Democrats see pay cuts in minimum wage hike

The San Francisco Chronicle reports:

Californians mobilized Tuesday to oppose a new federal minimum wage law coming up for a Senate vote this week that they say would slash the pay of an estimated 650,000 California waiters, waitresses, manicurists, bellhops and others who rely on tips for a chunk of their income.

But advocates of the proposal say the critics are misreading the legislation's arcane wording. The proposal is part of a voluminous House-passed bill that would cut estate taxes on the wealthiest Americans and offer a long list of other tax cuts, in addition to raising the minimum wage.

The bill would for the first time in nine years raise the federal minimum wage for 7 million workers from the current $5.15 an hour to $7.25 over three years.

The disagreement comes over the bill's wording for the seven states, including California, that do not allow so-called tip credits that permit tipped workers to be paid much less than the minimum wage.

Democratic critics, including Sen. Dianne Feinstein of California, contend that in this state, which has its own, higher minimum wage of $6.75 an hour, the pay of some 650,000 people who rely on tips would be hacked from the state minimum wage of $6.75 plus tips to $2.13 an hour plus tips.

In San Francisco, the cut would be even steeper, from the city minimum wage of $8.82 an hour plus tips to $2.13 an hour plus tips.

"This is unacceptable," Feinstein said in announcing her opposition to the package that Senate Majority Leader Bill Frist of Tennessee wants to bring to a vote by Friday, before the Senate goes on its August recess.

The hazards of central planning.