House-passed minimum wage measure moves to Senate

Thursday, January 11th 2007, 6:16 am

By: News On 6

WASHINGTON (AP) _ House-passed legislation boosting the federal minimum wage moves to the Senate, where Democrats intend to add billions of dollars in tax breaks to make it easier for business to swallow.

``Let us raise the minimum wage. Let us help small businesses cope,'' said Sen. Max Baucus, D-Mont, helping craft a multi-billion-dollar package of tax breaks aimed at businesses who hire low income workers, the restaurant industry and others.

Moving on a top priority, House Democrats, with help from 82 Republicans, overwhelmingly passed legislation Wednesday that would eventually lift the minimum wage by $2.10 an hour, the first increase in a decade. It didn't include any tax breaks to help temper the sting of higher labor costs to businesses.

``With the passage of this crucial legislation, we will reward work, paying America's workers a decent wage so they may join in our nation's prosperity,'' said House Speaker Nancy Pelosi of California.

In the Senate, however, Democrats have only a fragile majority and many of them favor the tax breaks.

The White House indicated that it would support a lift in the minimum wage as long as it as paired with ``tax and regulatory relief to help small businesses stay competitive and to help keep the economy growing.''

Sen. Majority Leader Harry Reid, D-Nev., has already signaled that Democrats will accept business-friendly amendments.

Baucus is working on a package with between $8 billion and $10 billion in relief over 10 years. Provisions being eyed for the package include a tax credit for employers who hire disadvantaged workers and faster depreciation for restaurant improvements, among other things.

The final minimum wage package will be ironed out in negotiations between the two chambers. It is likely that Pelosi and her Democratic colleagues will ultimately have to accept tax breaks for businesses if they are to get Bush's signature on one of their top priorities.

Under budget rules enacted law week, however, no tax legislation that clears the House can increase the deficit. That means a minimum wage that contains costly tax breaks would have to include either spending cuts or tax increases elsewhere to make up for the lost revenue.

The Senate _ like the House _ is not expected to waste time in advancing a minimum wage boost _ a top goal for Democrats now in control of both chambers.

Both bills would raise the federal wage floor by $2.10 from its current $5.15 an hour over 26 months.

The bills would raise the wage floor in three steps. It would go to $5.85 an hour 60 days after signed into law by the president, to $6.55 an hour a year later, and to $7.25 an hour a year after that.

Organized labor and other supporters pitched the bill as badly needed assistance for the working poor.

Business groups and other critics said it could lead to higher prices for goods and services, force small companies to pink-slip existing workers or hire fewer new ones, and crimp profits.

The last time the federal minimum wage rose was in 1997. That's the longest stretch without an increase since the minimum wage was established in 1938. Inflation has eroded the minimum wage's buying power to the lowest level in about 50 years.

The Labor Department says 479,000 workers paid by the hour earned exactly $5.15 in 2005, the most recent estimate available.

The federal minimum wage is like a national wage floor, though some people can be paid less under certain circumstances. States can set minimum wages above the federal level; more than two dozen states plus the District of Columbia do.

People who are paid the minimum wage tend to be young _ under age 25 _ never married, more likely to be a woman, a minority and work part time, according to a recent analysis of 2005 data by the Labor Department.

If the federal wage does rise in 26 months to $7.25 an hour, about 5.6 million people _ 4 percent of the work force _ who make less than this would be directly affected, according to the Economic Policy Institute, a liberal leaning group. The group estimates that another 7.4 million workers would benefit indirectly as raising the floor would ripple through the work force.