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Clinton Signs Minimum Wage Hike

August 21, 1996|PAUL RICHTER and JAMES GERSTENZANG | TIMES STAFF WRITERS

WASHINGTON — President Clinton signed minimum wage legislation Tuesday that will give the lowest-paid 11% of the American work force a raise of 90 cents an hour.

In the first of three bill signings in his pre-convention week, Clinton called the measure "pro-work, pro-business and pro-family." Evoking a venerable Democratic tradition, he fixed his signature in a South Lawn ceremony on the desk used by Frances Perkins, President Franklin D. Roosevelt's labor secretary.

"This bill says to working people of America: If you're willing to . . . go to work, your work will be honored," said Clinton, who was flanked by minimum wage workers, members of Congress and other supporters.

The first stage of the increase, a 50-cent-an-hour hike to $4.75, will take effect Oct. 1. That will be followed by a 40-cent-an-hour increase to $5.15 on Sept. 1, 1997.

Those raises will give an $1,800-a-year increase to the $4.25-an-hour minimum wage workers, who now gross $8,840 a year if they are employed full time.

Clinton, whose administration did not begin to push the issue until 1995, portrayed the measure as one of two related steps that his administration has taken for the working poor. The other is a change during his administration in the earned-income tax credit for the working poor that provides about $1,000 a year in tax breaks to a family of four earning $28,000 a year.

As a real-life example, Clinton introduced Kathy Wilkinson, a student at West Liberty State College in Wheeling, W. Va., who earns the minimum wage as a math lab assistant and tutor.

"It's going to be such a relief to be able to pay my gas and electric [bills] all within one month," said Wilkinson, a single mother of two. She said that the law also will enable her to buy musical instruments so her children can join their school band.

About 38% of minimum wage workers are the sole wage earners in their families. The measure will affect 1.3 million workers in California.

The bill also contains a series of features added in its final stages to soften opposition from small business and Republicans, who had battled the wage increase and argued that it would kill jobs.

Among other things, those features will give more generous equipment write-offs to small businesses, provide a new type of pension plan for companies with 100 or fewer employees and allow stay-at-home spouses who are not wage earners to contribute up to $2,000 a year tax-free to individual retirement accounts.

The law also will subsidize adoptions by offering a $5,000 tax credit for domestic and foreign adoptions through 2001 and a permanent $6,000 credit for adoptions of hard-to-place children.

Congress passed the minimum wage measure on Aug. 2 after a ferocious months-long partisan battle that saw Democrats pushing hard for a vote on the issue and GOP leaders ultimately changing position to support the bill. Their switch allowed Republicans to avoid voter wrath on an issue that polls show has the support of more than 80% of the public.

Adjusted for inflation, the minimum wage is now at its lowest value in 40 years.

The campaign of GOP presidential nominee Bob Dole, who long resisted its passage, praised the legislation Tuesday but suggested that the initiative would do less for workers than Dole's proposed 15% across-the-board cut in tax rates.

"The signing of today's minimum wage bill is a helpful but small step toward addressing the economic anxiety of American workers," the Dole campaign said.

House Republican leaders also spoke in favor of the law Tuesday but did so because it included the tax breaks for small businesses. House Speaker Newt Gingrich (R-Ga.) said the leadership was pleased the president was signing a measure that provides "real tax relief to the greatest job-creating force in our economy."

The tax breaks will cost the federal Treasury $21 billion over 10 years.

The minimum wage issue has substantial appeal to independent voters, as well as to organized labor. Since the first 50-cent increment will go into effect just five weeks before the election, it is likely to be fresh in the minds of millions of wage earners.

Business groups have warned that the higher wages will lead to the elimination of 300,000 to 600,000 jobs. In addition, employers have said that the increases at the bottom rung of the economic ladder will force them to pay higher wages to more skilled employees who demand that their pay be raised too.

In interviews, representatives of several smaller companies that employ large numbers of minimum wage workers generally reported that the wage increase will have only a marginal effect on their operations--even as they warned that expansion will be curtailed, prices will go up and vacant jobs will go unfilled.

Richard Schwarz, owner of a San Diego 7-Eleven store, said that the pay raise will cost him $232 weekly, which he will meet by increasing some prices, covering some work shifts himself and cutting others' work hours.

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