WASHINGTON -- Massachusetts Sen. Edward M. Kennedy and Pennsylvania Sen. Rick Santorum yesterday dueled over proposals to increase the minimum wage, with Republicans arguing that Kennedy's $2 increase would cripple the economy and Democrats arguing that Santorum's $1.10 increase was a thinly-disguised giveaway to business.

		Graphic: Minimum wage history

The proposals, attachments to the bankruptcy bill that the Senate is debating this week, both failed.

Kennedy's proposal, which won the support of four Republicans, lost 46-49; Santorum's failed by a far wider margin of 38-61, but the debate was mostly for show. Under an agreement between the two sides, 60 votes were required for either proposal to succeed.

Although President Bush has said he would support the proposed $1.10 increase, even Santorum acknowledged yesterday that leaders in the House had not expressed any willingness to consider the legislation this year.

Congress has not increased the minimum wage since 1996 when it was raised to the current level of $5.15. Kennedy's amendment would have raised the wage to $7.25 over two years and two months, which he said would have given a minimum wage family an additional $4,400 a year. Santorum's increase to $6.25 would have stretched over a year and six months. About 3 percent of American workers who are paid hourly wages make only the minimum wage.

The National Restaurant Association stridently opposed the Kennedy amendment as a 41 percent increase in minimum wage that would lead to the loss of jobs and increases in menu prices, but did not take a position on the Santorum amendment. (It did so, in part, because the proposal included provisions helpful to small businesses but was widely predicted to fail.)

The most heated debate yesterday was not over the wage hike itself, but the controversial measures in Santorum's 85-page amendment that helped small businesses, but which would have changed the rules so that fewer workers were protected by minimum wage and overtime laws.

Under the Fair Labor Standards Act, businesses that bring in less than $500,000 a year do not have to pay their workers the $5.15 minimum wage unless the employee is involved in some form of interstate commerce. That could include producing products that are sold in a different state or even taking orders over the phone from people in other states.

Democrats and some Republicans objected to a provision of the Santorum amendment that would have exempted additional small businesses from paying the minimum wage by raising the $500,000 threshold to $1 million.

More significantly, the legislation would have gotten rid of the interstate provision. Santorum said the change to interstate commerce rules was intended to correct a "drafting error" from the late 1980s that had forced small businesses to pay minimum wage to many more workers than Congress had originally intended.

The most recent information on the number of small businesses that fall into that category is from 1997. The Census bureau found that there were 7.5 million firms and establishments (employing some 11.7 million workers) that made less than $500,000. According to the 1997 figures, if the threshold was raised to $1 million, an additional 1.5 million businesses would have qualified for that exemption (businesses in that higher category employed some 6.8 million workers).

Another controversial provision in Santorum's legislation would have given employers the option of creating a two-week work period instead of one week, which could have changed the amount workers are paid in overtime.

Current law states that employers must pay overtime if an employee works more than 40 hours a week. Santorum's bill would have allowed employers to offer an 80-hour work period over two weeks as long as an employee agreed to that schedule.

Under the new rule, an employee could work 50 hours one week and 30 hours the next, but not receive overtime for that additional ten hours. Santorum stressed that the two-week work period was voluntary and designed to give workers more flexibility, and that the change would require the signed consent of an employee.

Santorum said his proposal reflected "the changing dynamics of the workforce" and non-traditional workers who want to spend more time with their families, but Democrats charged that millions of workers could lose their overtime pay.

"What a deal," said Sen. Dick Durbin, of Illinois, the No. 2 Democrat in the Senate. "After waiting eight years, [Santorum] helps one out of four of the workers Sen. Kennedy helps, and for the 1.8 million [workers] he helps, he pushes five times as many overboard, and says you're not going to get overtime, you're not going to get minimum wage."

Santorum said Democrats were exaggerating the bill's effects and said the measures were intended to help "mom and pop" businesses and smaller enterprises just starting out.

The Santorum amendment also included a number of tax breaks for small businesses. Susan Eckerly, vice president of public policy at the National Federation of Independent Businesses said the organization would have supported most if not all of the provisions in the Santorum amendment with the exception of the minimum wage increase.

Sen. Arlen Specter, R-Pa., was traveling with President Bush yesterday and arrived after the vote on the Kennedy amendment. He voted for Santorum's amendment, but said he would have preferred Kennedy's proposed $2 increase and said that "after a seven and a half year hiatus" the increase was "in order."