Action seen in coming months for min. wage, pension reform

BOTH PENSION reform and an increase in the minimum wage have been building steam for several years, but it remains to be seen whether they have enough momentum to move a Republican-controlled Congress and a Republican president this year.

A tentative agreement in the Senate would allow Republicans to bring a minimum wage bill to the floor by Memorial Day, and allow the Democrats to offer a substitute. Meanwhile, House minimum wage supporters have begun urging House Speaker Hastert to follow a similar course.

Senate Health, Education, Labor and Pensions ranking member Edward Kennedy, D-Mass., a frequent champion of workers' rights, told a United Auto Workers legislative conference earlier this year that he would fight for a minimum wage increase.

"The minimum wage would have to be $8.05 an hour today, instead of its current level of $5.15, to have the same purchasing power it had in 1968," Kennedy declared. "That disparity shows how far we have fallen short over the past generation from guaranteeing low-income workers their fair share of the nation's prosperity."

Kennedy, the chief sponsor of the Democrats' minimum wage bill, is proposing to raise the current $5.15 per hour by $1.50 over two years, while Republicans favor raising it by $1 over three years.

GOP Seeks Business Perks

A minimum wage hike has not been enacted since 1997, but Republicans are not likely to let it through without adding sweeteners for businesses to offset their expected costs.

A key GOP aide said the Republican bill would include a "blend of minimum wage policy, tax relief policy and any needed labor law changes." Republicans earlier this year pegged the tax relief component at $73 billion, but said it could go higher.

Republicans also are seeking labor law changes that could include allowing employers to address flexible working hours and overtime compensation for hourly wage earners. This is likely to draw fire from Democrats.

The Democrats have yet to decide whether tax relief will be part of their bill, a Kennedy spokesman said.

A key concern for Democrats is that President Bush has indicated he supports a minimum wage increase if states are allowed to opt out of it.

Such an option would not work, Kennedy has insisted. "The federal minimum wage protects the vast majority of workers across the country," he told the UAW. "But those who are at the tender mercy of the states often face real hardship. The state minimum wage is $1.60 an hour in Wyoming, $2.65 an hour in Kansas and $3.35 an hour in Texas - and that's unacceptable."

Hastert Awaits Senate Action

The House appears further behind in tackling the minimum wage issue. "We're going to wait and see what the Senate does," said a Hastert spokesman. However, the Hastert spokesman said he did not think a minimum wage hike would be part of the broad tax package based on Bush's tax cut plan.

"We don't want to cost our members any votes on the most important tax package of the year," the spokesman said.

"The best way to put more money in the pockets of American working families is through tax relief - which the president is pursuing vigorously," added a spokesman for House Education and the Workforce Chairman Boehner.

Meanwhile, the pension reform issue keeps chugging along.

Even though it has been nearly four years since they began pushing it, Reps. Rob Portman, R-Ohio, and Benjamin Cardin, D-Md., are confident that the time is at hand to pass their pension reform bill.

"We know there won't be a deal with Social Security in 2001, but we can deal with private savings," Cardin told CongressDaily.

Portman-Cardin seeks to increase the amount of money employees can contribute to their retirement plans, improve the portability of such plans and encourage businesses to offer plans to their rank-and-file employees.

A senior GOP House member suggested that Portman-Cardin could be a good way to "pull the train" on taxes. He pointed to the fact that more Democrats seem to be getting on board.

"Given the economy, it could be very helpful," the House member said of the Portman-Cardin proposal.

However, pension reform was not included in the $1.6 trillion Bush tax cut plan that was forwarded to Capitol Hill earlier this year.

House Ways and Means Chairman Thomas said that since the pension bill already has passed the House, "it may not need as much vetting as other things." Thomas said he would explore pension reform and other issues in tax bills following Congress' spring recess (see related article, page 10).

Senate Version Has 15 Cosponsors

Meanwhile, Senate Finance Chairman Grassley and ranking member Max Baucus, D-Mont., introduced their version just before the spring recess. Their proposal is comparable to House bill, and started out with 15 Senate cosponsors.

