Welfare Reform BIll

ENZI. Madam President, I thank my colleague from Georgia for his outstanding comments. There is a war going on and he made some outstanding points. I have heard several of his speeches and learned a lot from each of them.

I am going to speak now on, I believe, the pending amendment, the Boxer-Kennedy amendment. I will share my thoughts about raising the Federal minimum wage. My colleagues on the other side of the aisle keep talking about the loss of American jobs, but their actions don't match up to their words.

If my colleagues are so concerned about unemployment, why would they do something that would eliminate jobs in this country? If my colleagues are so concerned about helping poor families, why would they do something that hurts poor families the most? Their effort to increase the minimum wage, while attacking the President on job creation, is not based on sound policy and economics.

There is an effort underway to put a smokescreen of unrelated amendments that mask election year politics in misleading rhetoric. It is being done on the reauthorization of the welfare bill.

It is time for us to look beyond the smokescreen and see who is really helped and who is really hurt by Senator Kennedy's amendment to raise the Federal minimum wage.

Every student who has taken an economics course knows if you increase the price of something-in this case, the minimum wage job-you decrease the demand for those jobs. A survey of members of the American Economic Association revealed that 77 percent of economists believe that a minimum wage hike causes job loss.

For small businesses, where most of the job creation in this country is generated, a minimum wage increase is particularly harmful. Having owned a small business in Wyoming, I can speak from personal experience about how detrimental a minimum wage increase would be for small businesses and job growth.

I need to explain something. Very few people in the shoe business I was in were working at the minimum wage, which my wife and I preferred to call the level of minimum skills. Those are the people who first came in and did not have any capability in the kind of job they were going to be doing and we had a starting wage, a starting skills wage. Anybody who was in that wage more than 3 months was not paying attention, and that is the way with most of the businesses in this country.

The minimum wage is the minimum skills wage, and it is the starting wage. It does have an effect on other wages as well. When we raise the minimum wage, then to keep the proper spread between employees of different skills, other jobs get raises, too. Of course, when that happens, there has to be a way to pay for it, and the way to pay for that almost always comes from raising prices. If you raise prices and wages, there is not much gain.

How do I explain to my constituents, most of whom rely on small business for their livelihood, that Congress wants to do something that would foster job loss instead of job creation?

Every day I read letters to the editors of the Wyoming newspapers. One appeared in the Casper Star from one of my constituents about his concerns in September 2002. I came across this letter again. It was written by Imo Harned of Douglas, WY, about the effects of a minimum wage increase. It is a reminder about the true cost of minimum wage increases.

I ask unanimous consent to print this letter in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

THAT'S LIKE NO HELP AT ALL

EDITOR: I first became interested in the effects of raising minimum wage in the 1960s. An employer I knew fired three men he'd employed as watchmen. He remarked that it was worth something to have warm bodies around, but not at 75 cents an hour. Since then I have made it a habit from time to time to ask an employer if raising minimum wage makes a difference to his business. No matter if he pays one person or dozens, the answer is always the same. "There are X number of dollars in the budget and I can't exceed that amount. If it means cutting hours or firing workers, I have to do it to stay within the budget." Personal observations show that within a week of a raise in minimum wage, groceries will raise enough to absorb the increase. Also, people who make more than minimum have to pay the increased costs too, so it amounts to a cut in pay for those who make more.

Several years ago the Wall Street Journal did a study showing that living standards have remained unchanged for people earning minimum wage since that wage was 50 cents an hour! The only difference was that those poor people were in a higher tax bracket and had to pay more taxes.

A person who begins working at minimum wage, who works hard and earns an increase in pay should not be penalized by being returned to the beginning again. Neither should anyone be penalized by having to pay the increased food and utilities that follow every time the minimum wage is increased.

IMO HARNED, Douglas.

Mr. ENZI. Madam President, I have listened to my colleagues on the other side of the aisle who support a minimum wage increase. I have seen their charts and heard their arguments. However, none of their charts or arguments can refute the commonsense and real world observation of Imo Harned from Douglas, WY.

