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WASHINGTON — Competing Republican and Democratic bills to boost the federal minimum wage for the first time in eight years both failed in the Senate on Monday.

However, a bankruptcy bill that would make it tougher to entirely wipe out debt under Chapter 7 of U.S. bankruptcy law appeared headed for eventual Senate passage, though its fate in the House is uncertain. Department stores, mass merchants and credit card companies have long sought the measure.

The wage-hike proposals — opposed by retailers — were being considered as amendments to the bankruptcy bill.

Sen. Edward Kennedy (D., Mass.) wanted to increase the $5.15 wage to $7.25 over 26 months. Sen. Rick Santorum (R., Pa.) called for boosting it to $6.35 over two years. Santorum’s amendment also called for a series of small business tax breaks and would allow workers to voluntarily exchange time off instead of receiving overtime pay, as required by federal law.

Under an unusual agreement between Republicans and Democrats, a 60-vote threshold for passage was set instead of a simple majority of the 100-member Senate. By making the 60-vote deal for passage, both political parties are now able to claim support for increasing a minimum wage hike.

The agreement also was struck in order to head off a promised Kennedy filibuster of Santorum’s amendment, which could have sidetracked the bankruptcy bill and a list of pending amendments. Such a deal was possible because there is considerable support among Senate Democrats for bankruptcy reform, in addition to strong backing among Republicans, who hold a 55-44 majority. There is one Independent.

Retailers feared passage of Kennedy’s amendment on two levels.

“Not only would the increase proposed by Sen. Kennedy represent an unprecedented and extreme hike in the entry-level wage, it also would serve as a poison pill to the bankruptcy bill, which has been a long-standing priority of the retail industry,” Steve Pfister, senior vice president for government relations with the National Retail Federation, said in a statement.

Kennedy vowed to keep pressing for a minimum wage increase. If he succeeds, a wage boost would face an uphill battle in the House, where Majority Leader Tom DeLay (R., Tex.) said he would block it.

This story first appeared in the March 8, 2005 issue of WWD.  Subscribe Today.

But Kennedy and House Democrats, along with labor and consumer groups, are poised to fight.

“We have too many Americans now living in poverty…one out of every 10,” Kennedy said on the Senate floor. “The greatest impact of the minimum wage will be lifting up Hispanic and African-American workers.”

Santorum cited studies concluding a minimum wage boost the size of Kennedy’s would threaten the economy. The Republican called his own proposed increase “modest…[and] there are a lot of things in here that help small businesses absorb some of the cost.”

Should the bankruptcy reform bill clear the Senate, its passage in the GOP-controlled House isn’t assured, particularly if the Senate bill contains an amendment proposed by Sen. Charles Schumer (D., N.Y.), scheduled for consideration today. The amendment would prevent people from discharging debts arising from property damage caused in abortion-clinic violence.

Three years ago, bankruptcy reform legislation passed the Senate with Schumer’s amendment, causing an uproar among conservative Republicans in the House. The lower chamber, which earlier approved bankruptcy reform, then voted to reject it, killing the measure.