The stakes of raising the federal minimum wage: with the 110th Congress poised to increase the federal minimum wage, the apartment industry readies itself for the possible positive--and negative--repercussions.A priority for congressional Democrats, who recently earned majorities in both houses of Congress, is to pass legislation that would raise the federal minimum wage. The federal minimum wage, which is currently set at $5.15 per hour, has not been increased since 1997. That is the longest period without an increase since the federal minimum wage was created in 1938. House Speaker Nancy Pelosi (D-Calif.) and other House leaders included an increase in the federal minimum wage on their "First 100 Hours" agenda. On Jan. 10, the U.S. House of Representatives passed a "clean" bill that would increase the federal minimum wage to $7.25 per hour over the course of two years. The measure is considered "clean" because it does not include offsetting provisions for employer tax or regulatory breaks. But on Feb. 16, the House overwhelmingly approved a $1.3 billion bipartisan tax break package that will be paired with the $2.10 minimum wage increase. Proponents of the tax breaks say that they will help small businesses adjust to potential increases in operating costs operating costs npl → gastos mpl operacionales stemming from a minimum wage hike. The Senate also passed a bill that would raise the federal minimum wage to $7.25 per hour and an accompanying $8.3 billion tax break package. House leaders initially balked balk v. balked, balk·ing, balks v.intr. 1. To stop short and refuse to go on: The horse balked at the jump. 2. at including sweeteners in the form of tax cuts, but they agreed to some relief for businesses once it became clear that Senate Republicans would not support the minimum wage increase without it. Capitol Capitol, seat of the U.S. Congress Capitol, seat of the U.S. government at Washington, D.C. It is the city's dominating monument, built on an elevated site that was chosen by George Washington in consultation with Major Pierre L'Enfant. Hill was still debating this issue as of Feb. 20. Although approximately only 5.6 million workers currently earn the federal minimum wage, the apartment industry is paying close attention to this Capitol Hill debate in light of the more subtle potential effects on the apartment sector. Political Considerations President Bush repeatedly has signaled his willingness to sign into law legislation that would raise the minimum wage, but only if Congress also includes tax and regulatory relief for employers, especially for small businesses. Senate Minority Leader Mitch The name Mitch can mean:
tr.v. al·ien·at·ed, al·ien·at·ing, al·ien·ates 1. To cause to become unfriendly or hostile; estrange: alienate a friend; alienate potential supporters by taking extreme positions. leading Democratic proponents of the minimum wage increase. Negotiations between the House and Senate will be delicate, but it seems clear that a final measure include business-backed tax incentives. Although it is unclear what those incentives may be once the House and Senate enter negotiations to reconcile the two bills, there have been suggestions for association health plans--which the NAA/NMHC Joint Legislative Program support--small business tax credits or exemptions for certain industries. It has also been reported that Republicans may push changes to the Fair Labor Standards Act Fair Labor Standards Act or Wages and Hours Act, passed by the U.S. Congress in 1938 to establish minimum living standards for workers engaged directly or indirectly in interstate commerce, including those involved in production of goods bound , the federal law that governs minimum wage and overtime pay to shrink the number of covered employees. An Economic Perspective When the federal minimum wage was first implemented, the country's unemployment rate was approximately 20 percent. The move was one of the first federal worker protections created by Congress, and it came during the nation's most prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. economic depression. Today, unemployment is about 4.5 percent and American workers enjoy some of the world's most extensive legal safeguards. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. leading economists who closely study the issue, inflation has eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. the purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. of those earning the federal minimum wage by 20 percent to 25 percent during the past 10 years. Many economists believe that the benefits of raising the federal minimum wage would outweigh out·weigh tr.v. out·weighed, out·weigh·ing, out·weighs 1. To weigh more than. 2. To be more significant than; exceed in value or importance: The benefits outweigh the risks. the risks. Although some predict a modest degree of overall job loss if a small increase occurs, empirical studies Empirical studies in social sciences are when the research ends are based on evidence and not just theory. This is done to comply with the scientific method that asserts the objective discovery of knowledge based on verifiable facts of evidence. conducted over the past 15 years suggest that modest increases in the federal minimum wage, such as the current proposal, would have no, or very little, effect on employment. Some have also raised concerns about whether consumers would end up paying the price for a minimum wage increase via higher prices for goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. . In fact, there could be small price