The U.S. Senate voted 94-3 last week to increase the federal minimum wage, adding $8 billion in tax breaks for small businesses to a House version of the bill. If passed, the legislation will raise the federal minimum wage more than $2 over the next two years to $7.25 per hour.
The Senate’s proposed tax breaks would assist small businesses with the additional cost of a higher minimum wage, closing tax loopholes for larger corporations to offset the revenue drain. “Small businesses are the No. 1 creator of new jobs in America, and they deserve our support,” says Sen. John Cornyn (R-Texas). “By helping them with this important tax and regulatory relief, we’ll ensure that the economy continues to grow.”
The Fair Minimum Wage Act of 2007 now faces additional debate in the House, where the bill passed last month with no amendments. “Doing the right thing for workers and the smart thing for the economy need not be, nor should be, conditioned on passing a single additional tax break that our country cannot afford,” says Rep. George Miller (D-Calif.) sponsor of the House bill.
The proposed increase would directly affect 6.6 million workers now earning $5.15 per hour, according to the Economic Policy Institute, plus another 8.3 million who earn slightly more than minimum. Workers in 28 states and the District of Columbia are already guaranteed an hourly wage higher than $5.15; seven states already mandate a minimum higher than $7.25.