Minimum wage $9.50? Democrats say maybe

Senator Kennedy pledges to revisit the issue, may index minimum wage; political battle looms.

By Chris Zappone, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Just days after the first increase in the minimum wage in 10 years, Democrats on Capitol Hill led by Sen. Edward Kennedy are discussing a further increase to $9.50 an hour.

Kennedy (D-Mass.), one of the original sponsors of the recently enacted minimum wage hike, announced this week his intention to propose legislation for a new increase, Laura Capps, a spokeswoman for the senator, said. The proposal, if passed into law, will aim to take effect in 2009 after the current minimum wage law expires.

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No time frame was given for the legislation although an aide in another Senate Democrat's office confirmed there would be a push for another wage increase.

The recently-enacted law, The Fair Minimum Wage Act of 2007, raised the federal minimum amount to $5.85 from $5.15 on Tuesday. That will increase to $6.55 next year and $7.25 in 2009 under the current law.

The $9.50 figure would be half of the expected average worker's wage as of 2011, according to a statement released by Sen. Kennedy's office.

There is also a possibility the wage would be indexed to inflation or some other measure of the cost of living. Ten states already have index adjusted-minimum wages. They provide for automatic increases to the wage in the same way Social Security or Congressional salaries factor in inflation and costs of living.

Kennedy spokeswoman Capps said the awareness of the minimum wage issue rose dramatically with the legislative effort for the first bill.

Capps said it was an issue with broad popular support, including from Republican voters. "Republicans surely heard strongly from their constituents on the issue," Capps said.

Liana Fox of the labor-backed Economic Policy Institute said part of the reason for Kennedy's initiative is that by July of 2009, when the federal minimum is $7.25, 12 states with their own minimum wage law will be over $7.25.

"We've never had a situation like that before," said Fox. "It will increase pressure at the federal level."

Some critics said a new law to boost the minimum wage beyond $7.25 would not go far. Economist Chris Edwards of the libertarian Cato Institute dismissed the notion of an additional wage hike as a "political tool" used by Democrats.

Raising the wage to $9 an hour "would cause a lot of trouble," said Edwards. "There are huge differences in local economies. $9.50 an hour in New York and $9.50 an hour in Kansas are two different things."

Edwards said this "shows why free-market Republicans should never agree to this sort of the thing [a minimum wage increase]. The Bush administration thought, 'Oh we'll get this off the table,' but the Ted Kennedys always come back for more."

Kennedy told National Public Radio this week that he expects the minimum wage to be a major issue in next year's election. Indeed, it already is. On July 2, Democratic presidential candidate John Edwards endorsed a further increase to $9.50 by 2012.

Edwards also advocates indexing it so that it automatically rises each year to keep up with average wages.

"No one who is serious about the federal wage floor is ready to pack up and go home at $7.25 by 2009," said Jen Kern of the Association of Community Organizations for Reform Now. Kern added that $7.25 is not enough to restore the minimum wage to its historical buying power today.

ACORN is one of the groups involved in advocating for higher wages for poor and working-class families.

"It's not an issue that divides the country," she said. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.