Growth Strategies

House Supports Higher Minimum Wage

A new bill would raise the hourly rate to $7.25, but President Bush wants tax cuts for smaller businesses rolled into the legislation.
Stephen TaubJanuary 11, 2007

The House of Representatives passed a minimum wage bill that would lift the pay floor from $5.15 per hour to $7.25 per hour in three increments over two years and two months, according to CNNMoney.com.

The bill, introduced by Rep. George Miller (D.-California), passed by a vote of 315 to 116 yesterday, according to the report.

Miller has said that under the bill, 13 million American workers would get a pay raise. On the House floor Wednesday, he said it was simply “an up-or-down vote saying whether the poorest people working in the country deserve a raise.”

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Senators are not expected to vote on the bill until after they vote on the lobbying reform bill, which is expected at the end of next week, according to CNN.com, citing a spokesman for Senate Majority Leader Harry Reid (D-Nevada). The Senate is also putting together its own minimum-wage-increase bill.

President Bush has indicated that he would sign a minimum-wage increase if Congress offers tax and regulatory concessions to small businesses. The bill—the first federal minimum-wage increase since the mid-1990s—could also have the backing of the world’s largest retailer, Wal-Mart, which has supported a higher minimum wage since 2005.

Among the potential tax breaks for small businesses being discussed in the Senate include repeals of the estate tax and alternative minimum tax, and a measure to raise expensing levels, according to CNN.com.

“We think it’s positive that [the Senate] is discussing these offsets,” Karen Kerrigan of the Small Business and Entrepreneurship Council, a small-business tax advocacy organization, told CNN.com. “It’s a recognition that a minimum-wage increase will impact small firms. That’s a good thing,” she remarked. “But our preference is that Congress leave the issue alone and let the states deal with it.”

However, Jared Bernstein of the labor-backed Economic Policy Institute, reportedly said any tax breaks are “unwarranted given the extensive tax cuts to business both small and large over the past decade,” as well as the small magnitude of the current minimum-wage proposal.

More than half of the U.S. states have a minimum wage higher than $5.15 or have passed legislation that will raise it.

CNN.com pointed out the increase of the minimum wage would directly affect 5.6 million workers currently earning the minimum wage, citing the EPI. The other 9.2 million who would benefit from the hike currently earn slightly more than the minimum and would likely get a raise following the increase.

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