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House votes to raise minimum wage to $7.25

A $2.10 increase to the federal minimum wage received overwhelming approval from the House of Representatives on Jan. 10. The lopsided 315-116 vote in favor of the first raise to the minimum wage in 10 years surprised some political analysts who had predicted that the measure (H.R. 2) would pass by a narrower margin.

The legislation would raise the wage rate from $5.15 per hour to $7.25 in three phases over 25 months. Democrats, who now control the House for the first time since 1994, held true to their pledge of passing a minimum wage bill during the first 100 hours of the 110th Congress.

Some Republicans leaders had scoffed at the notion of passing wage legislation so quickly. Rep. Howard “Buck” McKeon, R-Calif., the ranking GOP member of the House Education and Labor Committee, was highly critical of H.R. 2 and called the measure an “unbalanced piece of legislation.” He and some other Republicans claimed that tax breaks for smaller business were needed in the bill to help offset the financial burdens of any wage increase.

McKeon led an attempt to remove the bill from the House floor and have it sent to the Education and Labor Committee for further deliberation. By returning the measure to the committee, the Republicans hoped to attach several tax-related amendments that would benefit small businesses. But in a surprising turn of events, 54 Republicans voted with the Democrats to block McKeon’s motion.

The legislation then passed with 82 Republicans voting to approve it. House Democrats praised the quick passage of the bill, claiming that the strong bipartisan vote sent a clear a message to the White House and the country that there is strong support for their agenda.

“Today we finally release many low wage workers from being frozen in time, stuck at that wage level when their gas prices are higher, their education prices are higher, their medical costs are higher,” said Rep. George Miller, D-Calif., chair of the House Education and Labor Committee and chief sponsor of H.R. 2.

Action expected in the Senate

A Senate version of the minimum wage increase has not yet been introduced. Sen. Edward Kennedy, D-Mass., chair of the Senate Health, Education, Labor and Pensions Committee, has said that increasing the federal minimum wage is one of his top priorities for the new Congress. Some Senate Democrats have indicated that they would favor adding some tax breaks for smaller businesses to the minimum wage bill.

Senate Finance Committee Chairman Max Baucus, D-Mont., announced that his committee plans to complete a package of tax breaks for smaller businesses before the end of January. He indicated that the tax package most likely would part of the Senate’s minimum wage bill. According to sources familiar with the issue, most of the provisions Baucus is considering would extend or make permanent popular tax breaks such as deductions for the hiring of welfare recipients, incentives for business investments and deductions for property leases.

Many Senate Republicans say they want the tax breaks for small businesses to go even further, and sources say they most likely will promote a measure that would allow small businesses to pool together to buy health insurance policies for their workers. Democrats have opposed the health insurance proposal in the past, claiming that it would allow business that participate in such pools to ignore state health insurance mandates.

In December, President Bush announced that he would support an increase to the minimum wage, but only if it included tax breaks and incentives for smaller business—much like the ones the Senate is set to consider later in January. The White House released a written statement on Jan. 10 stating that the president opposed H.R. 2. However, the statement stopped short of threatening a veto if the tax measures are not included in any final legislation passed by Congress.

Bill Leonard is senior writer for HR News.

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