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Managing America

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Week Ending January 12, 2006

H.R.2 To amend the Fair Labor Standards Act of 1938 to provide for an increase in the Federal minimum wage.

The bill requires that employers pay workers $5.85 per hour within 60 days of passage. Twelve months after that the hourly rate must be raised to $6.55 per hour. After twenty four months and 60 days the employer must pay a minimum wage of $7.25 per hour.

In the Northern Mariana Islands the minimum hourly wage will be raised to $3.55 per hour within 60 days of bill passage. Six months from then the wage will increase by $.50 per hour.

The Congressional Budget Office calculated in 2006 regarding a similar bill, HR 2429, that the cost to the federal government would likely be non-existent because few if any Federal employees are paid at the minimum hourly. Also, on the aggregate, those receiving the minimum increase are not likely, the CBO concluded, to be receiving Federal aid and therefore will not find their benefits reduced with an increase in wages. CBO does not see any great increase in tax revenues as a result of the wage hike.

However, CBO recognizes the bill as one that will affect the $131 million starting point that defines an unfunded mandate in the private sector. CBO concludes that the rise in wages paid in 2007 will cost the private sector $300 million rising to $1.5 billion in 2008, $4 billion in 2009, $5.7 billion in 2010 and $5 billion in 2011.

State, local and Tribal Governments will see increased cost of $0 in 2007, $100 million in 2008, $200 million in 2009, $300 million in 2010 and 2011.

Sponsor: Rep. George Miller (D-CA-7^th)

Vote: Passed House 315 to 116 (RC 18) January 9, 2007. A Motion to recommit the bill failed 144 to 287 (RC 17)

Cost to the taxpayers: “CBO estimates that enactment of an identical bill in the next Congress would have no significant effect on the direct spending and revenues of the federal government. Because a very small number of federal

employees are paid the federal minimum wage, the bill would have a minor effect on the budgets of federal agencies that are controlled through annual appropriations.”

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