increases in industries powered by workers who earn low wages, including retail, food service and hospitality. Most conservative and moderate-leaning experts agree that raising the minimum wage to the proposed amount would not produce perilous effects on employment levels, prices or the overall economy. In fact, 650 economists, including five Nobel Prize winners Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel Year Recipient(s) 1969 Ragnar Frisch Jan Tinbergen 1970 Paul A. Samuelson 1971 Simon Kuznets 1972 Sir John R. Hicks Kenneth J. , recently signed a statement supporting an increase in the minimum wage, with annual cost-of-living increases indexed to inflation. Their statement asserts that an increase "can significantly improve the lives of low-income workers and their families, without the adverse effects that critics have claimed." The Effect on Apartments The economic effects of raising the minimum wage, including potential impacts on the apartment industry, are uncertain. Apartment operators must take a multi-faceted approach when addressing the minimum wage issue. Despite the fact that the majority of industry employees earn more than the federal and local minimum wages, market pressures may push up the pay of lower-wage industry workers who earn more than the minimum wage. Although there could be a resulting increase in operating costs, there also may be benefits to the apartment industry. First, better-paid employees are less likely to resign, thereby reducing employee turnover, a costly problem within the industry. Additionally, higher wages could result in a stronger renter pool. It is likely that many workers who would benefit from an increase in the minimum wage are renters. An increase in their incomes from a higher minimum wage will mean more money available for essentials, such as housing costs. It takes no stretch of the imagination to conclude that these renters will be more likely to pay their rent on time and to accept future rent increases. It seems certain that a modest increase to the federal minimum wage will be signed into law this year. The apartment industry will feel some impact because of the change, but part of that impact will be for the better. How a Minimum Wage Increase Affects You If the proposed minimum wage increase is signed into law, the apartment industry may feel its effects in four areas: 1. Potential Tax Breaks. President Bush has repeatedly signaled his willingness to sign into law legislation that would raise the minimum wage, but only if Congress also includes tax and regulatory relief for employers, especially for small businesses. 2. The Ripple Effect ripple effect Epidemiology See Signal event. . Although most apartment industry employees earn more then the minimum wage, market pressures may push up the pay of lower-wage industry workers who earn more than the minimum wage. 3. Reducing Employee Turnover. Better-paid employees are less likely to resign, thereby reducing employee turnover, a well-documented and costly problem within the apartment industry. 4. Stronger Renter Pool. An increase in renters' incomes will mean more money available for essentials, such as housing costs, which allows those renters to pay their rent on time and to accept future rent increases. The Ripple Effect: Apartment Professionals Weigh In "What would impact all apartment managers is the 'ripple effect' of the minimum wage increase. When employers are forced to increase wage rates for their workers at lowest levels of the wage scale, there is an expectation that hourly rates higher in the wage hierarchy will be increased as well. These increased wage costs may result in staff layoffs, decreased hiring and higher rental rates and management fees for the industry." CONNIE BERTRAM, PARTNER, WINSTON & STRAWN LLP LLP - Lower Layer Protocol , WASHINGTON, D.C. "An increase in minimum wage could cause us to increase our rents, which hurts the residents. We're not paying anyone minimum wage, but if minimum wage goes up, then those who are making marginally more than that will want a raise to keep them marginally above that." DAVID David, in the Bible David, d. c.970 B.C., king of ancient Israel (c.1010–970 B.C.), successor of Saul. The Book of First Samuel introduces him as the youngest of eight sons who is anointed king by Samuel to replace Saul, who had been deemed a failure. HIRSCH, CAM cam, mechanical device cam, mechanical device for converting a rotating motion into a reciprocating, or back-and-forth, motion, or for changing a simple motion into a complex one. , PRESIDENT, ECI ECI Employment Cost Index ECI Election Commission(er) of India ECI Enterprise Content Integration ECI Early Childhood Intervention ECI Environmental Change Institute GROUP, MARIETTA, GA "What I fear will occur is that anyone making a few dollars over minimum wage will want their pay increased as well, simply because they want to continue to be making that much over minimum." VICTORIA COWART, CPM (1) (Critical Path Method) A project management planning and control technique implemented on computers. The critical path is the series of activities and tasks in the project that have no built-in slack time. , VICE PRESIDENT OF PROPERTY MANAGEMENT, DARBY DEVELOPMENT, NORTH CHARLESTON North Charleston A city of southeast South Carolina, a suburb of Charleston. Population: 80,600. , S.C. Betsy Feigin Befits is Senior Director of Employment Policy and Special Counsel for the National Apartment Association-National Multi Housing Council Joint Legislative Program. |
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