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Obama's Minimum Wage Plan Caught Organized Labor By Surprise

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President Barack Obama speaking in Washington, Tuesday, Feb. 19, 2013, to urge Congress to come up with an alternative plan to avert automatic spending cuts set to kick in on March 1, 2013. (AP Photo/Susan Walsh) | AP

WASHINGTON -- As the White House developed its new proposal to raise the federal minimum wage, there was at least one core constituency of President Obama's that was largely left out of the loop on the plan: organized labor.

Labor unions by tradition are one of the loudest voices advocating for a higher minimum wage, believing it will help spur wage growth not just for the working poor but for all workers. The White House's proposal last week to raise the wage floor from $7.25 to $9 by 2015 and peg it to inflation caught many labor officials by surprise -- in most cases, pleasant surprise, given the president's relative silence on the issue during his first term.

But others have voiced concern off-the-record that the White House's proposal comes with too low a number. Despite the general applause by progressives, labor activists who follow the issue closely recall that on the campaign trail in 2008 Obama stumped for having a minimum wage of $9.50 by the end of 2011.

His proposal now, in effect, is 50 cents and four years behind his earlier proposal, leaving some advocates with a mixture of enthusiasm and worry.

"We're encouraged, but we think the wage is too low," said one D.C. labor official, requesting anonymity to speak freely. "We would have enjoyed a deeper discussion."

A spokesman for the AFL-CIO, the largest labor federation in the country, declined to comment when asked if officials there had talked with the White House about its minimum wage plan ahead of the announcement, though labor sources say AFL-CIO officials did not have the opportunity to give their feedback. Similarly, a spokesperson for the Service Employees International Union (SEIU), many of whose members work in low-wage service jobs, said the union wasn't privy to the minimum wage plan, either.

Both the AFL-CIO and SEIU have publicly praised the White House proposal. AFL-CIO President Richard Trumka said it would alleviate "wage stagnation and growing inequality," and SEIU President Mary Kay Henry said it would "lift up millions of families."

But even among those who are thrilled to see the minimum wage become part of the national dialogue, there are some who believe the White House may be lowballing itself with $9, and at least two of them will be spearheading legislative talks in Congress.

Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) have already said the $9 plan isn't enough, and they'll be advocating for a baseline of $10.10, also to be pegged to inflation. Harkin is the chairman of the Senate Committee on Health, Education, Labor and Pensions, and Miller is senior Democrat on the House Committee on Education and the Workforce. Both legislators have noted that the minimum wage would now be above $10 if it had kept pace with inflation since its historic high in the late 1960's.

The White House is probably hoping its more modest proposal of $9 will be palatable to House Republicans who are ideologically opposed to minimum wage increases, particularly during a weak economic climate. (The White House declined to comment on how it chose its number or whether organized labor was involved in the discussions.) The minimum wage hasn't been raised since 2009, after the last in a series of increases signed into law under President George W. Bush bumped it to $7.25 per hour.

Indexing the minimum wage to inflation is a long-term goal for many low-wage worker advocates, since it would tweak the wage floor each year to keep up with the cost of living, as well as take the politics out of legislative increases made by Congress. Ten states have already taken the initiative to index their minimum wages, usually to the consumer price index. (Nineteen states and the District of Columbia currently have minimum wages that trump the lower federal minimum.)

In his State of the Union address, Obama joked that indexing the minimum wage to inflation was one idea he had in common last year with failed GOP presidential candidate Mitt Romney.

For those who feel the minimum wage has eroded far too much, the downside to indexing is that raising the wage through large lump sums (as Bush did) becomes very difficult politically, given that it's already being raised each year in smaller measures. That makes the dollar value you start at -- in Obama's proposal, $9 -- all the more important, their reasoning goes.

"We wanted to get it above $10 before we index it -- we didn't want it to be artificially low," said one Democratic source, who didn't want to openly criticize the White House plan. The source added, "We were thrilled to see indexing" for inflation in the president's proposal.

A consultant to labor unions was less charitable, saying Obama should have pressed a more ambitious proposal. "Why didn't he go for $10, or even $11?" the consultant asked. "He's negotiating with himself again."

Whatever the number ends up being, Democratic aides expect the increase will be passed, despite claims from Republican leadership that it will hurt businesses and job growth. Minimum wage hikes typically get passed every few years, with Republicans and the business community finding something to like in the larger legislative package. The 2007 measure signed by Bush, for instance, was rolled into a supplemental aid package for the Iraq War that also included a small-business tax cut.

Michael McAuliff contributed reporting.

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