Mr. Harned writes-I am quoting part of it and the whole letter is printed in the RECORD. I am sure my colleagues will want to read it:

. . . I have made it a habit from time to time to ask an employer if raising minimum wage makes a difference to his business. No matter if he pays one person or dozens, the answer is always the same: "There are X number of dollars in the budget and I can't exceed that amount. If it means cutting hours or firing workers, I have to do it to stay within the budget." Personal observations show that within a week of a raise in minimum wage, groceries will raise enough to absorb the increase. Also, people who make more than minimum have to pay the increased costs, too, so it amounts to a cut in pay for those who make more.

Mr. Harned saw through the phony economics of a minimum wage increase. He reached the same conclusion as two Stanford economists: A minimum wage increase is paid for by higher prices that hurt poor families the most. Some argue that we need to increase the minimum wage to help poor families. However, the 2001 study conducted by Stanford University economists found that only one in four of the poorest 20 percent of families would benefit from an increase in the minimum wage. Three in four of the poorest workers would be hurt by a wage hike because they would shoulder the costs of resulting higher prices. A Federal wage hike will hurt the very people the underlying welfare reauthorization bill is designed to help: America's poor families.

I have held on to Mr. Harned's letter as a reminder of the dangers of a "Washington knows best" and a "one size fits all" mentality. An increase in the Federal minimum wage is a classic lesson that Washington does not know best and one size does not fit all.

A Federal wage mandate does not account for the cost of living that varies across the country. It costs over twice as much to live in New York City than in Cheyenne, WY. However, a Federal minimum wage hike that applies coast to coast is like saying a bag of groceries in New York City must cost the same as a bag of groceries in Cheyenne. Local labor market conditions and the cost of living determines pay rates, not Federal minimum wage laws dictated from Washington.
I support an increase for all wages, but that increase should be fueled by a strong, free market economy, not by an artificial Federal mandate that hurts business and workers alike. Artificial wage hikes drive prices up. We should not trick workers into thinking they are earning more when they still cannot pay the bills at the end of the month. We should not trick the American people into believing that the phony economics of a minimum wage increase will improve the standard of living in this country. Nor should we trick the American people into believing that a minimum wage increase is without cost.

The smoke and mirrors of a minimum wage increase is not the way for American workers to find and keep well-paying jobs. We have to encourage, not discourage, job creation, and we have to equip our workers with the skills needed to compete in the new global economy.

It is one of my goals to make sure that the unfilled higher paying jobs can be filled by Americans. I talked about the minimum wage being a minimum skills wage. There are higher paying jobs out there, but you have to have the skills for them. How do you get the skills for them? We have a bill. It is called the Workforce Investment Act. It reauthorizes the Nation's job training and employment system, and it updates it to the modern jobs. It allows people to be working in the areas of highest need in this country, instead of forcing those jobs overseas.

That bill passed out of the Health, Education, Labor, and Pensions Committee unanimously. We passed it on the Senate floor by unanimous consent last November. That means nobody wanted to amend it and nobody objected to what was in the bill. That is as bipartisan as you can get.

Where is that bill now? It is languishing around here because the minority party will not let us get a conference committee appointed to resolve the differences with the House, the final step for the bill. The House has passed a bill. It is a little different from the Senate bill. But we need to meet and work out the differences and get that final bill.

What does this mean in the way of jobs? Training for 900,000 jobs a year. That is pretty significant, training for 900,000 jobs a year. I kind of get the feeling we do not want to resolve that until after November so that it can be a part of the politics of the Presidency. That is wrong. It ought to be worked out now. We ought to have a conference committee. We ought to get it done. If we want to take care of jobs in this country, if we want people to be making more and to be making more real money, we ought to get them trained into the skilled positions in the jobs that are vacant in this country right now before we ship them over to another country. We need to have a conference committee. That would provide jobs. That will provide increased wages. That will provide real increased wages, not just inflationary wages that will drive up the price of all of the goods and absorb, as Mr. Harned said, in 1 week the amount of the raise.

I owe Mr. Harned and all my constituents sound policy, not election year rhetoric. I owe it to Mr. Harned and all of my constituents to remove the smokescreen around the minimum wage debate and expose its true cost.

The Boxer-Kennedy amendment to raise the Federal minimum wage ignores the true cost of a minimum wage increase on America's workers and businessmen.

I hope we can put this debate, which is unrelated to the underlying bill, behind us. I hope we can move beyond election year theatrics and get to the real work of helping America's low-income families.

I urge my colleagues to oppose the Boxer-Kennedy amendment and to read the letter of Mr. Harned in full.
I yield the floor.