Outside experts believe that legislation along this line is likely to pass this year. "The only question now is when," said James Delaplane, vice president for retirement policy at the American Benefits Council.

"Partly because the bill is tax-related, its fate rises and falls depending on the fate of tax bills," he added.

Reform of pension laws is seen as increasingly necessary as Americans move from job to job - and as the fate of Social Security reform remains unclear. "We need to give people new tools to save," Delaplane said.

Kennedy Considers Pension Support

The House effort on pension reform is expected to begin in earnest in midto late summer, a source close to Boehner said. Hearings will probably take place before then, the source added.

The Senate effort - which has the support of Senate Health, Education, Labor and Pensions Chairman Jeffords - contains three tax credits not in the House bill, to help small businesses.

The credits would assist some businesses with costs to start up pension plans and help defray some of the costs of contributing to the retirement plans of rank-and-file workers.

The bill also includes an individual, non-refundable tax credit to help lowincome individuals make contributions to individual retirement accounts or employer-sponsored defined contribution plans, such as 401(k) plans.

Jeffords held hearings last year on concerns that older workers were at a disadvantage when their companies converted their pension plans to cash balance plans. The Senate bill is expected to address this issue.

Even Kennedy, who has opposed similar provisions before, indicated through a spokesman that he would likely support the Senate bill because of changes that would make it more worker-friendly. Kennedy has said he wants to put pension reforms "on the agenda" but to get rid of language that "disadvantages workers."

Other Items May Be Attached

Other items could move hand-inhand with pension reform.

Among them are ways to increase stock options and investment opportunities for workers and modernization of the Employee Retirement Income Security Act - although the recent instability in the stock market may give Congress members pause.

A recent study by the Wharton School concludes that stock options are still in demand and increase shareholder value. Companies that grant more stock options to managers and technical and non-technical staff perform better than companies that do not offer stock options to those types of workers, the study said.

Boehner, who introduced ERISA reforms in the last Congress, plans to work on the issue again and focus on allowing companies to give employees investment advice and on modernizing prohibited transaction requirements.

Action seen in coming months for min. wage, pension reform

BOTH PENSION reform and an increase in the minimum wage have been building steam for several years, but it remains to be seen whether they have enough momentum to move a Republican-controlled Congress and a Republican president this year.

A tentative agreement in the Senate would allow Republicans to bring a minimum wage bill to the floor by Memorial Day, and allow the Democrats to offer a substitute. Meanwhile, House minimum wage supporters have begun urging House Speaker Hastert to follow a similar course.

Senate Health, Education, Labor and Pensions ranking member Edward Kennedy, D-Mass., a frequent champion of workers' rights, told a United Auto Workers legislative conference earlier this year that he would fight for a minimum wage increase.

"The minimum wage would have to be $8.05 an hour today, instead of its current level of $5.15, to have the same purchasing power it had in 1968," Kennedy declared. "That disparity shows how far we have fallen short over the past generation from guaranteeing low-income workers their fair share of the nation's prosperity."

Kennedy, the chief sponsor of the Democrats' minimum wage bill, is proposing to raise the current $5.15 per hour by $1.50 over two years, while Republicans favor raising it by $1 over three years.

GOP Seeks Business Perks

A minimum wage hike has not been enacted since 1997, but Republicans are not likely to let it through without adding sweeteners for businesses to offset their expected costs.

A key GOP aide said the Republican bill would include a "blend of minimum wage policy, tax relief policy and any needed labor law changes." Republicans earlier this year pegged the tax relief component at $73 billion, but said it could go higher.

Republicans also are seeking labor law changes that could include allowing employers to address flexible working hours and overtime compensation for hourly wage earners. This is likely to draw fire from Democrats.

The Democrats have yet to decide whether tax relief will be part of their bill, a Kennedy spokesman said.

A key concern for Democrats is that President Bush has indicated he supports a minimum wage increase if states are allowed to opt out of it.

Such an option would not work, Kennedy has insisted. "The federal minimum wage protects the vast majority of workers across the country," he told the UAW. "But those who are at the tender mercy of the states often face real hardship. The state minimum wage is $1.60 an hour in Wyoming, $2.65 an hour in Kansas and $3.35 an hour in Texas - and that's unacceptable."

