The limits on deferred compensation plans contained in the Senate version of minimum wage legislation are “a solution in search of a problem,” according to an official at the National Association of Manufacturers.
Ken Petrini, a Pennsylvania executive, made that case for the National Association of Manufacturers, Washington, Wednesday during a hearing organized by the House Ways and Means Committee.
Petrini said his firm and NAM “strongly oppose” the deferred comp provisions in the Senate bill.
Another witness, Edward Kleinbard, who testified on behalf of the Securities Industry and Financial Markets Association, New York, said the Senate provisions are “profoundly undercooked” and needed to be “put back in the oven” to develop further.
The Senate passed a minimum wage bill that raises the minimum wage and also includes a number of additional tax breaks, along with revenue-raising measures to offset the cost of the new tax breaks.
The House tried to pass a “clean” minimum wage bill that raises the minimum wage and includes just enough other provisions to ease the burden of the increase on small businesses.
The House bill is running into strong opposition in the Senate.
Sen. Charles Grassley, R-Iowa, who was chairman of the Senate Finance Committee when the Republicans controlled the Senate, reportedly dislikes the House bill, according to published reports.
Rep. Bill Pascrell, D-N.J., said at the hearing that he has “deep reservations” about the Senate bill because it would “go back in time” and penalize deferred comp arrangements that are already in place.
Any new law should be enacted prospectively, Pascrell said.
Rep. Earl Pomeroy, D-N.D., questioned what the effect the Senate bill would have on pension plans. He said Congress should ensure that those plans are protected and not hurt by the Senate bill.
Rep. Joseph Crowley, D-N.Y, also expressed “deep reservations” about the Senate bill, but he also said he respected the Senate’s intent.
In written comments submitted to the committee, Kenneth Cohen, deputy general counsel at Massachusetts Mutual Life Insurance Company, Springfield, Mass., says non-qualified deferred compensation plans “are particularly essential for the survival and profitability of small businesses and family businesses.”
“We understand the concerns surrounding excessive CEO pay and the potential equity issues such pay may raise,” Cohen says. “However, the solution should not come at the expense of small and family-run businesses and middle management employees.”