WASHINGTON -- Legislation introduced by Sen. Tom Harkin (D-Iowa) on Thursday included a litany of measures aimed at boosting income for low-wage workers, most notably raising the minimum wage significantly and pegging it to inflation.
Along with spending on school modernization and renewable energy development, the Rebuild America Act calls for raising the minimum wage from the current federal level of $7.25 to $9.80 -- a 35 percent hike -- over the course of two and a half years, then indexing it so it rises with the cost of living. For restaurant servers and other tipped employees, the minimum wage before tips would leap from the current $2.13 to $6.86, and then track at 70 percent of the normal minimum wage.
The bill would also require employers to offer their workers paid sick days, make more white-collar workers eligible for overtime pay that they're currently exempted from, and give more workers the right to join a union.
In short, Harkin's bill, pitched as a prescription to rebuild the American middle class, hits all the right notes for worker advocates who say low- and middle-income earners are falling behind. The package was quickly praised by groups such as the AFL-CIO federation of labor unions; the National Employment Law Project, which advocates for low-wage workers; and the Restaurant Opportunities Center United, a national group representing restaurant employees.
On a call with reporters Thursday, Harkin called the bill "a sweeping piece of legislation that will modernize our nation's infrastructure, expand our manufacturing base, prepare American workers for the jobs of the future, and strengthen the economic security of middle-class families." Citing failed "trickle-down economics for the rich," Harkin said "it's time for percolate-up economics for the middle class."
Despite the infrastructure spending and tax credits packaged in Harkin's bill, the pieces related to employment are bound to displease the Chamber of Commerce and other deep-pocketed trade groups, which typically lobby against higher minimum wages and employer mandates like paid sick days. Many of Harkin's priorities would have little to no chance in the GOP-controlled House, where Republicans are loath to raise the minimum wage or put any regulations on employers, arguing it would jeopardize jobs during a difficult recovery.
Despite the rising cost of living, the federal minimum wage hasn't budged since 2009, when it received the last in a series of increases passed under President George W. Bush. The minimum wage for servers has been frozen at $2.13 for two decades, and the restaurant industry has traditionally lobbied on both the federal and state levels to keep it as low as possible. Under the law, if a worker doesn't earn the normal minimum wage after tips, the employer must make up the difference.
GOP presidential candidate Mitt Romney drew the ire of conservatives when he suggested in January that the federal minimum wage should be pegged to inflation, as Harkin's bill would do and as many states have already done. He has since walked back that statement and said it's not time to hike the minimum wage given the high unemployment rate. During his 2008 campaign, President Obama said he would raise the minimum wage to $9.50 by the end of 2011.
As for sick days, current federal law leaves it up to the employer whether or not to give workers paid time off when they're ill. Last year Connecticut became the first state to mandate that private-sector businesses let their workers accrue paid sick days. Similar legislation recently failed in Denver, Colo., where a ballot measure was defeated after heavy spending by the restaurant industry.
A summary of the bill provided by Harkin's office:
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