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January 25, 2007
Minimum Wage Increase Hits Roadblock

Democrats in the Senate failed to secure enough votes to pass a minimum wage increase without tax breaks for small businesses.

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Fifty-four Senators favored ending debate and forcing a vote on the minimum wage proposal, six votes shy of what was needed. The Democrats tried to pass the minimum wage increase without packaging it with tax breaks for small businesses.

President Bush has said that he would support raising the minimum wage if Congress also approves tax and regulatory breaks for small businesses.

Earlier this month, the U.S. House of Representatives voted to raise the federal minimum wage from $5.15 per hour to $7.25 per hour over a period of 26 months. The legislation included no link to tax breaks.

Without enough votes in the Senate to invoke cloture, Democrats may have to package the minimum wage proposal with tax breaks already approved by a Senate panel.

Business groups oppose an increase to the minimum wage, arguing that it would be especially burdensome on small businesses and would hurt the economy.

The federal minimum wage has been $5.15 per hour since 1997. Twenty-nine states have approved minimum wages above $5.15 an hour, including ten that have tied future increases to inflation. Any action on the federal level would affect a number of those 29 states because many of the state minimum wages would fall somewhere in between the first and third steps of the House-approved proposal. In the case of conflicting minimum wage levels, the federal or state law that is more generous to employees takes precedence.

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