly steal their worker's tips through payroll deductions. Instead of taking their tips directly, employers may deduct part or all of the employee's tips from his paycheck. While you may have been given $40 in tips, our government has figured out a way to allow employers an ability to steal your tip. Our government has passed a bill that allows employer an ability to reduce your wages by as much as $40 a day. What this means is that if you receive $40 or more in tips every day, your employer can steal them by reducing your wages by $40.
Not only should the 56 senators who voted to expand this corruption to all states be voted out of office, they should be arrested and tried on charges of conspiracy to commit fraud. The consumer's tips are not intended for the financial benefit of business owners, and yet the tip credit, which these senators are so eager to expand to all states, fraudulently gives over the financial benefit of the consumer's tip to business owners.
Allowing business an ability to reduce a tipped workers wages is no different than allowing businesses an ability to steal their worker's tips. If a group of senators were caught attempting to pass a law that would allow the organizers a charity to steal the charitable contributions for themselves, those senators would be tried on charges of conspiracy to commit fraud. Why are these senators, who so blatantly attempt to write laws allowing businesses an ability to steal their worker's tips, any different? Please note that while some will argue that charities are allowed to take part of the contributions for operating costs, business owners are not like charity organizations for they derive revenues from the operations of their business and the work their employees are providing. Businesses should have no reason to take any part of their worker's tips.
Sincerely,
Gary | 08.22.06 04:17 PM
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ccl-onlinetr | 02.03.08 05:39 PM
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ccl-onlinetr | 02.03.08 05:39 PM
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ccl-onlinetr | 02.03.08 05:40 PM
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lostyand | 03.01.08 08:51 AM
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