Hastert Awaits Senate Action

The House appears further behind in tackling the minimum wage issue. "We're going to wait and see what the Senate does," said a Hastert spokesman. However, the Hastert spokesman said he did not think a minimum wage hike would be part of the broad tax package based on Bush's tax cut plan.

"We don't want to cost our members any votes on the most important tax package of the year," the spokesman said.

"The best way to put more money in the pockets of American working families is through tax relief - which the president is pursuing vigorously," added a spokesman for House Education and the Workforce Chairman Boehner.

Meanwhile, the pension reform issue keeps chugging along.

Even though it has been nearly four years since they began pushing it, Reps. Rob Portman, R-Ohio, and Benjamin Cardin, D-Md., are confident that the time is at hand to pass their pension reform bill.

"We know there won't be a deal with Social Security in 2001, but we can deal with private savings," Cardin told CongressDaily.

Portman-Cardin seeks to increase the amount of money employees can contribute to their retirement plans, improve the portability of such plans and encourage businesses to offer plans to their rank-and-file employees.

A senior GOP House member suggested that Portman-Cardin could be a good way to "pull the train" on taxes. He pointed to the fact that more Democrats seem to be getting on board.

"Given the economy, it could be very helpful," the House member said of the Portman-Cardin proposal.

However, pension reform was not included in the $1.6 trillion Bush tax cut plan that was forwarded to Capitol Hill earlier this year.

House Ways and Means Chairman Thomas said that since the pension bill already has passed the House, "it may not need as much vetting as other things." Thomas said he would explore pension reform and other issues in tax bills following Congress' spring recess (see related article, page 10).

Senate Version Has 15 Cosponsors

Meanwhile, Senate Finance Chairman Grassley and ranking member Max Baucus, D-Mont., introduced their version just before the spring recess. Their proposal is comparable to House bill, and started out with 15 Senate cosponsors.

Outside experts believe that legislation along this line is likely to pass this year. "The only question now is when," said James Delaplane, vice president for retirement policy at the American Benefits Council.

"Partly because the bill is tax-related, its fate rises and falls depending on the fate of tax bills," he added.

Reform of pension laws is seen as increasingly necessary as Americans move from job to job - and as the fate of Social Security reform remains unclear. "We need to give people new tools to save," Delaplane said.

Kennedy Considers Pension Support

The House effort on pension reform is expected to begin in earnest in midto late summer, a source close to Boehner said. Hearings will probably take place before then, the source added.

The Senate effort - which has the support of Senate Health, Education, Labor and Pensions Chairman Jeffords - contains three tax credits not in the House bill, to help small businesses.

The credits would assist some businesses with costs to start up pension plans and help defray some of the costs of contributing to the retirement plans of rank-and-file workers.

The bill also includes an individual, non-refundable tax credit to help lowincome individuals make contributions to individual retirement accounts or employer-sponsored defined contribution plans, such as 401(k) plans.

Jeffords held hearings last year on concerns that older workers were at a disadvantage when their companies converted their pension plans to cash balance plans. The Senate bill is expected to address this issue.

Even Kennedy, who has opposed similar provisions before, indicated through a spokesman that he would likely support the Senate bill because of changes that would make it more worker-friendly. Kennedy has said he wants to put pension reforms "on the agenda" but to get rid of language that "disadvantages workers."

Other Items May Be Attached

Other items could move hand-inhand with pension reform.

Among them are ways to increase stock options and investment opportunities for workers and modernization of the Employee Retirement Income Security Act - although the recent instability in the stock market may give Congress members pause.

A recent study by the Wharton School concludes that stock options are still in demand and increase shareholder value. Companies that grant more stock options to managers and technical and non-technical staff perform better than companies that do not offer stock options to those types of workers, the study said.

Boehner, who introduced ERISA reforms in the last Congress, plans to work on the issue again and focus on allowing companies to give employees investment advice and on modernizing prohibited transaction requirements.