US House Passes 'Clean' Minimum Wage Increase Bill

by Leroy Baker, Tax-News.com, New York

15 January 2007

House Democrats have ignored the pleas of President George W. Bush to provide businesses with tax relief to balance rising wages by passing a 'clean' federal minimum wage increase bill last week.

The Fair Minimum Wage Act of 2007 passed on the House floor with bipartisan support after lawmakers voted 315 to 116 in favor of the proposals.

If enacted, the bill would raise the federal minimum wage to $7.25 per hour from $5.15 per hour over two years. It would be the first increase in the minimum wage for ten years.

"This represents the longest period without an increase since Congress established the minimum wage in 1938," observed House Majority Leader Steny Hoyer in a floor statement.

"At $5.15 today, the minimum wage is at its lowest level, adjusted for inflation, in half a century. And, in fact, if the minimum wage had been adjusted for inflation since 1968, it would be $9.05 today," he added.

President Bush has called for any legislation increasing the minimum wage to also contain other measures to help businesses, particularly small firms, to absorb the cost through additional tax relief.

"I believe we should do it in a way that does not punish the millions of small businesses that are creating most of the new jobs in our country," he told reporters last month. "I support pairing it with targeted tax and regulatory relief to help these small businesses stay competitive and to help keep our economy growing."

However, Hoyer rejected arguments that the wage increase would hurt businesses by increasing their costs.

"There are those who will claim this legislation will hurt small businesses and the economy. But in fact, according to one recent study, small business employment grew more in states with a higher minimum wage between 1997 and 2003 than in federal minimum wage states," he claimed.

The bill now goes to the Senate where the Finance Committee chairman Max Baucus has already crafted legislation to make permanent a tax credit for American employers who hire disadvantaged workers, in direct response to a likely minimum wage increase.

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